A demographic cohort is never monolithic, but the group that recently entered the labor force had one trait in common: they watched as the Great Recession dramatically reshaped the landscape of employment, housing, and, in general, their expectations. How profoundly will the economic downturn and its associated effects mark this generation?
On top of the economic hardships facing the millennials, they show signs of veering from established patterns. Whereas the last few preceding generations moved more quickly toward getting married or buying a house, millen- nials as a group are taking their time on those fronts (for many, out of necessity). In 2012, 36 percent of the nation’s young adults ages 18 to 31 were living in their parents’ home, the largest share in four decades, according to 2013 data from Pew. The same year, just 25 percent of millennials were married, down from 30 per- cent of the same age group that were married in 2007. Statistics like these bring the Great Recession’s effects on the millennial generation into sharp focus.
Indeed, the bleak employment situation millennials encountered upon entering the labor force likely hindered household formation rates: they weren’t able to rent apartments or furnish and equip their own households in general. Though labor markets today continue their slow rebound from their recession-era lows, the U.S. Bureau of Labor Statistics (BLS) says youth unemployment rates (ages 16–24) remained around 15.5 percent in 2013 and began 2014 at 14.2 percent, roughly twice the rate of overall unemployment. In fact, excluding those under the age of 25, the overall U.S. unemployment rate was only 5.4 percent in January 2014, according to the BLS.
Another statistic from Pew illustrates millennials’ straits: in 2012, 63 percent of people ages 18–31 had jobs, down from 70 percent of their same-aged counterparts who had jobs in 2007. Unemployed millennials are much more likely than their employed cohorts to live with their parents.
More skills, more problems?
Even beyond the harsh labor market conditions into which millennials graduated, other distinctive factors have intensified frustrations for this demographic. Millennials view higher education as crucial to enhancing their skills and thus their career prospects, and data strongly support their view: a new Pew survey shows that, on virtually every measure of economic well-being and career attain- ment (including personal earnings, job satisfaction, and the share employed full-time), young college graduates are outperforming their peers with less education.
However, these skills come with skyrocketing costs even as students under 30 years old are increasingly taking on loans to finance their education. A New York Fed report shows total student loan debt for those under 30 grew from $144 billion in the first quarter of 2005 to more than $322 billion in the fourth quarter of 2012. During the same period, the number of people under 30 who borrowed to pay for their education increased from 10.8 million to 15 million.
Overall increased enrollment levels explain, in part at least, the larger number of people borrowing to finance higher education, but student borrowers have taken out much higher amounts: from 2005 to 2012, the average per capita amount of education-related debt that Americans under 30 took on went from about $13,000 to $21,000, ac- cording to New York Fed data.
In fact, even as every other kind of debt generally decreased throughout the Great Recession, student loan debt was a clear outlier. The total amount of student debt for all age groups went from just shy of $300 million in 2004 to just over $1 trillion by the end of 2012, according to New York Fed data. At no time during that period did student loan balances decrease.
Millennials make up the best-educated generation in U.S. history, with a little more than a third of those ages 25–32 holding at least a bachelor’s degree. By comparison, in 1965, 13 percent of the same age group held degrees. A Pew Research survey on young adults, education, and earnings says that as the share of college graduates has grown, their degrees have also become more valuable: between 1965 and last year, the median annual earnings of college graduates ages 25–32 grew from $38,833 to $45,500 in 2012 dollars, a nearly $7,000 increase.
The combination of more millennials earning degrees and the premium for those degrees increasing might therefore lead you to conclude that they earn considerably more than previous generations of young adults, but overall they don’t. The overall median annual earnings of today’s millennials ($35,000) aren’t too different from the earnings at comparable ages of the baby boomers ($34,883) or the generational cohort after them, often referred to as Genera- tion X ($32,173).
Chosen excerpts by Job Market Monitor. Read the whole story at The Economic Plight of Millenials
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