In this blog, we attempt to explain where are youth are compared to the past generations. Like pigs in a python the millennial (born between 1980 and 1999) and Gen Z (now in college and younger) are the largest generation since the baby boomers and the ones to watch to impact our economy and certainly employment. Millennials are the most-educated generation ever. This is the age when generations start working and moving into adulthood. There are many challenges facing job applicants, millennials, career opportunities and the job market today We are attempting to connect the dots where many pundits seem to be challenged by comparisons to past generations. So here are the facts or you can skip down to our conclusions of where we go from here.
The Job Market-There are jobs today! By most measurements there are not enough qualified workers to fill over 4 million job listings that are challenged to find qualified candidates. An example:73% of contractors surveyed in January 2017 said they had “a hard time filling salaried or hourly craft construction jobs” in 2016 (source: Associated General Contractors of America). In 2016, the Millennials are 35% of the work force (largest generation working). In theory and as a percentage of the population this able-bodied group should be the productivity machine of the country.
Less men are working over the last 50 years. The work rate of U.S. men twenty and older fell from 85.8% to 68.2 percent in 2015 over 65 years.
The work rate for women in the same age group has gone from 34% to over 60%. The rate peaked in the 1990’s
Since 1960 the number of dual income households has doubled.
In 1960 divorce rates were 22% today they approach 50% (Census Bureau.
There are 153.0 million employed Americans. Many Americans are not looking for jobs out of frustration of diminished job opportunities, even after the end of the recession in 2009 as seen in the overall participation rate above. So why is this with so many available jobs? A Startling fact- Deaths from drugs, alcohol and suicide have caused middle age mortality to rise at such a rate that in 2015 and again in 2016 life expectancy of the entire U.S. population is now lower!
Education- The number of millennials born between 1980 and 1999 is 83 million (1990 was the peak birth year of 4.2 million babies who are today 26 years old). Every year, over three million youth drop out of school. They join the 6.7 million youth between the ages of 16 and 24 who are neither enrolled in school nor participating in the labor market. Just under 70% of graduates from high school enrolled in college or around 3.1 million students in 2016(US Labor Department). This matriculation is near its highest levels ever. Less than 60% of bachelor degree students graduate within 6 years. About 7 of every 10 college graduates now borrows to pay for higher education, up from about half in the 1990s (EAB Daily Briefing)
After Education- Unemployment rates of college graduates out of school less than five years are consistently 10 percent and underemployment rates near 20 percent. More 18-34-year-olds (24 million or about 1/3 of total) live with a parent than with a spouse (The Changing Economics and Demographics of Young Adulthood). Among 25-34-year-olds living at home 25% of those are not in school or working and 26% are married by age 32 (Pew Research Center).
73% of 24 year olds have drivers licenses
Auto loans have doubled since 2010
- 41% of males 25-34 had incomes less than $30,000 (Center on Education and the Workforce)
- 70% of students worry about their finances(Bloomberg) 59% have no idea how they will pay off their student loans (research agency TNS)
- 75% of Business majors have participated in a paid job or internship. Only 23% believed they could apply what they learned in a classroom. Less than a third of undergrads had an internship in their course of study (Gallup-Purdue University)
- 37% of employed college grads are in jobs only requiring a high school diploma (U.S. DOL)
- Over 65% of Bachelor degree recipients have outstanding loans with Average debt of over $27,000 (Pew Research Center). Average college grad debt is $33,000(NCES)
- Over 40% of student and parent loans are delinquent-total $200 billion. 42 million Americans collectively owe more than $1.3 trillion (US Department of Education).8 million Americans owe 137 billion at least 365 days’ delinquent owned or guaranteed by the U.S. Department of Education. The amount of the average Parent Loans is increased 60% in 15 years (College Board)
- The number of parent plus loans has doubled in past 10 years to over 3 million. There are no credit score qualifications for these loans. The percentage in default has tripled. The number requiring garnishment has quadrupled (U.S. Department of Education).
Where do we go from here?
“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.”
– John Adams, 1826
Today’s college graduates are part of the largest educated generation. But with that appears to come some luggage. The return on education seems to be dropping. A millennial with both a college degree and college debt earns about the same as a boomer without a degree did at the same age (Federal Reserve). The Census bureau estimates they earn, even with a full-time job, $2,000 less in real dollars than the same age group made in 1980. Wages for the typical recent college graduate working full time have risen just 1.6 percent over the last 25 years, after adjusting for inflation, (Federal Reserve Bank of New York). Millennials as we see from the numbers above face far longer period of unemployment and suffer low rates of labor participation.
Around half of students borrowed for their education during the 2013–14 school year, up from around 30 percent in the mid-1990s. The massive amount of debt they have accumulated, not just in student, but also in auto loans and other types of debt is under any definition a burden and to think this doesn’t have a behavioral impact is just naïve. Student debt burdens for the typical bachelor’s degree recipient who borrowed for college have increased about 163.8 percent.
Stagnant wages and the jump in debt levels risks slowing U.S. economic growth as households reduce their spending to make their debt payments. According to Zillow, for workers between 22 and 34, rent costs now range from 30 to 45 percent of income in metropolitan areas. in New York, the median rent-to-income ratio is frequently above 50%. The costs of purchasing a house are even more lopsided.
Consumer debt is affecting lifestyles not by choice but economics. High debt, high housing prices and low incomes are creating the “sharing economy” so many pundits affectionally call it today. This is not a chosen path as all ages are feeling the pinch. Helicopter parents have taken on debt also as we see above and at ages that have changed the elderly’s balance sheets. Students and their parents are struggling with debt as the delinquencies show. As the group gets older they are borrowing more (especially as a percentage of income) for cars. Add the student loans and the car debt and the result is now that credit card debt is growing and the economy is stagnating. The “Pig in the Python” is the changing behavior moving thru our population because of these circumstances.
Millennials aren’t buying homes and the theory goes it is because of their practicality and a lifestyle choice. REALLY! Roughly 80%, including most renters, express interest in acquiring a home of their own. Many are attracted to the idea of raising a family (often at an older age) a major motivation for home ownership. Roughly 80% of millennials say they plan to get married, and most of them are planning to have children. Many of their major decisions are moving back in age and life. This is not a lifestyle choice. It is economic reality. They are also unaware of a need for health insurance. Is this an economic choice or do they really feel they are invincible?
This situation is 15 years in the making back to when millennials first came out of college. Starting in the early 2000’s, the bubbles in consumer debt (credit cards and mortgages) were the result of helicopter aged parents spending. This was the generation of baby boomers that started pushing college debt increasingly on their children. This was the first bubble (remember the Y2K era). In the 1960’s there truly was a lifestyle change. In the 2000-2001 malaise, increase in debt was the result of a washout in the markets. But another interesting thing was happening. Dual income households took off and more men of working age stopped working. Divorces were increasing and the definition of the family roles were going thru their largest changes not only in a generation, but with the help of technology this family change was unprecedented. Many of the charts and facts above point to this period when parenting and the resulting behavior by a young generation was transformed.
We are seeing a change with Generation Z (currently in college) as they look at their older brethren. In our next blog, we will discuss the challenges and some solutions. We will reference many of these facts the most important of which we believe to be the increased drug use and suicide rates which seem to be directly tied to the behavior course change started in the 2000’s.
We hope you will give us your feedback.