Millennials have been called everything from self-absorbed to lazy. Pundits have speculated on why America's youngest adult generation isn't buying cars and homes, getting married, having sex or children. Few are willing to point out, however, just how disadvantaged young adults are today.
One of the uniquely American beliefs is that each generation will do better than their parents—the janitor’s daughter becomes an accountant, the home care worker’s son becomes a teacher, or in my case, the steel worker’s daughter becomes a think-tank executive.
For much of our nation’s history, this kind of upward mobility was routine, as public investments in the post-war era created a middle class the likes of which the world had never seen. These investments overwhelmingly benefited white Americans, as Jim Crow and legal discrimination prohibited African Americans from enrolling in four-year colleges or buying a single-family home in the suburbs. The Civil Rights Act of 1964, which outlawed discrimination in the job market based on race, ethnicity, or gender—created a significant black middle class for the first time in our nation’s history. But the economic gains, particularly for black Americans, would not hold as a backlash against this progress propelled conservative economics into the political mainstream.
With the election of Ronald Reagan in 1980, the conservative orthodoxy of anti-spending, anti-taxes, and anti-regulation would begin its three-decades-long dominance in state and federal policymaking. Generation X, my generation, would be the first to feel the effects of a shrunken safety net, decreased public investment and deregulated financial markets. Families like mine, best described as blue-collar middle class, became an endangered species and today are nearly extinct.
But it is the millennial generation, those born between 1981 and 2000, that would absorb the accumulated effect of three decades of trickle-down economics and laissez faire ideology. By almost any economic indicator—college attainment, wages or wealth—millennials are, and will likely continue to, fare worse than their parents.
One of the most profound generational shifts has been declining wages for people without college degrees and stagnant earnings for those with degrees. Today, the typical 25- to 34-year-old with a high school diploma earns $5,000 less than they did in 1980, after adjusting for inflation. Annual earnings have risen slightly for those with bachelor’s degrees or higher, rising from close to $49,000 in 1980 to $52,000 in 2014—modest growth that doesn’t remotely absorb the student debt payments that are now required to obtain a college degree. These trends were well underway before the Great Recession hit, as I documented at length in my 2006 book, Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead. The recession only intensified the generational decline in job quality and economic security that bruised Generation X and walloped millennials.
By almost any economic indicator—college attainment, wages or wealth—millennials are, and will likely continue to, fare worse than their parents.
Aggregate income trends mask substantial differences in earnings and employment by race and gender. For example, the typical young white worker earns about the same as their counterpart a generation or two ago, while the average millennial black and Latino worker earns slightly less than previous generations. Women’s earnings have increased thanks in large part to the percentage increase of millennial women with college degrees compared to previous generations. The story is different for young men who today earn more than $7,000 less annually than their dads made in 1980—a trend driven largely by the loss of good-paying manufacturing jobs for millennials without bachelor’s degrees.
Not only have millennial paychecks taken a beating—finding a full-time job has become harder, too. Seven years into the economic recovery, the percentage of part-time workers looking for full-time jobs is higher for millennials than it was for any other generation at this age, with a full 36 percent of part-time young workers in need of full-time jobs.
Today, the United States has the highest percentage of low-paid workers of any advanced nation as a result of decimated unions, the declining purchasing power of the minimum wage and historic inequality in both our political and economic systems. Rather than our democracy writing the rules for capitalism, capitalism is writing the rules for our democracy, and millennials are paying the steepest price.
For generations, our nation made steady progress in making college affordable for all who wanted a degree. For the baby boom generation, that meant well-funded public universities where a minimum-wage job combined with federal grants made it possible to pay tuition without going into debt. But that was then. Today, state higher ed. funding—which used to be the primary source of revenue for state colleges and universities—is at a 25-year low. As a result, tuition has risen substantially, shifting the burden of paying for college away from us as a society and firmly onto the backs of students in the form of college debt.
Rather than our democracy writing the rules for capitalism, capitalism is writing the rules for our democracy, and millennials are paying the steepest price.
Overall student debt in the economy has increased from around $260 billion in 2003 to nearly $1.3 trillion today. While most students who graduated in the early 1990s did not take on debt for their degree, 7 in 10 millennial college students borrow today. But this debt-for-diploma system does not affect all millennials equally: Black students borrow more often and in higher amounts than white students, even at public colleges and universities. And the lowest income students—those who receive Pell grants—are far more likely to also need to borrow than their non-Pell receiving friends.
But taking out loans to pay for school is risky—especially given that one in three borrowers drop out of college. This problem is particularly pronounced at for-profit institutions, where two-thirds of black and Latino student borrowers drop out of four-year degree programs. As a result, millions of millennials are carrying student debt without the pay-boosting benefit of a college degree.
The millennial generation is the first generation in American history for whom debt is now required to obtain a college degree. This cost shift occurred at the very same time the demographics of college students changed to become more female, black, and brown—creating a system that today hardens racial and class privilege rather than ameliorating it. And the negative impacts of student debt don’t just occur during the “college years.” Households with a college degree and no debt have nearly $100,000 in average retirement savings, while college-educated households with debt have less than half that. Demos has previously found that even average levels of student loan debt may result in the lifetime wealth loss of more than $200,000, namely from lost retirement savings.
In the span of two generations, our nation has experienced declining economic mobility, rising inequality and widespread economic anxiety. These trends hit the working class first but inflict plenty of damage on the college-educated professional class too. How? Because the philosophy that allows employers to schedule their hourly workers week to week, with little advance notice, is the same philosophy that allows employers to expect their salaried workers to be “on” 24/7.
The policies that stripped away our factories are the same policies that are now yanking professional jobs out of the country. The political hostility toward people who are down on their luck and need help buying food is delivered by the same politicians who drastically cut higher-education funding. It’s an economic and governing philosophy that prioritizes profits over people, private interests over the public’s and austerity over investment. That’s the economic context in which millennials find themselves as they try to work and educate their way into the middle class. It isn’t working very well.