James Roy dropped out of college and now works at a coffee shop in a Chicago suburb. The 26-year-old calls his outlook 'kind of grim.'
More Demanding Jobs, Coupled With Recession, Have Postponed Young Americans' Entry Into Workforce, According to New Report
The on-ramp to adulthood is delayed and harder to reach for young people today, a reality that is changing the country's society and economy, according to a new report.
More demanding job requirements, coupled with the pressures of the recession, have delayed the transition to adulthood for young people in the past decade and earned them the title of "the new lost generation," according to the report from the Georgetown University Center on Education and the Workforce, published Monday.
James Roy, 26, has spent the past six years paying off $14,000 in student loans for two years of college by skating from job to job. Now working as a supervisor for a coffee shop in the Chicago suburb of St. Charles, Ill., Mr. Roy describes his outlook as "kind of grim."
"It seems to me that if you went to college and took on student debt, there used to be greater assurance that you could pay it off with a good job," said the Colorado native, who majored in English before dropping out. "But now, for people living in this economy and in our age group, it's a rough deal."
Most economists agree that in general, more education is a positive factor for job seekers, though rising college costs are prompting young people to take a hard look at where to go and what to study.
Through analyzing about three decades of census data—from 1980 to 2012—the study found that on average, young workers are now 30 years old when they first earn a median-wage income of about $42,000, a marker of financial independence, up from 26 years old in 1980.
About a third of adults in their early 20s work full time, a proportion that rises to about half of adults in their late 20s. The labor-force participation rate for young people last year declined to its lowest point in about 40 years, according to the report.
The decline in employment among young people mirrors a drop among the broader population. The share of U.S. adults who work peaked at nearly 65% in the late 1990s and early 2000s, and has trended downward ever since. An aging population explains part of the decline, but even workers in the prime of their professional lives are less likely to work today than a decade ago.
In recent decades, the U.S. has seen a gradual outward shift in people's professional lives: Americans today tend to start work later and continue working longer than in past generations. A decade ago, a boy in his late teens was twice as likely as a man his grandfather's age to hold a job; today, the teen is actually less likely to be working.
For young people, the delayed entry into the world of work is partly a reflection of the recent recession, but it is also driven by long-term trends, including more jobs that require advanced skills and fewer high-paying factory jobs that required little more than a high-school diploma, the report found. The "new knowledge economy" has spawned more internships and bite-size credentials as a result.
"The combination of structural change plus this particular recession has been devastating for millennials," said Anthony Carnevale, director of the center and co-author of the report. Mr. Carnevale estimates, by modeling previous recessions, that today's young people will lose a minimum of 3% in earnings over their lifetimes. "It has really knocked them back, and some of these losses are permanent."
Between 2000 and 2012, the employment rate for people ages 21 to 25 dropped from 84% to 72% overall, with some demographics taking a bigger hit. Young men experienced a steeper decline, from 80% to 65%. The job rate for young workers without postsecondary education dwindled from 66% to 53%, and young African-Americans' peak unemployment rate after the recession reached 30%, double that of young whites.
"The millennial generation was the generation to confront this structural change first," said Mr. Carnevale. "It has sorted them out in ways that have made them more unequal than any generation before. For those who didn't get the traction [for a job], it's not clear that they will get the traction."
The delay in reaching adulthood will have a lasting impact on U.S. society and the economy, said Maureen Conway, executive director of the Economic Opportunities Program at the Aspen Institute, an education and policy-studies nonprofit. "They are not out there making these typical, middle-class expenditures," she said. "That is a huge problem when you think of where demand is going."
To rectify the situation, Ms. Conway said employment practices need reform. "I believe that education and training is necessary but not sufficient. We need to start looking more broadly at the economic system." She advocates asking more of employers in terms of workplace rules and minimum wages.
Some economists contend raising the minimum wage would boost business costs and reduce the number of jobs.
Others point to the need for alternative routes to jobs besides a college degree. Jonathan Njus, a program officer at the W.K. Kellogg Foundation, a nonprofit based in Battle Creek, Mich., said that the challenges for young parents who stumble in their postsecondary educations are going to trickle down to their children's lives as well. "The lack of mobility leads to a lack of stability for the family," said Mr. Njus, who focuses on disadvantaged families. "We have to develop alternative pathways and innovative tools to bridge routes to the employers that will meet their needs."
The study also found that older adults are delaying retirement to work longer and reap the benefits of larger salaries. This is particularly true for older women, as their employment rate rose 17 percentage points between 1986 and 2012. "There is no generational contest," said Mr. Carnevale, who added that older people who work will create 22 million more jobs for younger adults by 2020, partly by launching businesses, while older people who retire will open up 33 million new spots for younger people by 2020.
For Connor Hughes, the first few years after high school were a struggle. "It was pretty intimidating, especially because there was so much pressure to just go to college after high school," said the 24-year-old, who sells shoes at a retail store part-time in St. Charles. He left community college after a year, citing student loans and uncertainty about his purpose there. After selling cars for a year and being trained as an emergency medical technician, he now plans to finish an accelerated bachelor's degree in nursing in three years, taking on at least $50,000 in debt.
"Right now I feel pretty good," said Mr. Hughes, who lives with his parents, a nurse and an electrician, and hopes to do so until he graduates at age 27. "As soon as I can, I am going to leave the nest."
"I feel pretty confident about the future. Now that I know that nursing is my passion, plus the fact that it is in high demand, is very exciting," he added.