Friday, April 12, 2013

A Lost Economic Generation?

Young people have it pretty rough in this country right now. Most age groups and demographics do too, but the statistics are worth taking a closer look at:

  • Median net worth of people under 35 fell 37% between 2005 and 2010; those over 65 took only a 13 percent hit.
  • The national unemployment rate is 7.6%; For people between 20-25, it's 13.3%. For 18-19 year olds, it's 22.1% (remember these percentages aren't out of the total population, but rather the portion of the age group that are actively seeking work but can't find it.  And as this post from Young Invincibles points out, that $4.25 an hour internship or 20 hour a week bartending gig means, that in the eyes of the Bureau of Labor Statistics, you are very much employed.)

Why should we care? Aren't the young less likely to have obligations like mortgages, children, and aging parents? Take a look at this chart that shows how rising costs in education and health care, combined with sluggish earnings trend, is putting extra financial pressure on the nation's young people. 





As the gap between the top green line and the other three shrinks, young people will delay moving out on their own, making major purchases, and also be more willing to work those low paying jobs that America's hirers are more than happy to keep them in. 

For each year lost to unemployment, not only is that a year of forgone cash earnings, that are very likely to be spend to spur the economy as a whole, but it acts a drag on future earnings as well. Even with a more significant economic recovery, the lack of gained experience and skills could amount to a $20 BILLION LOSS  in earnings over the next decade. Of course that's lost taxable income as well, so advocates protesting the President's proposed cuts to safety net programs should probably consider advocating investing in the generation that's responsible for the tab of those benefits. 


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