Millennials' American Dream Slipping Away
This commentary originally appeared in The Potpourri on Tuesday, November 19, 2013.
As Millennials, we understand the alarming challenges facing many of our family and friends who were born between the early 1980s and early 2000s. Devastatingly high unemployment, daunting student loan debt, and soaring health premiums are reasons why many Millennials are pessimistic about their future. Without faster economic growth, higher education affordability, and a health insurance market that works, this generation will find their American Dream slipping away.
Our early years of employment were excellent opportunities for on-the-job training, learning what we enjoy (and what we don’t), and earning income to help pay for a car, college, and other choices we made. Although we had several jobs during our search for a preferred position (and one of us is still searching), we understood there was a price to pay for setting the foundation of our career. While we are still early in our careers and do not know what the future holds, these early earning opportunities were excellent stepping stones for our future.
Unfortunately, we know, and surely you do too, many teenagers and young adults who are not able to have these same opportunities.
Regarding their labor market woes, the U.S. Bureau of Labor Statistics recently released the nation’s October jobs report indicating those between 16 and 24-years-old have rates of labor-force participation (55 percent) and employment-to-population (46 percent) at lows not seen in 60 years and an unemployment rate (15.1 percent) more than twice the national average.
These data points crystalize the abysmal labor market facing this group, making it difficult for a Millennial to gain on-the-job training, increase their lifetime earnings potential, and control their choices—all hindering their path to prosperity.
Making the situation worse for those who attended college, a Millennial owes a staggering average of $27,000 for student loans, with total student loan debt of just over $1 trillion owed across the U.S. recently surpassing credit card and auto loan debt totals. Despite the federal government nationalizing the student loan market and capping interest rates, tuition rates continue to skyrocket and there is little slowdown in sight, indicating little hope for those with student loans and a large burden on their choices.
Also inhibiting a Millennial’s livelihood are higher health care costs under ObamaCare. Although many can now keep their parent’s health care coverage until they are 26, those whose parents do not have health insurance must purchase their own coverage or pay a penalty starting next year and those who will soon be 26 will face a frightening 158 percent increase in health care premiums in Texas compared with pre-ObamaCare’s lowest cost catastrophic plans. With this group’s fragile financial position, this will cripple a Millennial’s chance of improving their financial situation.
All of these factors combined substantially reduce a Millennial’s chance of reaching their American Dream.
Home ownership, typically the cornerstone of the American Dream, is becoming a smaller priority for this generation. A credit.com poll shows nearly one in four 18 to 24-year-olds defined the American Dream as being debt-free; they were least likely to classify it as joining the top one percent or retiring financially secure at 65. Amid few job prospects and mounting costs in healthcare and education, it is no surprise living debt-free—rather than home ownership—is becoming the foundation of a Millennial’s American Dream; despite redefining it, 89 percent of the nation’s youngest adults claim they would live without debt at some point in their lives.
We all want a better outlook for those Millennials we know. Imagine the following situations: employers have policy certainty out of Washington, D.C. promoting job creation instead of hindering it; a higher education system providing students with educated choices of which major to choose and with lower college tuition that allows them to have control over their future; and a health care system that allows you the opportunity to design your own plan that is more affordable and provides more choices than ObamaCare.
While the typical American Dream seems further out of sight for Millennials, their optimism can be rejuvenated by free market reforms in higher education, health care, and across the nation that will provide a faster economic recovery and help Millennials grasp their chosen American Dream.
Vance Ginn, Ph.D., is policy analyst for the Center for Fiscal Policy with the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. He may be reached at firstname.lastname@example.org.
Alison Hern is a research associate for the Center for Fiscal Policy with the Texas Public Policy Foundation.