It’s often difficult for young people to make the transition from the more certain world of college to the working world—or even graduate school—where “doing your best” isn’t always enough and choices aren’t always clear. Drew Lichtenberger, whom I met on a generations chat board when he was 28, called the pervasive malaise of his generation “the twenties beatdown”—and that was before the late 2000s recession. When he was starting his first job in business and his then girlfriend was in law school, they talked frequently about how their 20s were turning out to be much more challenging than they’d expected. Even his friends who were successful wondered about fulfillment, asking, “Is this what I want to do with my life? Is it meaningful enough?” His summary of his friends’ 20s experiences was “they used to be supersuccessful people and now they’re just freshmen in life.”
THE NEW ECONOMICS
This is the scenario for young people today: To get a decent job, you must have a college degree, preferably from a good school. It is harder to get into a good college, and it’s more expensive. Once you get in and graduate, it is difficult to get into graduate school and sometimes even more difficult to find a job. Once you find a job, corporate downsizing and restructuring create the constant threat of layoffs. By the time you’re in your 30s, career pressures are compounded by the demands of raising children when both of you have to work to pay the bills.
It is easy to say that this is just GenMe whining; things have always been tough—stop complaining and deal with it. Looked at objectively, however, things are harder now for young people. The age distribution of wealth has changed markedly in this country: between 1984 and 2011, the wealth of older adults in the United States increased 37% when adjusted for inflation, while younger adults’ wealth fell by 44%. As the Pew Center’s Paul Taylor puts it, “Millennials and Xers are not only in far worse financial shape than Boomers and Silents now, they are also in worse shape than these older generations were back when they were at the age that Millennials and Xers are now.”
In addition, income inequality has raised the stakes for getting by, creating a bigger divide between the haves and have-nots. It’s not just that the rich are getting richer, it’s that the rest of us are getting poorer. It was once possible to support a family on one middle-class or even working-class income. No longer. Many blue-collar jobs with good wages have been shipped overseas, and many white-collar jobs don’t pay that well either. “You need a college degree now just to be where blue-collar people the same age were twenty or thirty years ago,” says sociologist James Côté.
Anne, 20, has experienced this firsthand. “When my parents were growing up, all they really needed was a high school degree to get by, but now things are so much harder, and the pressure is put on you to go to college and get a degree,” she says. “It seems more people in today’s generation are depressed because they can’t achieve their dream of owning their own house because the world has become so much more competitive.” The link to mental health issues is more than theoretical: women living in states with greater income inequality—where the rich are richer and the poor are poorer—are more likely to be depressed. The effect held even when the researchers controlled for other factors such as age, unemployment, and education.
Feeling surrounded by wealth when you’re struggling to get by is depressing. That’s exactly the change of the past decades: since 1970, the share of the wealth held by the top 1% has more than doubled, from 9% to 23%. The top 10% once held about 33% of the wealth; they now hold a full 50%. A shocking 96% of the growth in incomes between 1981 and 2008 went to the top 10%. The median wage of American men declined 28% between 1968 and 2010. Even before the late 2000s recession, incomes for the middle class were declining. Then they plunged another 12%.
These days, the essentials are astronomically expensive: education, housing, day-care, and health-care costs have all far outstripped inflation—so much so that more young people than ever live with their parents well into adulthood.
Most GenMe’ers begin their foray into adulthood by starting college—and soon learn just how expensive that can be. Americans now owe more in student debt than they do on credit cards. In 2010, 40% of all American families headed by someone under 35 had student loan debt, more than double the 17% who carried student loan debt in 1989. College students in the 1960s or even the 1980s could work their way through school with part-time jobs; that’s virtually impossible now that yearly tuition, books, and room and board total $44,750 at the average private university and $22,826 at the average public university. Total cost for four years: over $179,000 for a private college and $91,304 for public.
Today’s young people are the most highly educated generation ever—more than 30% of people between the ages of 25 and 39 have a college degree. But all of that education comes at a price. Student loan debt has doubled just since 2007; the average member of the class of 2013 owed about $27,000. And that’s just undergrad; add graduate or professional school loans and things get even worse. Sarah, 29, wrote, “I have a TON of debt from my law school loan. Think six digits.” Casey, 25, describes his English degree as a “framable bill” for $33,000.
After writing the check to pay the installment on the student loan, it’s time to write the hefty check for the rent or mortgage. That check is a much larger chunk of the budget than it once was. In 1960, only 12% of renters paid more than 50% of their pretax income for rent, but by 2009 the figure had doubled to 25%. Casey, the college graduate, finally found a job paying about $1,200 a month; rent on his one-bedroom apartment was $700 a month. This is a relative bargain. The median rent in San Francisco was $3,475 in 2013 (and not because places were huge: the average for a one-bedroom was $2,800). Rent in New York City averages over $3,000 a month. The median rent for a one-bedroom in Chicago’s Lincoln Park neighborhood will run you $1,550. The median rent in LA County is $1,435. Yes, these are the big cities, but they are also where most of the jobs are, especially for young people. In San Francisco, even the middle to upper-middle class finds rent unaffordable. Former mayor Art Agnos says that the main struggle is “to keep people who make between $60,000 and $150,000 a year.” When those making six-figure incomes are struggling to pay the rent, there’s clearly a problem. And what about the truly low income? As Agnos says, “Frankly, it’s all but over for the poor in this city.”
Buying a house is little better. In 1970, the median home price was about three times the median household income. In the mid-2000s, at the height of the housing boom, when many older GenMe’ers and young GenX’ers bought their houses, the median housing price was six times the median income. Even after the crash, the median home price (around $200,000) is still four times the median income. Even after millions of foreclosures, housing still eats up a larger portion of young people’s paychecks than it did in the 1970s. And that’s just for an average home, presumably in an average school district and an average neighborhood (which often means not very good on either count).
Those who bought at the peak are even less fortunate, with many losing all of their savings and good credit in a foreclosure or paying the mortgage on a house worth 30% less than what they paid for it. Before the crash, the conservative advice was to buy a house if you thought you would stay for at least seven years, because based on historical trends that was more than enough to protect against the ups and downs of the housing market. In 2013, seven years after the housing crash of 2006, most people who bought that year were still living in a house worth less than what they paid—or, worse, they foreclosed or sold at a loss.
Jennifer, 29, is a teacher near Boston. Scanning the newspaper for houses, she would read the ad if the price was under $250,000. “Usually, I would get only a few syllables into it and would ultimately hit one of the following words: condo, duplex, mobile home, fixer-upper, or handyman special,” she says. When she and her husband went to see the few homes in their price range, she says that the ads should have read, “This pile of rotted wood offers 4 rooms and resembles a double-
wide trailer. You can store all kinds of crap that you don’t care about in the musty, damp cellar that looks like something out of a horror movie” or “Very small house just a few miles into the ghetto. You’ll be the envy of your neighbors as they push their shopping-cart homes by your overpriced dump.”
Some people have asked me if young people’s complaining about the cost of housing was just another sign of entitlement. I didn’t think so, given how housing costs had outpaced inflation in most places. Now, fewer people make that comment, perhaps because even people making six-figure incomes struggle to pay the rent in some large cities. There’s also much more awareness of income inequality now, after the Occupy protests and the bailouts that protected the rich while the rest of the population saw shrinking incomes. True, GenMe’s valuing becoming “very well-off financially” may indicate some entitlement. But wanting to afford the rent on a one-bedroom apartment, not so much. (And, yes, it’s possible that high expenses are the reason why GenMe values money so much. However, 90% of the 2010–12 high school senior sample expected to own as much or more than their parents, suggesting not all of their overly optimistic materialism is based on practical considerations.)
Another counterargument: some have pointed out that homes are larger now on average than they were in the 1950s and 1960s. However, this has been driven by McMansions at the high end of the market, not the ridiculously expensive—and often small—houses GenMe is buying. Even though houses are larger on average, even one-bedroom condos and apartments are out of reach for many people in many cities.
A tale of two housing markets. A young couple poses outside their newly purchased house in Minneapolis, Minnesota, about 1,450 square feet and built in the 1930s. Price tag: $300,000.
A housing development in San Diego, California. Despite their proximity, each of these three houses of 1,300 to 1,700 square feet is worth at least $400,000.
Affordable housing is increasingly scarce even as wages for service workers remain low. In Nickel and Dimed, Barbara Ehrenreich reports that the service industry workers she met often lived in their cars because they couldn’t afford even a small apartment. Even borderline-affordable apartments were difficult to find, so during much of her yearlong experiment as a service worker, Ehrenreich lived in fleabag motels. “Something is wrong, seriously wrong, when a single person in good health . . . can barely support herself by the sweat of her brow,” writes Ehrenreich. “You don’t need a degree in economics to see that wages are too low and rents too high.”
Many in GenMe don’t even try to afford rent. A stunning 1 out of 3—36%—of GenMe’ers (ages 18 to 31) live with their parents. That includes 56% of those between the ages of 18 and 24, and 40% of men under 31. Many young people simply cannot find a job. Unemployment for Americans ages 20 to 24 was 13.4% in the first half of 2013, twice as high as the rate for those ages 25 to 54 (6.5%). Even for those who find jobs, expenses such as rent and student loans often overwhelm their meager resources. This was true even before the late-2000s recession. “I graduated from college with honors in three years but could not find a job that allowed me to become financially independent,” wrote Tricia Engelhardt in a letter to Time in 2004. “So I moved back in with my parents. I was surprised to find that the majority of my high school class had done the same thing.” By 2013, things were even worse. “When my parents were my age, they had their own place already, and they came from Mexico,” Patricia Guerra, 24, told the Los Angeles Times. “I’m a US citizen with a college degree—and it’s really hard for me to achieve that for myself at this point.”
The LA Times profiled Andrew Post, an academic superstar who began college at 13 and earned a law degree by 22. At 24, he was living with his parents. In 2010, the year he graduated from the University of Southern California’s law school, he says, “I competed with three hundred people in my year for the attention of only seven private employers and a handful of government agencies.” Unable to find a job, he freelanced as a lawyer for small-business clients. “There were times when I had to decide on whether to buy enough gas to get back to court or buy lunch. The last time I went to court, I was wearing something I got at Goodwill. The two lawyers on the other side were each wearing suits worth more than my car.” Post did finally find full-time employment as a programmer for a website operator, but will continue to live at home, primarily because his student loans total $215,000, with a minimum monthly payment of $2,756.
For those who do manage to pay the rent or the mortgage, where does the extra money for housing come from? Primarily from women’s salaries. Many families have been able to stay afloat mostly because both adults are in the workforce. Summarizing data from several large studies, political scientist Robert Putnam concludes, “Virtually all of the increase in full-time employment of American women over the last twenty years is attributable to financial pressures, not personal fulfillment.”
The dual-income formula works—until the woman (or the man) wants to take some time off to care for a child. With shrinking incomes and higher basic expenses, this is becoming a virtual impossibility for many families. Several couples I know live in apartments or commute two hours to their jobs because that’s all they can afford on one income. My childless friends wonder how they will be able to stay in their homes (or buy one) after they have children, given that they both have to work to afford the mortgage payment and the prohibitive cost of full-time day care for an infant (usually $1,200 a month or more—for each kid). The cost varies from state to state, but as of 2010 full-time yearly care for an infant was $11,823 in California, $14,980 in Massachusetts, and a stunning $20,178 in Washington, DC (perhaps because big cities have the highest costs). For the average single mother, day care costs for an infant will eat up 38% of her income. For a family making twice the poverty level (about $37,060), child care for two children would require almost half of their income. When I told my undergraduate class the price of day care, they were stunned; most guessed it cost about $500 a month. I heard a woman in the back row exhale audibly. “I’m not having kids,” she said ruefully.
In 35 states and DC, child care for an infant costs more than in-state tuition at a public university; even for 4-year-olds, child care costs more than tuition in 19 states and DC. Child care center fees for two children (an infant and a 4-year-old) cost more than rent in all 50 states and DC. It’s difficult to overestimate just how stressful looking for—and paying for—day care is on young families. It is a frequent topic of discussion among pregnant women on message boards. Over and over, women expressed surprise and shock at the outrageous price of day care; most had no idea how expensive it was before they made a few calls. Words such as nightmare, insane, freaked-out, and scary were frequent. Describing a day care facility that charged $845 a month, Lauren, 23, wrote, “I nearly choked.” Alexandra, 27, responded, “I want to live where you live,” explaining that day care was at least $1,000 a month in her city. Many also found long waiting lists and numerous day cares that didn’t take infants under six months, or even two years old. With most paid maternity leaves lasting only six weeks (and that’s if you even get paid maternity leave), this is a big problem.
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Health care costs are also astoundingly high. Even people with good jobs often find themselves paying $500 a month or more for their family’s health care premiums—if they have health care at all. The self-employed can lay out over $1,000 a month for just a basic health care plan. And the cost keeps going up: health care premiums have nearly doubled since 2001. Even people who have coverage can run into serious financial trouble if they or their family members develop major health problems. People profiled several families, even some with health insurance, who went bankrupt after unexpected medical crises. It remains to be seen whether the implementation of Obamacare will improve these issues.
Many older people seem to have only a faint grasp of how much it costs to raise a family these days, which can subject many young parents to guilt-inducing advice. The current trend is toward a
ttachment parenting, in which you “wear” your baby in a sling, breast-feed for at least a year, and sleep in the same bed with your child. Some of this is still possible if you’re working, but William and Martha Sears, the high priest and priestess of attachment parenting, make it clear that this is not desirable. In The Baby Book’s 2003 edition, the Searses recommend that couples get used to living on one income before the baby arrives so they don’t get too accustomed to having two salaries. (Are they kidding? Most of GenMe is “accustomed” to the mortgage payment eating up one entire salary.) Mothers should stay at home if at all possible, they say, and children under a year should not go to day care centers because of the risk of infectious diseases. Their subheading “I Have to Work—We Need the Income” is placed in quotes as if to question its veracity, and it’s followed by advice on how this might not be true—you probably only need that second income for “desired luxuries,” they say.
When I read this, I wondered how the authors could be so clueless about housing costs. I turned to the back of the book to scan the “About the Authors” blurb, thinking perhaps the Searses lived in Dallas, Indianapolis, or another undervalued housing market. Nope. They live and practice in San Clemente, California, where (as of October 2013) the least expensive two-bedroom condo was going for $300,000, and the least expensive single-family house cost $449,000 (and this winner had power lines running through the backyard, was 954 square feet, and had just two bedrooms). Three-bedroom houses in San Clemente usually sell for well over $500,000. Yes, this is an especially expensive place to live, but many large cities—the places where most of the jobs are—are not far behind. Unless you’ve married someone making over $100,000 a year when you’re ready to have kids, learning to live on one income is going to mean learning to raise a family in a small apartment (and even that will set you back $2,000 a month in their town). So when the Searses talk about doing without “desired luxuries,” do they mean a place to live? What a great idea for the new century—let’s all quit work, wear our babies, and live in a cardboard box on the street. (C’mon, kids, it’ll be fun!) At least we’d be “attached” to our children, though I bet they’d get a few more infectious diseases than they would have caught at day care.
Generation Me--Revised and Updated Page 18
