In the long series of bad news items about increasing income inequality, the plight of younger households often gets overlooked. This bit from Fivethirtyeight deserves special attention:
Young people were hit especially hard. Thursday’s report provided yet more evidence that today’s young people risk becoming a “lost generation” economically. The median family headed by someone under 35 earned $35,300 in 2013, down 6 percent from 2010 and down nearly 20 percent from 2001. Those figures may understate the magnitude of the problem: Many young people are living with their parents because they can’t afford to strike out on their own; they aren’t included in the Fed’s figures because they don’t count as their own households. Young people have also become less likely to own their own homes (35.6 percent listed their primary residence as an asset in 2013, down from 40.6 percent in 2007) and much more likely to have student debt (41.7 percent in 2013, up from 33.8 percent in 2007). Whether by choice or by necessity, young people are also taking fewer financial risks, holding more of their assets in cash and less in stocks.
Some analysts believe that these trends will push many Millennials toward conservative politics. I disagree. But regardless of the partisan politics, the question remains whether either party will actually provide solutions that work for Millennials.
Mention the problems of young households to a politician or pundit and they’re likely to talk about student loans and the minimum wage. It’s true that student loans are a huge burden and that the minimum wage needs increasing. But those two policy items are just the bare beginning of the problems facing Millennials in the new economy.
The bigger challenge is low wages and high cost of living–particularly in terms of housing. Older generations are fond of making fun of Millennials for claiming to be broke while buying the latest iPhone–but particularly in urban areas where most of the attractive jobs are, no amount of scrimping and saving will allow the average young adult to break into the real estate market or even afford a decent rental. So why not splurge on a gadget or some vinyl records now and again? It’s not as if most young people can make real financial progress toward the biggest goals without acquiring a job that puts them into at least the top two (if not the very top) quintile of American incomes.
Right now neither party is addressing that problem. There are a lot of young people who make above minimum wage and never went to college. There are a lot of hardworking young people without student debt burdens who are nonetheless struggling to just get by. And no policy solutions seem to be forthcoming for them. Republicans offer even more brutal economic libertarianism, while Democrats tend to continue to focus on inflating asset values while minimizing the damage to the elderly and those who are “left behind.”
There’s an untapped well of potential electoral energy out there for a politics that offers real solutions for an increasingly lost generation.