GENERATION OPPORTUNITY
2 0 1 6 S TAT E O F T H E
1
Contributions by: David Barnes, Wesley Coopersmith, Jordan Richardson, Ja'Ron Smith
TA B L E O F C O N T E N T S P R E FAC E
06
R E FO R M S C R E AT I N G PAT H WAYS TO O P P O RT U N I T Y
09 15
CO N C LU S I O N
20
O B STAC L E S FAC E D BY YO U N G A M E R I CA N S
GENERATION OPPORTUNITY
P R E FAC E “He [the president] shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient.” -U.S. Constitution, Article II, Section III The annual State of the Union Address is arguably one of
Indeed, while previous generations experienced relative-
the most important events a president can use to influ-
ly stable growth and an improvement in their economic
ence public conversation about the agenda for the com-
condition, the Millennial Generation faces an uphill climb
ing year. In 1790, George Washington delivered the First
to success. In 2014, we saw a new wave of officeholders
Annual Message to Congress on the State of the Union,
come into power who we hoped would help lead us to bet-
where he joined with Congress in the “task of insuring to
ter times, but they have disappointed and passed budgets
our fellow citizens the blessings which they have a right to
and bills that have left our nation worse this year than it
expect from a free, efficient, and equal government.”
was last year.
For the past 225 years, every president has given an annual
Significant barriers to opportunity created by govern-
report on the state of the country and recommendations
ment impede the ability of young Americans to make a
for improvement. The American people have come to ex-
better life for themselves and their families. The number
pect that their leaders are aware of the problems facing the
of young people making less than $25,000 a year is at its
nation and are doing something about them. But recent
highest level since the 1990s.1
addresses have instead shown how out-of-touch our leaders are when it comes to the needs of my generation.
A FOCUS ON MILLENNIALS How the next generation of Americans are faring under the policies of the current administration is often overlooked or merely given lip service. General figures of employment or income are often cited as measures of the health of the economy, but these examples only provide an explanation for the average demographic, not what the upcoming generation is facing.
1 Drew Desilver, 5 Facts About Today’s College Graduates, PEW RES. CTR. (May 30, 2014), http://www. pewresearch.org/fact-tank/2014/05/30/5-facts-about-todays-college-graduates/.
6
Worse, 48 percent of Millennials now believe that the American Dream is dead.2 Despite challenges, there is hope for the next generation.
OVERVIEW OF REPORT Generation Opportunity’s 2016 State of the Millennial Report discusses the current economic state of young Americans and highlights key areas where government-creat-
2 Philip Bump, 48 Percent of Millennials Think the American Dream is Dead. Here’s Why. WASH. POST, Dec. 10, 2015, available at http://www.washingtonpost.com/news/the-fix/wp/2015/12/10/48-percent-of-millennialsthink-the-american-dream-is-dead-heres-why/.
GENERATION OPPORTUNITY
ed obstacles limit economic opportunity for Millennials. Finally, it outlines what policymakers should do to address those obstacles.
Obstacles Faced by Young Americans: In part one, we look at key economic indicators to better understand how Millennials are faring, particularly when compared to past generations and older Americans today.
Reforms Creating Pathways to Opportunity : In part two, we discuss four key areas where government-created obstacles are hurting young Americans and what to do about them. The Millennial Generation is the largest in history and will soon be voting in strength. It is time for this demographic to be understood.
—David Barnes
Policy Director, Generation Opportunity
7
GENERATION OPPORTUNITY
O B STAC L E S
8
GENERATION OPPORTUNITY
O B STAC L E S FAC E D BY YO U N G A M E R I CA N S
For the first time in American history, a younger genera-
For the young adults who have been able to find work,
tion may be left worse off than the one before it. By almost
40 percent are underemployed, either working part-time
every economic indicator, Millennials are struggling com-
jobs, contract jobs, or one-time gigs.6 While Millennials
pared to their older counterparts. According to the Pew
have a strong desire to start businesses, only 3.6 percent
Research Center:
of Americans under the age of 30 own or have a stake in a private businesses compared to 10.6 percent in 1989.7
Millennials are also the first in the modern era to have higher levels of student loan debt, poverty and unemployment, and lower levels of wealth and personal income than their two immediate predecessor generations (Gen Xers and Boomers) had at the same stage of their life cycles.3
Due to a lack of economic opportunity, young Americans experience higher levels of poverty than the generations that went before them at similar points in their lives. For early Boomers in 1979, only eight percent were living in poverty. For Millennials in 2013, the percentage of those living in poverty doubled to 16 percent. This observation holds true regardless of education attainment. Six percent of Millennial college graduates lived in poverty in 2013 compared to three percent of early
Currently, 18-29 year olds experience an unemployment
Boomers in 1979. Fifteen percent of Millennials with some
rate of eight percent. This compares to a more modest 3.7
college experience lived in poverty in 2013 compared to
percent for Americans over 29 years old. The struggle to
six percent of early Boomers in 1979. 22 percent of Millen-
find employment has left many young Americans out of
nial high school graduates lived in poverty in 2013 com-
the workforce entirely. The labor force participation rate
pared to only seven percent of early Boomers in 1979.8
4
for 18-29 year olds is 71 percent, the lowest it’s ever been, while over 1.8 million young adults have given up looking
Things are not much better today. On average, young high
for a job.
school graduates earn around $10.40 an hour, roughly
5
equivalent to $21,600 a year.10 For young college graduates,
3
2, 2015, available at http://www.wsj.com/articles/endangered-species-young-u-s-entrepreneurs-1420246116.
4
8 Comparing Millennials to Other Generations, Pew Res.Ctr. (March 19, 2015), available at http://www.pewsocialtrends.org/2015/03/19/comparing-millennials-to-other-generations/#!16.
The Rising Cost of Not Going to College, PEW RES. CTR. (Feb. 2014), http://www.pewsocialtrends.org/ files/2014/02/SDT-higher-ed-FINAL-02-11-2014.pdf.
Stephen Kent, 1.8 Million Able-Bodied Young Americans Gave up Looking for Work Last Month, Generation Opportunity Millennial Jobs Rep. (Dec. 4, 2015), http://generationopportunity.org/press-release/18-million-ablez-bodied-young-americans-gave-up-looking-for-work-last-month/. 5 Id. 6
jason abel, richard deitz and yaquin su, are recent college graduates finding good jobs? N.Y. Fed. Res. (2014), http://www.newyorkfed.org/research/current_issues/ ci20-1.pdf.
7
Ruth Simon and Caelainn Barr, Endangered Species: Young U.S. Entrepreneurs New Data Underscore Financial Challenges and Low Tolerance for Risk Among Young Americans, wall st. j., Jan.
9 New Census Bureau Statistics Show How Young Adults neighborhoods nationwide, american Community survey: 2009-2013, (DEC. 4, 2014), available at http://www.census.gov/newsroom/press-releases/2014/cb14-219.html 10
Alyssa Davis, Will Kimball, and Elise Gould, The Class of 2015: Despite an Improving Economy, Young Grads Still Face an Uphill Climb, Econ. Pol'y Inst. Briefing Paper No. 401(May 27, 2015), http://www.epi.org/ files/2015/the-class-of-2015-revised.pdf. 11
Id.
9
GENERATION OPPORTUNITY
average hourly wages are around $17.94, roughly equiva-
Thanks to an excess of laws and harsh penalties, the U.S.
lent to $37,300 a year.11 Median weekly earnings for full-
imprisons young Americans at an astonishing rate. Of the
time workers who graduated college from 2007 to 2014
nearly 2.3 million people in prison nationwide, Millenni-
have been stagnant, rising only six percent. This compares
als make up approximately 38 percent of federal inmates,
to a growth of 15 percent for all full-time workers over that
and more than half of all inmates in state prisons.20 Star-
same time period.12
tlingly, up to 41 percent of all young people have been arrested by the time they turn 23.21
Because of these economic hardships, many young Americans have altered or delayed significant life events. For
According to a study by University of Michigan economist
instance, only 26 percent of Millennials were married in
Michael Mueller-Smith, for every additional year behind
2013 compared to 36 percent for Gen Xers and 48 percent
bars, the chances that someone can secure employment
for Boomers.14 Home ownership is also down among Mil-
post-release decreases by 3.6 percentage points.22 This has
lennials. Only 36 percent of Americans under 35 years old
an especially significant impact on young Americans who
own a home, the lowest level on record since home own-
want to turn their life around after spending time in cor-
ership by age was first tabulated. Instead, Millennials are
rectional supervision.
choosing to live with their parents at levels higher than observed before the Great Recession. In 2015, 26 percent reported they still live with mom and dad.15 While a greater number of young Americans are attending and graduating college than ever before, many are saddled with thousands of dollars of student loan debt as college costs have skyrocketed. 16 Many question whether their degree was worth the investment. Since 1985, college tuition grew by over 500 percent, rising significantly faster than the cost of health care, gasoline, shelter, and food. Nearly 70 percent of the class of 2014 graduated with student loan debt, with an average of nearly $30,000 per borrower.18 Too many of these graduates are still defaulting on their loans as the student loan default rate is close to 12 percent.19 Among the more troubling problems facing Millennials are institutional barriers in the criminal justice system.
12
Bart Hobijn and Leila Bengali, The Wage Growth Gap for Recent College Grads, FRBSF Economic letter: 2014-22 (July 21, 2014), http://www.frbsf.org/economic-research/files/el2014-22.pdf 13
Millennials in Adulthood: Detached from Institutions, Networked with Friends, Pew Res.Ctr. (March 7, 2014), http://www.pewsocialtrends.org/files/2014/03/2014-03-07_generations-report-version-for-web.pdf. 14 Katherine Peralta, Homeownership for Millennials Declines to New Lows, U.S. News & World rep., Apr. 30, 2014, available at http://www.usnews.com/news/articles/2014/04/30/homeownership-for-millennials-declines-to-historic-lows.
15
Anna Louie Sussman, ‘Boomerang’ Millennials Get Cozy at Home, Wall St. J., July 29, 2015, available at http://blogs.wsj.com/economics/2015/07/29/boomerang-millennials-get-cozy-at-home/.
10
16 College Board, Trends in College Pricing 2015 (2015), available at http://trends.collegeboard.org/sites/default/ files/2015-trends-college-pricing-final-508.pdf. 17 Michelle Jamrisko and Ilan Kolet, College Costs Surge 500% in U.S. Since 1985: Chart of the Day, Bloomberg, Aug. 26, 2013, available at http://www.bloomberg.com/news/articles/2013-08-26/college-costs-surge-500-inu-s-since-1985-chart-of-the-day. 18 The Institute For College Access & Success, Student Debt and the Class of 2014: PROJECT ON STUDENT DEBT 2 (2014), available at http://ticas.org/sites/default/files/pub_files/classof2014.pdf. 19 Michael Stratford, Default Rates Drop, Inside higher ed., Oct. 1, 2015, available at http://www.insidehighered.com/news/2015/10/01/student-loan-defaults-drop-obama-admin-again-tweaks-rates. 20 See E. Ann Carson, Dep't of justice, Prisoners in 2014, (2015), available at http://www.bjs.gov/content/ pub/pdf/p14.pdf.
GENERATION OPPORTUNITY
LABOR FORCE PARTICIPATION Generation Opportunity: Monthly Millennial Jobs Report
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1982
70%
1984
PERCENT
80%
Federal Reserve of San Francisco
PERCENT
120% 110% 100% 90% 80% 70%
2014
2009
20 04
1999
19 94
60%
Robert Brame, et al, Demographic Patterns of Cumulative Arrest Prevalence by Ages 18 and 23, 60 J. Crime & Delinquency 471-486 (2014).
21
22 Michael Mueller-Smith, The Criminal and Labor Market Impacts of Incarceration, Colum. U., (Nov. 2014), http://www. columbia.edu/~mgm2146/incar.pdf.
11
GENERATION OPPORTUNITY
Bloomberg Labor Department
COLLEGE TUITION/FEES
MEDICAL CARE
SHELTER
Food
CONSUMER PRICE INDEX
1200% 1000% 800% 600% 400%
2010
2000
1990
1980
200%
Federal Burea of Prisons Inmate Statistics
40000 35000 30000 25000 20000 15000 10000 5000 0
12
<18
18
22
26
31
36
41
46
51
56
61
>65
GENERATION OPPORTUNITY
Federal Register
80000 70000 60000 50000 40000 30000 20000 10000 1995
MILLENNIALS LIVING WITH PARENTS
FEWER HOME OWNERS
26%
8%
25%
6%
24%
4%
23%
2%
22%
2015
10%
2013
27%
2011
12%
2009
Federal Reserve Survey of Consumer Finances; The Wall Street Journal
U.S. Census Bureau
1989 1992 1995 1998 2001 2004 2007 2010 2013
2013
2007
1954
13
GENERATION OPPORTUNITY
R E FO R M
14
GENERATION OPPORTUNITY
R E F O R M S C R E AT I N G PAT H WAYS TO O P P O RT U N I T Y These negative trends are caused by years of government
verse this trend, we need to reduce excessive government
intervention disrupting economic growth in countless
regulations that stop job creation. We need to simplify
parts of our lives. Enacting the following policy initiatives
the tax code so Millennials can start new businesses with-
would be a start to turning around these developments. If
out Uncle Sam intervening. We need to repeal ridiculous
our generation takes action, we can put a stop to bureau-
occupational licensing requirements that keep the least
cratic intervention by passing reforms to institute a freer
fortunate among us from working and climbing into the
society where hard work is encouraged, the rule of law is
middle class. And lastly, we need to protect the sharing
strengthened, and government is limited to its proper role.
economy from the alliance of big government and special interest groups which seek to undermine innovative ser-
unleashing the entrepreneurial spirit
vices like Uber, Airbnb, and other digital platforms that
Government barriers to starting a new business have
provide new and exciting economic opportunities for
made it harder than ever for Millennials to chase after
young Americans.
their versions of the American Dream. Government regulations have skyrocketed out of control growing from
fixing higher education by expanding choice
nearly 10,000 pages in 1954 to over 80,000 by 2013. The
One of the toughest challenges facing young Americans is
complexity of the tax code has also made it difficult to do
finding a way to pay for a college education that empowers
business. In 1954 the tax code was only 14,000 pages long,
them to find employment, pay off their student loans, and
but by 2013 it reached nearly 74,000.
create better lives for themselves and their families.
Occupational licensing requirements are another barrier.
Unfortunately, government interference in higher educa-
In 1950, only five percent of the American workforce need-
tion has driven up the cost of college through excessive
ed a permission slip from the government to work. Today
subsidies that inflate prices. Government interference has
that number is around 30 percent, and itâ&#x20AC;&#x2122;s costing us up to
also limited choice and competition in higher education
2.85 million jobs.
by preventing new and innovative educational programs
23
24
25
26
from competing and offering better, inexpensive alternaAs government continues to grow, young Americans are
tives. Making higher education work for present and fu-
beginning to believe the American Dream is dead. To re-
ture generations of Americans requires a major overhaul of
23
Federal register document pages annual percentage change 1976-2013, off. fed. reg. (2013) http://www.federalregister.gov/uploads/2014/04/OFR-STATISTICS-CHARTS-ALL1-1-1-2013.pdf.
24
Federal tax law keeps piling up, wolters kluwer, CCH (2013), http://www.cch.com/taxlawpileup. pdf.
25
Melissa S. Kearney, Nearly 30 Percent of Workers in the U.S. Need a License to Perform Their Job: It Is Time to Examine Occupational Licensing Practices, Brookings inst. (Jan. 27, 2015), http://www.brookings.edu/blogs/ up-front/posts/2015/01/26-time-to-examine-occupational-licensing-practices-kearney-hershbein-boddy.
26
Id.
15
GENERATION OPPORTUNITY
the current system.
.
first: We need to remove accreditation power from the
securing opportunity by stopping the governmentâ&#x20AC;&#x2122;s mortgaging of our future
federal government and give it to the states in order to ex-
Government debt is a millstone around the neck of the
pand choice and competition.27
Millennial Generation, caused by decades of bad decisions
second:
We need to simplify the student fi-
made by politicians in Washington to spend beyond their
nancial aid programs and target the truly needy.
means. The biggest program in the Federal budget is So-
third: We need to embrace competency-based educ ation
cial Securityâ&#x20AC;&#x201D;a whopping $800 billion outlay this year
reform that grants degrees to students based on mastery
alone. Half of all Millennials believe that Social Security
of content rather than how long they sit in a classroom.
will go bankrupt before they retire.31
fourth:
We need to improve and expand college pay-
ment tools like 529 programs and encourage income-share
The average Millennial pays in three-hundred to four-hun-
agreements that allow students to pay for college without
dred thousand dollars into Social Security over the course
having to take out burdensome loans.
of his or her work life with little expectation of seeing commensurate benefits upon retirement. The Social Security
removing institutional barriers to justice
system is quickly running down its fictitious trust fund,
Once a young person obtains a criminal record, it's as if
which will be officially exhausted in 2034, over a decade
a target is painted on their resume. These Americans are
before the first Millennial hits retirement age.32 The more
often unable to find jobs, get the education they need,
we delay reforms, the bigger they will have to be to make
or gain access to support in order to turn their lives
sure payments are lowered to match the taxes collected.
around and contribute to society. Almost 90 percent of employers conduct criminal background checks on
Policy
their applicants,28 and two-thirds of colleges ask about
eligibility to slow down the outflow of dollars, reworking
criminal history.29 Crime deserves punishment, but hu-
the formula that determines benefits, or finding alterna-
man lives are also worth redemption. Any program of
tives and means of testing for people who do not need the
reform, whether on the federal or state level, should re-
benefits are just some of the ideas that must be consid-
examine harsh sentencing policies that send so many
ered. Furthermore, young people need to take ownership
to prison (such as mandatory minimums, three-strike
of their own retirement savings with easier access to
laws, and overcriminalization) as well as encourage re-
tax-advantaged investment accounts.
reforms
such
as
changing
the
age
of
entry by equipping offenders to be ready to enter the workforce upon their release. State-based reforms have resulted in systems with lower crime and lower cost.30 The federal government and other states should implement similar reforms.
27 Wes Coopersmith, Higher Education Accreditation Reform, Generation opportunity policy backgrounder (2015), http://generationopportunity.org/wp-content/uploads/2015/12/Accreditation_Reform.
pdf. 28 Background Checking: Conducting Criminal Background Checks, Society for Human Resources Management(Jan. 22, 2010), at 3, available at http://www.shrm.org/research/surveyfindings/ articles/pages/backgroundcheckcriminalchecks.aspx. 29
The Use of Criminal History Records in College Admissions Reconsidered, Center for Community Alternatives(2011), at 3, available at http://www.shrm.org/research/surveyfindings/articles/ pages/backgroundcheckcriminalchecks.aspx.
16
30 Jordan Richardson, States, Not Congress, Lead the Way on Criminal Justice Reform, Generation Opportunity (Aug. 11, 2015), available at https://generationopportunity.org/articles/2015/08/11/states-not-congress-
lead-the-way-on-criminal-justice-reform/. 31 Ashley Redmond, Here's What Social Security Will Look Like by the Time Millennials Retire, Huffington Post, Aug. 21, 2015. available at http://www.huffingtonpost.com/gobankingrates/heres-what-social-securit_b_8023246.html. 32 The 2015 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, Social Security Admin. (Jul. 22, 2015), https://www.ssa.gov/oact/tr/2015/tr2015.pdf.
GENERATION OPPORTUNITY
Mark Kantrowitz; The Wall Street Journal
$35000 $30000 $25000 $20000 $15000 $10000
2015
2013
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
$5000
The Heritage Foundation
$6.21
92¢
83¢ 2030
$1.00
2010
1980
1960
$2.14
17
GENERATION OPPORTUNITY
CONCLUSION
18
GENERATION OPPORTUNITY
THE PROBLEMS FACING OUR GENERATION ARE SERIOUS, SO POLICYMAKERS NEED TO GET SERIOUS ABOUT SOLUTIONS.
Each year, a new crop of students enters a higher education system that’s overpriced and underperforming due to government distortions. New entrants to the workforce can’t find good jobs because government regulations make hiring us for the right position impossible. We’ve outlined evidence of the many problems facing young Americans, and it paints a bleak picture.
HOWEVER, OPPORTUNITY IS ON THE HORIZON WHEN WE UNITE FOR THE RIGHT POLICY CHANGES TO MAKE AMERICA A BETTER PLACE FOR MILLENNIALS AND GENERATIONS TO COME.
19
GENERATION OPPORTUNITY
www.generationopportunity.org @generationopportunity /generationopportunity @generationopportunity @genopp 20