One could assume that life for a lot of young people who are currently going to college has materially improved over the last decades and centuries. According to the Census Bureau, life expectancy in 2008 stood at 78 years, which is up from 70.8 years back in 1970, and much higher than 35 years when the nation was founded. This is due to better nutrition and medicine, which reduced mortality rates while lengthening life spans. Infant mortality rates decreased from 26 per 1,000 in 1960 to 6.6 in 2008. In terms of education, in 1910, 13% of the U.S. population 25 or older had at least a high school degree, and 3% attained a college degree. In 2009, these numbers jumped to 85% and 28% respectively. From an income standpoint, whereas the average U.S. family earned $750 in 1901, it earned $50,302 in 2003. The once dominant manufacturing industry with its back-breaking and physically exhausting labor has mostly been replaced by service-oriented jobs such as in retail, hospitality, education and health care, and are less physically demanding. The civil rights movement, the surge in non-white immigration, and the massive entry of women into the workforce has opened up economic opportunities for the non-white and female population. The internet enables us to access information quicker than in any previous time period. All indicators suggest that we are better off today than any time before. This provides us with enough reasons to be content, right?
Not so fast. One could argue that the challenges the young generation today is facing are enormous. Whereas the number of people attending college has gone up, so has college tuition. College tuition has increased by 559% since 1985. Financial aid from the government has decreased as a share of the total tuition. The maximum Pell Grant used to cover 77% of the college tuition at an average public university in 1979, which stands at only 36% in 2004. This has forced students to take out more loans. The average student currently has $25,000 in student loans, and the total student loan amount has exceeded $1 trillion. Nearly two-thirds of the people in their 20s carry some amount of debt. In 2004, the average undergraduate had $2,200 in credit card debt.
This debt load would not be so bad if the jobs that follow graduation would pay enough in wages. College graduates in the pre-recession years (2006-2007) had median starting salaries of $30,000, as opposed to graduates in recession years (2009-2010), who started out with $27,000. Studies suggest that young adults starting their careers during a recession have lower lifetime earnings than adults starting in better economic time periods. More generally, the Bureau of Labor Statistics reports a drop of real average hourly earnings of workers of 1.1% between February 2011 and February 2012.
Low wages for young adults are not the only problem: The current unemployment rate for people aged 20-24 is 14%, compared to 8.3% in the general population. The current generation aged 18-29 mostly works for the food service, retail industry and start-up companies. A quarter of the people aged 16-29 work for the hospitality industry such as in restaurants. The majority of these positions, unlike in the previously dominant manufacturing industry, are not unionized. The lack of unions often account for very low wages and benefits. Unionization rates declined from 20.1% of the workforce in 1983 to 11.9% in 2010. Despite a provision in the health care law, which expanded health coverage to people under 26, who are covered under their parents plan, which lowered the number of uninsured among adults 19-25 of age by 900,000, 45% of young adults reported delaying medical care due to costs, and 39% reported having trouble to pay medical bills.
One is at least hoping that with a college degree a more secure job such as being a software engineer, doctor or accountant might be found. Think again: with globalization and free trade running rampant, labor competition has increased. Software can be engineered in India and shipped to the U.S.; an MRI scan taking place in a U.S. hospital can be read by an Australian radiologist; a French physician may operate on an American patient via a controlled robot; and U.S. income taxes can be prepared by accountants in Costa Rica. The idea of job security is quickly vanishing.
Financially speaking, the young generation of today is worse off than the previous generation. The age cohort of 18-34 year-olds has 68% less in net worth than the same age cohort in 1984. With all these factors in mind, one can hardly tolerate the fact that life after having improved so much, in reality, has gotten worse.
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