Millennials Aren’t A “Lost Generation” – At Least, Not All of Us

“Millennials are either impressively optimistic or blissfully ignorant,” writes Fusion’s Rob Wile. The snide comment comes on the heels of a Fusion survey which found that more than a quarter of young adults expect to become millionaires even though 28 percent lack full-time jobs and 46 percent still live at home with their parents.

Fortunately, the economic situation that Millennials face is more complicated than Fusion’s simplistic poll seems to assume. Unfortunately, it’s not necessarily a better situation.

First, a complication. Previously we’ve been able to speak about Millennials as one generational cohort, but recent census data suggests a split in fortunes. The data shows that the share of 18 – to 24-year-olds living with their parents fell 0.4 percent in 2014, from 55.3 to 44.9 percent. But the data also shows the reverse trend among older Millennials. The number of Americans aged 25 to 34 who have been forced to shack up with their folks has risen each of the last three years. In 2014, 14.7 percent were living with their parents, the highest percentage since the government began keeping track in 1960.

The older-half of the Millennial generation could be in for a rough go of it. Catherine Rampell writes for the Washington Post:

Yale’s Lisa Kahn finds that people who graduate from college during a time of high unemployment earn significantly lower wages than workers with better timing. This differential persists not for a year or two but for decades.

Why such long-lasting scars?

When openings are rare, young people take whatever job is available and get stuck on a lower trajectory, at worse-paying firms, with fewer opportunities for upward mobility.

Fortunately, the declining number of 18- to 24-year-olds who have been forced to bunk with the parents indicates that the underemployment situation is abating. Recent college graduates are entering into a better labor market, allowing them to find meaningful work more quickly and/or switch jobs more often in order to move up the career ladder and pay scale.

But neither age cohort that makes up the Millennial generation is quite out of the woods yet. Although the economy is improving, albeit slower than anyone would like, college tuition prices are getting worse. As tuition prices go up so too does the need for college students to take out ever-larger loans. And a new report from the Federal Reserve of New York confirmed what we already suspected – that student loan debt burdens is the major reason that young adults are stuck in their parents’ basements.

“State-cohort groups who were more heavily reliant on student debt while in school are significantly and substantially more likely to move home to parents when living independently, and are significantly and substantially less likely to move away from parents when living at home,” the report said.

The Fed’s analysis shows that for every $10,000 increase in student loan debt per graduate there is a 2.9 percent rise in the rate of living with the parents.

Student loan debt, the Fed concludes, is the thing “driving young people home and keeping them there,” even moreso than “local economic growth” and “escalating housing prices.”

Even this depressing trend has a silver lining. CNBC’s Landon Dowdy reports:

Their pessimism has prompted many to start saving earlier and to participate more in their retirement savings accounts than baby boomers did at their age. According to a Transamerica Center fore Retirement Studies report, 70 percent of millennials are already saving for retirement in a company-sponsored 401(k) or a similar plan or outside the workplace. . .

And advisors say millennials have reason to be upbeat about their long-term prospects. For one, time is on their side. They’ve also got an awareness of the importance of saving early for retirement. In the Wells Fargo survey, 80 percent said the Great Recession had taught them they need to save now to be prepared for economic problems down the road, and 55 percent were already saving.

So what does it all mean? It means the economy is getting better, but college costs aren’t. It means we’re optimistic about our future, but are wise enough to prepare for the worst. It means we may not be the Lost Generation after all, at least not all of us, and that we shouldn’t stop fighting until it’s none of us.