The Wall Street Journal recently published this article, stating that more than 40 percent of American young adults are back living with their parents.
The article cited possible reasons for this trend, up since 2005, being that rent has risen and that mortgage lending regulations have become stricter.
Both of these things are true–rent has risen (but just a little bit, if you refer to our handy chart), and mortgage lending regulations HAVE tightened up, appropriately, as a result of the subprime mortgage crisis.
But what’s striking is what’s missing here: the smoking gun in this whole scenario. And that’s the cold, hard fact that the cost of college has risen 600% since 2005…and 1100% in the last 35 years.
And yet, wages have NOT risen accordingly–not anywhere close. And that’s despite the number of millennials who have one or more degrees to qualify them for said jobs.
But do they? Do these degrees help qualify young people for the available jobs out there?
Many people seem to THINK they do. In reading through the comments section and in discussing with acquaintances, it seems many still think a stagnant economy is making jobs scarce (despite the fact that more young adults are educated than any other generation in history). Others blame the younger “special snowflake” generation for simply lacking in competence.
But the truth is…these degrees are a big part of the problem. Part of the reason the economy is stagnant…and jobs seem scarce…is because these degrees don’t match the reality of the workforce.
What happened is that in the recession, many people thought to go get more education as an effort to bolster their chances of getting a job in a bad economy. But more higher education just for the sake of more education doesn’t match what our workforce is really demanding.
As a result, more young people are unemployed and underemployed. But they spent an astronomical amount to get those degrees, which do not match the pay scales of what’s out there in the workforce.
And now they have to pay those loans off each month. To the tune of $350 a month (on average). Without a job (or with one that offers an entry-level salary).
So it’s no surprise that millennials aren’t entering the housing market. How could they? These capable adults couldn’t–and shouldn’t–obtain home loans while walking around with tens of thousands of dollars of debt already strapped to their backs.
And for some, it’s just easier to blame the younger generation for being “slackers,” “can’t-do special snowflakes,” and “wanting to put-off adulthood.” It’s always been the way, throughout history. But instead of name-calling, what we should be doing as a society is considering why we continue to encourage young people to pursue degrees (and in some cases, multiple degrees) without first measuring the return on investment.
Given the impact on our markets and economy…isn’t it time we rethink that?