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MEYER AND HARDEN: Generation Y asks ‘why us?’
Big-government policies put young Americans deeply in debt
President Obama, who rode into the presidency on a wave of youth enthusiasm, has seen his support among young people fall by nearly 30 points since he took office. Young people are disappointed that this administration’s policies failed to live up to the hope-filled rhetoric of 2008, but more pointedly, America’s youth are taking an economic beating.
Not only is unemployment higher among youth than any other major demographic, but record-smashing college debt levels and a looming $15 trillion national debt threaten to financially indenture the millennial generation to the federal government for the rest of our lives.
To visualize this dire situation, Young America's Foundation has created the Youth Misery Index (YMI). Taking a page from a listing made famous by Jimmy Carter, the Youth Misery Index uses simple addition to combine youth unemployment, average graduating student debt (in thousands), and national debt per capita (in thousands).
Youth unemployment is at 17.4 percent - one of the highest levels since World War II. Average graduating student debt has reached a record-breaking $26,300. National debt per capita is $46,900 - the highest ever. Add it up, and the Youth Misery Index comes out to 90.6.
What does this number mean? Like the original Misery Index, the YMI expresses symbolically some very real threats to our nation’s prosperity. The Youth Misery Index has grown more than 25 percent in four years. Today, young people face a three-pronged attack on their financial security - educational debt from their past, unemployment in the present, and a future plagued by the burden of massive government debt.
The government is largely responsible for all three problems. We’ve found a statistically significant relationship between government expenditures and the Youth Misery Index; this is no coincidence. Each indicator can be tied to government actions.
Let’s start with youth unemployment. The youth unemployment rate has actually improved slightly over the last two years. But that doesn’t mean things have gotten better. This past summer, the Labor Department recorded the lowest youth labor force participation rate in history. Therefore, it seems many young people have simply given up on finding a job.
Young people typically offer cheaper labor than their counterparts. However, older, more experienced workers who can’t find higher-paying jobs are settling for starter jobs formerly held by youth. Time magazine reports that 85 percent of 2011 grads moved back home after college. For those who do find work, the median graduating income has dropped more than 10 percent.
Bottom line: Young people are battling one of the worst job markets in the last century, and hundreds of billions in federal “stimulus” money has failed to revive the labor market.
Government intervention in the economy - escalated by the Obama administration - has helped make this recession particularly bad for young Americans. The government-sponsored, highly unionized industries and programs funded by the bailouts or stimulus hire few young people; unions protect seniority and push up prices for labor, both of which hurt a young person’s chance at landing a job.
Plus, these government expenditures take money (through taxes or monetary policy) out of the private sector, which historically hires significantly more young people. Less available capital for the private sector means greater uncertainty and fewer jobs for young people.
Government expenditures also contribute to another YMI indicator: national debt per capita. Each young person inherits a massive share of government debt, and the interest alone is enough to cripple our economic future. This year, the interest payments are more than $3,000 per taxpayer, and this number will at least double by the end of the decade. As this cost increases, the government will probably choose to either raise taxes or take out more loans to pay the interest - both of which remove capital out of the private sector - further compounding the problem.
Young people will be stuck paying for government debt they had no part in creating. They’ll have to do it with less discretionary income than ever before as they struggle with record high levels of student loan debt.
Student Loan Debt
Prognosticators used to warn the public about a credit card bubble. But now, student loan debt has surpassed credit card debt at more than $1 trillion. Student loans, similar to the housing market, relied on a government-sponsored enterprise: Sallie Mae. Lax lending standards, and easy, government-backed credit has fueled an explosion in tuition prices.
Today tuition costs continue to increase at twice the rate of inflation. Recently, a growing number of indebted graduates have been demanding that the government forgive all student loans. Meanwhile, college debt continues to skyrocket under the Obama administration’s newly nationalized student lending system.
Nothing is more earth-shattering to a young person than being stuck with no job and tens of thousands in college debt. As the Youth Misery Index rises, look for Mr. Obama’s youth approval numbers to continue to plummet.
All three indicators of the Youth Misery Index have gone up, at least in part, thanks to government intervention and out-of-control spending. As recent college graduates ourselves, we believe our generation would be best served by using our activist tendencies to be the catalyst for government reform. No one expects young people to fight for fiscal responsibility and sustainable government, but it’s time to shock the establishment before it’s too late to reverse our country’s dour trajectory.
Ron Meyer is a program officer for Young America's Foundation. Nathan Harden is a Novak Fellow with the Phillips Foundation.
© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.
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