Why Gen Y Is So Financially Frustrated
The challenging job market has led to marriage and parenthood delays, along with career stagnation
When Liz Funk was in college, she felt like the world was her oyster. Her dream, to become a freelance writer and author, was well underway; she landed her first book contract as a college sophomore and was freelancing for major publications on top of her school work. Then, shortly before she graduated, the imploding economy forced her to rethink her plans. "It was becoming clearer and clearer that [freelance writing] wasn't really a career path anymore ... it was about as aspirational as wanting to be a rock star," she says.
Instead of pursuing freelancing, Funk, now 23, moved to Los Angeles, intending to break into television writing, but those plans quickly fell through, too. She struggled to find a job that would pay her rent, and ultimately found work in a salon for $10 an hour. After racking up $12,000 in credit card debt, she called it quits and moved back home to upstate New York to find work as a media strategist. Her experience inspired her next project, the ebook Coming of Age in a Crap Economy.
Funk's struggles represent, in many ways, a common experience among her generation: Graduating into a recession, many young people continue to flail in the labor market, which often means they also have a hard time saving money, paying off loans, and meeting other goals, such as buying their first home or living independently from their parents.
According to a new survey by the Pew Research Center, half of young adults between ages 18 and 34 have taken jobs they don't want to pay bills and almost 1 in 3 have delayed marriage or parenthood because of the economy. The survey found that more than 80 percent of Americans believe it's harder for young people to find jobs today than it was for their parents. Economic data back up that belief: Employment rates among young people between the ages of 18 and 24 are at an all-time low, at 54 percent, and those who are employed full-time have experienced a bigger drop in weekly earnings (6 percent) than any other age group, Pew reports.
"It's pretty clear that young people are facing a lot of things that our parents didn't -- [including] student loan debt and very low job placement rates among recent grads. That's a pretty devastating combination," says Zac Bissonnette, author of the forthcoming How to Be Richer, Smarter, and Better Looking Than Your Parents.
Gen Y's financial struggles have made it harder for them to reach the traditional milestones of adulthood, the Pew survey found. While the vast majority of respondents (80 percent) in a 1993 survey said children should be financially independent from their parents by age 22, the current survey found that only two-thirds of respondents felt that way. In fact, 31 percent of respondents said age 25 or older was a more appropriate age for financial independence.
Many of the young adults between the ages of 25 and 34 in the survey (30 percent) said they spent time living with their parents -- and most of them were happy with that choice. (Not all of them were freeloading, either: About half said they paid their parents' rent.)
Gen Y's other defining characteristic -- optimism -- also came through in the survey. While most young adults surveyed said they can't currently afford the life they want, 9 in 10 said they will earn enough to live the life of their dreams in the future. They also believe the country is improving: Most said they expect their own children to have a higher standard of living than they themselves do.
"In spite of hardships, they do have a real sense of optimism," says Kim Parker, associate director at Pew Research Center and lead author of the study. The recession, she adds, did not put a damper on young people's optimism. "They feel they have so much time ahead of them and that things will work out," she says.
The recession and resulting decision to move back home with parents has helped many young people grow closer to their parents, too. According to Pew, just 12 percent of those between the ages of 18 and 24 living at home say the arrangement has hurt their relationship, and 41 percent say it's had a positive impact. (Among older respondents between the ages of 25 and 34 who have lived at home, results were more mixed: About one-quarter said it was bad for the relationship, one-quarter said it was good, and the rest said it had no impact.)
"Parents can be an enormous source of support. If your parents were born in the late '50s or early '60s, they graduated right into a recession, too," says Funk. She adds that the high-profile success of Gen Y entrepreneurs, such as Facebook's Mark Zuckerberg, give young people inspiration to create their own careers instead of endlessly job hunting.
As Bissonnette puts it, "We have technological skills that give us a huge advantage over older people -- who are often competing with us for entry-level jobs."
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Personal Finance - Why Gen Y Is So Financially Frustrated
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