And even for the lucky half who happens to land a full-time position after college, the silver lining may be a bit duller than expected. âStarting salaries have ...
Unemployment and Debt Wounds Causing a ‘Milennial’ Mess Millennials are arguably the most multi-faceted generation. As a group coming of age in the 2000s, they’re often categorized as progressive, confident, technologically-savvy and futuristic. And according to a Pew Research Center report, today’s twenty-something’s are more racially and religiously diverse than ever before. While these personality traits would certainly help decorate a LinkedIn resume, that forward-thinking fervor of Gen Y is doing little to help twenty-something’s land actual jobs. This past month, the current unemployment rate for 18 to 34 year-olds was 10.8 percent, and over 53.6 percent of recent bachelor degree recipients were under or unemployed. Furthermore, two-thirds of students who earn a four-year bachelor’s degree are graduating with a debt burden of at least $25,000, and one in ten owes more than $54,000. Today’s Millennials are falling financially astray, but at what point is a complex question. Historically, Gen Y has often been accused of being one of the most financially illiterate, creditcompulsive and dependent generations, much more so than their predecessors. But could it also be possible there are a few external forces at play that are simply out of their control?
Perpetually Under or Unemployed Opportunities for employment are scarce for today’s young adults, and their prospects continue to look dismal with recent trends. According to the Wall Street Journal, there’s an increase in employers seeking low-wage, part-time workers in effort to mitigate the health-care requirements imposed on businesses. And even for the lucky half who happens to land a full-time position after college, the silver lining may be a bit duller than expected. “Starting salaries have plummeted, and a mediocre college degree that costs $150,000 isn’t showing a positive return on investment anymore,” explained Stephen C. Murphy, the 25 year-old owner of the small business blog GetBusyMedia.com. “Salaries are low, and many Millennials are forced to work for much less than their market value from years past just to make a buck. And with the cost of college increasing by 1000 percent since 2011, these meager salaries stand to make miniscule dents in overall student debt loads. Given the disparity between escalating tuition costs and standstill employment opportunities, many have begun to consider the true worth of higher education. However, the US Census Bureau recently reported that college graduates are still twice as likely to find work than those with a high school diploma, making college just as much of a middle-class requirement as it’s always been.
The reality is jarring. Even if a twenty-something is able to land a decent, well-paying job with benefits, there’s still a good chance the amount they owe on their loans or on credit cards will outweigh their incomes. In other words, young adults are being stunted for financial growth before they can even step foot into the professional realm. “Millennials are in this state of crisis by no doing of their own,” said Chris Sands, CFO of oXYGen Financial, Inc. and a Millennial himself. “We were born into this.” And according to Kimberly Pelkey Sdeo, a New Jersey bankruptcy attorney, that downfall is having a spillover effect into the rest of the economy. “The recession and overall decrease in wealth has delayed many [Baby Boomers] from entering into a traditional retirement, making it more difficult for young adults to get their foot in the door,” she explained. “Young people are often shackled by their debt loads and end up delaying purchasing homes and saving for retirement, which has pour over effects into the rest of the economy.”
In Over Their Heads For today’s twenty-something’s, a sizable chunk of their financial wounds may be self-inflicted, or simply a product of credit negligence. According to the Pew Research Center report, Millennials: Confident. Connected. Open to Change, nine out of ten Millennials claim that they are currently financially stable enough to meet, or eventually reach, their long-term goals. However, this confidence is juxtaposed with disconcerting financial problems that plague Gen Y. According to a recent report by the U.S. Department of Education, borrowers who defaulted on their student loans rose from 8.8 percent in 2010 to 9.1 percent in 2011. Furthermore, statistics by Sallie Mae show that young adults are becoming increasingly willing to take on larger amounts of credit, with over half owning four or more cards. And for Murphy, that negligence hit close to home after graduation day. “It was a complete ignorance of personal finance, budgeting, and expectation setting. I took out loans to pay for school, but didn’t understand how much would be added from four years of accrued interest,” he explained. “Millennials often make bad decisions early on – taking on too much in student loans, loading up on credit card debt, and failing to accumulate any emergency savings,” said Chris DesBarres, owner of Help Unlimited, a daily money management company that helps families manage their day-to-day personal finances. “[This] has dire consequences down the road.” But should laissez-faire parenting take responsibility for some of the blame? “The biggest systematic problem I see with Millennials is that nobody has ever taught them how money works,” explained DesBarres.
Indeed, Millennials have grown up during an interesting span of financial highs and lows, creating some credit confusion. The booming economies of the 80s and 90s may have given parents less reason to give their kids proper money lessons, but as young people transition into adulthood in the recession, they’re paying for that lack of education tenfold.
Hope for Generation Y It’s no secret that Millennials are soured by a financial pickle. However, given Gen Y’s resilient nature, is there still hope left for the downtrodden generation? “I think that because of this, today’s young are [going to be] much more fiscally conservative,” said Sands. “We don’t trust the economy or the stock markets enough to invest in our country. We would rather invest in ourselves.” This dawn of wallet-conservatism is certainly a viable option. USA Today recently ran a report stating that Millennials today were eating out significantly less than their neighboring generations. However, cutting back on spending and being more conservative with credit will only go so far for Millennials. According to Murphy, the ways in which young adults view their career paths will need a major makeover in the coming years. “I see a rise in overall entrepreneurship as young adults begin to realize that they can’t follow the same path as their parents before them,” he said. “Gone are the days of steady jobs that pay out benefits, pensions, and comfortable salaries. Young people will need to pave their own road to success.” However, the road to entrepreneurship is easier said than done for many Millennials. Coming out of college and proceeding to erect an empire from scratch will be daunting. But it’s not an impossible feat. However, gaining a foothold in the professional world won’t come without some sincere effort. “Always, always, always, always make yourself more valuable in the workforce,” explained Sands. “Continue education and training. Go above and beyond. Have options for alternative employment. Network.” There’s no doubt that turning the traditional working world on its head and carving unique career paths will be a challenge for the Millennial generation. But given the group’s most positive trait of adaptability in adversity, it’s certainly a goal worth reaching for.