Treasury Researcher Analyzes Economic Fragility Among Young Adults

Treasury Deputy Assistant Secretary for Microeconomics analyzed "intergenerational" factors that "contribute to an increasing sense of economic fragility among young adults." 

In a featured article on the Treasury Department's website, titled How does the Well-Being of Young Adults Compare to Their Parents'?, Laura Feiveson compared economic factors affecting adults in the 25–39-year-old age range, going back to 1990. Among her findings:

• There has been a decline in labor force participation among young men, (from nearly 95% in 1990 to under 90% in recent data). In contrast, young women's participation remained steady, rising to 78% during the pandemic recovery. Ms. Feiveson attributed the decline in young male participation partly to wage stagnation, particularly among those with lower education levels.
• Homeownership has become significantly less affordable for young middle-class Americans since 1990, with median home prices nearly doubling after adjusting for inflation, while real weekly earnings for young workers have risen only modestly. Ms. Feiveson found that rent increases, though less steep than home prices, have also outpaced earnings with over 90% of Americans now living in areas where housing costs have grown faster than household incomes. She found that essential expenses—including housing, childcare, healthcare and education—have seen substantial price increases.
• Young Americans' real median wealth surged from 2019 to 2022, reaching unprecedented levels after decades of stagnation and a slow recovery from the 2008 recession. Ms. Feiveson argued that this wealth growth masks balance sheet challenges, including a near doubling of non-housing debt since 1989, largely driven by a nine-fold increase in student loan debt.
• Young Americans are increasingly likely to live with their parents and less likely to be married or have children. Ms. Feiveson explained that the shift is at least partially due to (i) the stagnation of real wages, (ii) the rise in housing and childcare costs and (iii) the rise in student debt.
• Obesity rates more than doubled between 1990 and 2018, and mortality rates for individuals aged 25-39 rose by 17% from 1999 to 2019, driven largely by the opioid epidemic and other causes such as suicides and accidents. Ms. Feiveson argued that mental health indicators have worsened, with the share of young adults ages 18-25 reporting poor mental health on most days. She found that the numbers doubled between 1993 and 2020 and may be tied to increased social media use.
• Rising global temperatures and unsustainable federal debt heighten uncertainty about the future.
• The demographic shift toward an older population represents serious challenges to fiscal sustainability as the number of social security recipients per every 100 payroll-paying workers is expected to increase from 30 in 1990 to 37 in 2024 and 44 in 2040.

Ms. Feiveson concluded that "substantial investments in housing, childcare, healthcare, and workforce opportunities could lead to improvements that would be felt quickly by today's young Americans.  And tackling climate change and moving toward a more sustainable fiscal trajectory now could go far in significantly improving current young Americans' futures."