Youth Update: Unemployment High, Parents Struggling
A recent article from the WSJ tells the story of many American families these days. With unemployment especially high amongst young people, and amid a tough economy for our parents age group as well, young people are struggling to make financial progress. Parents are working hard to provide the good life for their kids, but are finding it difficult to get by themselves.
The following story illustrates the struggles of many middle class families:
The family income of the Johnsons is a fifth of what it used to be. And the children are about to feel the pain. Mr. Johnson’s two oldest are attending his alma mater, Johns Hopkins University, at an annual cost of $50,000 apiece. And his youngest daughter, 15 years old, recently began her own college search. Mr. Johnson isn’t sure whether he’ll be able to help her to go to college, or even to get the older kids to graduation.
Kids need financial assistance from parents more than ever, with unemployment for workers between the ages of 16 and 29 at 15.2% according to government data (real unemployment or underemployment is most likely higher).
A Bigger Change Unraveling
In my opinion, there is something bigger going on and the main story isn’t that the youth are struggling because their parents can’t give them a new iPod every year. The reality is that a standard of living shift is coming to most Americans, and it’s already started.
The American middle class is up to their ears in debt, housing payments and paying for ridiculously expensive degrees for their kids. This WSJ article is just another example of this bigger change.
Baby boomers are downsizing on lifestyle in order to survive financially in the years ahead. Fancy cars and homes are no longer the priority. Securing the possibility of an actual retirement is now the number one goal, and for many, it’s a major uncertainty.
The standard of living maxed out I believe with the height of the previous credit bubble in the U.S. Jetskis, granite counter tops, BMWs, Disney vacations, etc. These were the focus of the mid 2000’s. Now financial survival is the focus.
Back To The Youth…
So, the youth are actually being forced to face reality these days. You can argue that this is a good thing (as I’ve discussed here). Our generation might actually grow up realizing that debt can end up hurting, that hard work is required to get ahead and that a financial trajectory over the course of your lifetime isn’t guaranteed to be a 45 degree incline.
As the article states:
As a result, many young people are now moving home to save on rent. About 21% of young adults say they’ve either moved in with a friend or relative, or had a friend or relative move in with them because of the economy, according to a study from the Pew Research Center.
People are relying on family and friends to save money and are working together to survive a tough economy. This isn’t a bad thing.
As the re-balancing of the American standard of living occurs with the rest of the world, it’s important to not fight it, but to be smart. Limit your overhead, save your money, seek out opportunities to earn an extra buck, don’t keep up with the Joneses, be frugal, fight for your financial future.
The progress you make today and in the years ahead during the tough days will make a huge difference and impact on your future when things actually get better from a macro perspective. Sacrifice today will yield much later.