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Youth Update: Unemployment High, Parents Struggling

12 April 2010 8 Comments

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.

8 Comments »

  • simple in france said:

    "The reality is that a standard of living shift is coming to most Americans, and it’s already started." I agree with this very much. I mention it on my blog but don't say it often in real life because it tends to get people really pissed off in my experience.

    I'd say that the people I've noticed experiencing the most pain are probably the once resisting the reality that they cannot go on living large on credit forever (timeshares, fancy cars etc). Great topic.

  • 20smoney said:

    This will be the biggest shock in my opinion for my generation. Those of us who grew up in fairly affluent homes will realize that expensive autos and large mcmansions are not gauranteed in life. Thanks for the comment.

  • Jackie said:

    I don't think that kids moving home and people being more thoughtful about their finances is a bad thing. If we'd all done it starting years ago, we'd be in a whole lot better place now.

  • 20smoney said:

    I think its a great thing. People need to accumulate some savings and that's an easy way to do it!

  • Ryan said:

    Sound advice as a conclusion Kevin… moving home after college seems to be a European trend coming to America. I think as younger Americans we should take a look at how they're living since we may be mirroring it in the future.

  • Laura said:

    My parents and my generation worked their way thru college. Then were on their own; no one moved back with their folks as that was considered being a loser then. They even held weekend and night jobs when in high school. I blame the spoiled slacker younger generation who won't get out on their own, as my generation made it in bad downturns in the late 60's and early 80's. Kids can go to college and live at home, but they should be working too and helping will the expenses.

  • Gina said:

    I wish they would talk more about the "underemployment" rates among youth. When I see one friend only get 3 hours per week making minimum wage per hour at his job at age 26, and many other friends not doing much better, it makes me mad that they act like the bad economy is only effecting 15 percent of our youth just because that's the percentage that are unemployed.

    I live in Michigan, where the economy is especially bad. Based on my peers, it's more like, 15 percent are NOT effected by the bad economy. Minimum wage in Michigan is $7.40/hour. In 40 hours a person working for minimum wage would earn $296. If someone is making less than that per week, they should be a part of the statistic… and that's pretty much everyone I know in my age group (I'm 24).

    I'm currently unemployed. At my last job, that I was laid off from 6 months ago, I made around $80 per paycheck. My paycheck came every two weeks. That breaks down to $5.72 per day. You call that employed? There were 6 other people working there in my age group. One was the owners daughter so she made significantly more than the rest of us with management position. The rest of us, busting our butts, did the job of multiple people each because they couldn't afford to hire more people and were severely understaffed (which brings up a whole other issue). So we were running around trying to hurry up and do everything all at once, but we still only made minimum wage and had barely any hours. Three of them made about the same as me, and the other two had significantly less hours. None of us had a second job. All of us were part of the "employed" statistic.

    I have a bachelors degree and I also continued my education at a trade school and I have a lot of experience in my field. I applied for 6 jobs in the last week, no response. I am completely dependent on my parents and I hate it. I want to be independent. I want a job that pays me enough to buy food and have a cheap apartment. …And I'm one of many.

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