The Squeeze Is On: The Impact of the Recession on Young People

The Squeeze Is On: The Impact of the Recession on Young People

October 9, 2009
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Even before the Great Recession of 2008, today's young adults were on track to have the dubious distinction of being the first generation in a century not likely to end up better off than their parents. Stagnant wages, job insecurity, the decline in employer sponsored health insurance and retirement benefits, rapid increases in the cost of basic expenses, soaring debt, and minimal savings have diminished the prospects for opportunity and mobility. Although the recession has affected Americans of all ages, young adults in their 20s and early 30s entered the downturn at a distinct disadvantage--trying to complete their educations and enter and get ahead in the job market in the midst of the deepest economic crisis since the Great Depression. The recession jeopardized not only their immediate prospects but also their long-term chances for economic security and success. This fact sheet distills some of the more problematic indicators of how young adults are faring today, including employment & earnings, post-secondary education, as well as the accumulation of debt & assets.

TOP FACTS:

  • The recession had a devastating toll on young workers, whose unemployment and underemployment rates were higher than for any other age group. During the second quarter of 2009, the unemployment rate for workers under age 25 was 17.3 percent; in contrast, the unemployment rate for workers ages 45 to 54 was 6.9 percent.
  • The overall rate of underemployment doubled between 2007 and 2009, but the figures were highest for young workers. During the second quarter of 2009, young workers under 25 had an underemployment rate of 31.9 percent. Underemployment for workers ages 25 to 34 was 17.1 percent and 13.7 percent for workers ages 35 to 44.
  • The recession—with high unemployment, underemployment, lower salaries for entry-level workers and barriers to college completion— hampered the ability of young people to build assets. In 2008, the average debt of students graduating with loans was $23,200, an increase of 24 percent over 2004 when student debt averaged $18,650. In 2008, indebted low- and middle-income Americans under age 35 averaged about $9,000 in credit card debt.
  • Stagnant incomes and high-cost debt affected homeownership among young people. Between 2006 and 2008, the total numbers of homeowners decreased slightly, but declines were much larger for people under age 30—in 2008 there were 4.8 percent fewer homeowners among adults under 25 and 4.3 percent fewer among those 25 to 29 year olds.