Why So Many Millennials Are Struggling

From The Daily Dot: The real reason young people are the poorest generation in 25 years

The kids are not all right. As the millennial generation starts to reach its 30s, many of these ‘80s and ‘90s kids are having kids of their own, and recent surveys show one in five millennial parents is living in poverty. That’s the result of a combination of rising costs for raising children, falling wages, increased unemployment, and high debt—mostly college related. But the boomer generation seems to think otherwise: Millennials are to blame for their own financial situation, thanks to wasting time on the Internet and being too lazy to find jobs.

Millennials were promised that if they followed the American prescription for success, starting with a college degree, they’d be on a track to profitable careers and respected roles in American society. Instead, they entered college precisely at the moment tuition was skyrocketing, endowments were falling, and interest on student loans was climbing. College loans are a major contributor to millennial debt, so much so that there are legitimate fears of a college debt bubble that could be as devastating as the tech bubble of the 1990s (boomers) or the recession (boomers again).

Millennials, raised in the 90′s and early 2000′s – a era of participation trophies, an unusually strong labor market, and the ‘self-esteem movement’ – were in for a rude awakening when 2008 rolled along, and suddenly the panglossian promises made by teachers, parents, and society in general, of ‘good jobs’ and the attainment of the ‘American dream’ was, for many millennials, pulled away.

So what happened? Economic reality – that’s what happened. But the problem is multi-fold:

1. Millennials, for much of the 90′s and 2000′s, were coddled and fed affirmations by teachers, parents, and society and culture (such as networks like MTV) about how ‘great’ they were, about how they were the ‘future’, and so on. Their boomer parents, having had for decades of post-war prosperity dropped on their lap, assumed that the good times would continue for their children too, and we (millennials) believed it too.

2. Then the financial and housing crisis came. The economy became more efficient and productive, with employers using the 2008 crisis an excuse to thin the herd, which has persisted to this day even as profits, earnings, and stock prices are at record highs. The economy became much more competitive – and many Millennials, lacking the tenacity and grit due to being coddled and their self-esteem artificially boosted, were unable to adapt.

3. But credentialism has become a major problem, leading to a vicious circle of increased college attendance and then more student loan debt, as BA degrees, which become devalued, are replaced by Masters, and those, eventually, are replaced by PHDs, and so on. As I discuss in Fixing the Student Loan Debt Crisis and Reforming Edcuation, one solution is to replace costly, time-consuming college diplomas with cheap, easy-to-administer IQ tests (and proxies like the SAT and Wonderlic) that can signal competence to employers. A college degree, unless it’s specialized, is just a very expensive way of signaling ‘general competence’.

The result: more debt

4. The economy has also become more hollowed-out and bifurcated, with a proliferation of low-paying service sectors jobs, some good-paying ‘creative class’ jobs (coding, advertising), and professional service job (doctors, lawyers), but not enough jobs for those in-between, who have neither superior intellect nor the time to acquire a high-paying, specialized skills. This is due to the decline of manufacturing (ongoing since the 80′s, with the decline of unions) and the decline of ‘middle-income’ jobs such as banking and real estate jobs – jobs which paid well during 90′s and 2000′s during the real estate boom, but have since seen major and permanent cuts due to the 2008 crisis.

I mention IQ because the cold, harsh reality as elucidated by by Charles Murray in Coming Apart and The Bell Curve is that IQ has – in our era of outsourcing, automation, and efficiency – become something of a ‘sorting mechanism’ for those who succeed or fail in America’s increasing competitive economy. Whereas coding, finance and other high-IQ jobs have done very well, seeing only small dips in 2002 and 2008, ‘blue collar’ jobs – manufacturing, energy (drilling, fracking, oil exploration), mining, landscaping, and construction – have seen much more volatility and large dips in employment, first in 2008 during the housing bust, and then, in 2014, due to the energy/oil bust as oil plunged from $100 a barrel to just $30, resulting in the loss of hundreds of thousands of energy jobs.

5. Despite courses being ‘dumbed down’, the college dropout rate still stands above 50%. Parents and guidance counselors are to blame, too, in conscripting millions intellectually unfit students to a decades of debt, with noting to show for it. Charles Murray wrote that the minimum IQ to benefit from a ‘liberal arts education is around 110, which seems accurate (from Para Pundit):

There is no magic point at which a genuine college-level education becomes an option, but anything below an IQ of 110 is problematic. If you want to do well, you should have an IQ of 115 or higher. Put another way, it makes sense for only about 15% of the population, 25% if one stretches it, to get a college education. And yet more than 45% of recent high school graduates enroll in four-year colleges. Adjust that percentage to account for high-school dropouts, and more than 40% of all persons in their late teens are trying to go to a four-year college–enough people to absorb everyone down through an IQ of 104.

6. Students are to blame, too, in majoring in ‘worthless’ subjects. In the 90′s, when the job market was more tilted in favor of workers, those with useless degrees found work, but nowadays ‘social justice’ or ‘oppression studies’ are not skills employers are looking for. That’s why majoring in STEM is still the best path to prosperity. That’s not to say other degrees are a total waste, but research shows STEM has the best ROI.

7. Related to number 2, the labor market seems perpetually crummy, and for many jobs the supply of labor vastly exceeds the demand. During a 2011 national hiring day, McDonald’s received over a million job applications, and only 62,000 people were hired. The rise of the ‘gig’ economy, is an example of employees being paid for the economic value they produce, in our era of increased productivity and efficiency. Legions of millennials, with liberal arts degrees in tow, find themselves with jobs (assuming they can even find work) that are not commensurate with their academic credentials and expectations.

Overall, it’s apparent the problem is multi-faceted, and decades in the making. Solutions will be hard to come by. The first step is ‘unlearning’ the indoctrination, followed by learning skills employers are seeking.