Bernie Sanders commissioned the Government Accountability Office to study the consequences of the high degree of indebtedness borne by Millennials; the GAO’s report concludes that Millennials dreams are being “crushed” by debts — primarily student loans — which have limited their abilities to seek good employment, good housing, and to save for retirement.
Millennials — a generation that’s more racially diverse, more educated and more childless than any generation in American history — are substantially financially worse off than their parents, with both lower earnings and lower savings than boomers or gen Xers had at the same age. They are less likely to own homes than earlier generations did at the same age.
There are many factors contributing to the lower earnings and savings than other generations, but the single most dispositive one is student debt, with typical millennial-headed households carrying a debt-to-income ratio exceeding 100%.
The GAO report also takes into account the additional factors that influence economic mobility, such as parental income. Between one-third and two-thirds of economic status is passed down from one generation to the next, according to the report, so parental income has a significant impact on wealth and earnings. Geographically, people living in counties in the southeastern United States have lower rates of economic mobility than those living in the rural Midwest. To get more specific, growing up in an affluent neighborhood can positively impact a child’s future earnings to nearly the same extent that a bachelor’s degree does. When it comes to race, Black men have lower adult income than white men who grew up in the same neighborhood as they did in 99% of census tracts, even when accounting for parental income. Additionally, only 4.2% of Black children grow up in neighborhoods that have markers associated with higher levels of mobility, compared with 62.5% of white children. (The 1934 creation of the Federal Housing Administration — which made homeownership accessible to white people by guaranteeing their loans, and simultaneously refused to back loans to Black people — played a large part in historical racial disparity, and its legacy is still visible today.)
New Report From Bernie Sanders Shows How Debt Is ‘Crushing’ the Dreams of a Generation [Jameelah Nasheed/Teen Vogue]
(via Naked Capitalism)
(Image: Hardtopeel, CC BY-SA)