This Thanksgiving, the kids are not all right
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It's a hard time to be a young adult. Unemployment for the group is spiking, homeownership is increasingly out of reach, and return on investment in a college education is unclear.
Why it matters: The American Dream sold to Gen Z feels further from reality than ever, according to a new study from Oxford Economics. The scars of that could last their lifetimes.
What they're saying: "Unemployment is rising, and wage growth is declining for young adults, which could have a long-term scarring impact," wrote Grace Zwemmer, an economist at Oxford Economics and author of the report.
By the numbers: We have a no-hire, no-fire labor market in the U.S., which is challenging for workers who are trying to get jobs, many for the first time.
- Unemployment among workers ages 20 to 24 rose 2.1 percentage points since early 2023. For ages 16 to 19, unemployment is up 3.5 points.
- In contrast, unemployment for workers over 25 has barely moved.
- Wage growth for workers 16 to 24 is also falling faster than for any other age group, and upward mobility, normally strongest early in careers, has stalled as job-switching opportunities vanish in a tight market.
Between the lines: Gen Z is starting with low wealth, and high asset prices may delay the catch-up period other generations had.
- Millennials also entered the job market during a downturn but eventually surpassed Gen X and boomers on wealth accumulation by the same age.
- Gen Z could still follow a similar trajectory, but only once wage growth revives and more affordable housing returns.
Zoom in: Layoffs are also rising among workers ages 22 to 28.
- The study does not cite AI as one of the reasons behind that shift, but strategists tell Axios that young people are more easily replaced by AI.
Reality check: Gen Z holds less debt than older generations did at their age, including student loans.
- Still, credit card delinquencies are rising fastest among young borrowers.
Threat level: This is not just about the personal economics for young people. This trend could also have macro implications.
- Oxford Economics estimates that 1 million more young adults are living at home than pre-pandemic trends would imply.
- Young adults living with their parents spend over $12,000 less annually than peers who move out, per New York Fed research cited in the report.
- Notably, they are not reallocating the savings to discretionary purchases, resulting in a $12 billion to $13 billion hit to U.S. consumption, or 0.1% of total spending.
The bottom line: Young workers are taking the brunt of a softening labor market because they are either entering it for the first time or reentering it after graduation, just as competition for openings intensifies.
