Prospects for Millennials: What’s Wrong and What Can Be Done

Last month’s National Academy of Social Insurance conference highlighted the grim world Millennials are inheriting. It also gave a platform to some creative solutions that include expanding and creating new social insurance programs. Example: Universal Family Care.

As someone who researches and writes about history, I’m naturally skeptical of the concept of generations. For the most part, “generations” are arbitrary categories that lump together groups of people whose experiences of life are starkly different, muddling our ability to decide the best policies—and politics—for society as a whole.

For “Millennials,” however, I’m inclined to make an exception. The National Academy of Social Insurance made “Regenerating Social Insurance for Millennials and the Millennium” the theme of its annual policy conference at the end of January, and the event made a strong case that this is one generation with distinct needs and a distinct profile.

On the surface, Millennials are still a vastly disparate group. They are the most diverse cohort, ethnically, in American history, Jean Accius, vice president at AARP Public Policy Institute, pointed out in the conference’s opening panel—and this at a time when income and life prospects between racial groups in the U.S. are diverging. But the Academy framed its definition of Millennials—individuals born between 1980 and 2000—in a different and very useful way. What marks them, and colors their lives profoundly, is the era in which they were born. They all came of age after September 11, 2001, reached adulthood just before or after the 2008 financial collapse, and have seen the political scene reshaped by both Black Lives Matter and the election of Donald Trump.

Millennials thus grew up in an era of seemingly perpetual war (and expenditure on war) and entered an economy reshaped by the grim “new normal” of the jobless recovery and the brutal restructuring of the job market that followed it (and that’s still playing out). Depending on where they began in life, Millennials’ experience is widely different, but these changes have shaped (if not scarred) their journey from the start and will continue to do so.

Evan Avila, a student at University of Maryland, Baltimore County, who won the 2019 iOme Challenge, a national research competition about financial security in retirement, noted that 53% of Millennials carry student loan debt, and that 59% of these worry whether they will ever be able to pay it off. Katie Kirchner, national director of the Roosevelt Network, added that much of that debt is owed to “predatory for-profit universities” and that the holders are disproportionately people of color and women. And much of it is not in the hands of Millennials at all but rather their parents and grandparents, who took out loans themselves or acted as guarantors for their children’s and grandchildren’s student loans.

The conference assembled a chartbook that highlights other ways in which Millennials are growing up in a dramatically more precarious world than (say) the Baby Boomers.

  • They haven’t benefited much from the vaunted “rising tide”: purchasing power for Americans was almost identical to its level in the mid-1970s (Pew Research Center).
  • The gap between productivity and the typical worker’s compensation has widened enormously during that period as well (Economic Policy Institute).
  • The cost of education, in the form of inflation-adjusted tuition and fees, has ballooned (The College Board).
  • Millennials are less likely to be homeowners at age 30 (35.8%) than Baby Boomers at the same point in their lives (48.3%), with all the consequences that implies for the ability to accumulate wealth over their active careers (Stanford Center on Longevity).
  • Close to half (42%) of workers 18-34 were freelancing in 2018, far higher than older cohorts (Edelman Intelligence), suggesting they are also less likely to be enjoying health care and other benefits, less able to save, and if they work under the table, less likely to be accumulating benefits under Social Security and Medicare.
  • Perhaps not surprisingly, then, their confidence that they will receive Social Security is low: 25% vs. 66% for Boomers born before 1956 (National Academy of Social Insurance).
  • Speaking of retirement, Millennials’ entry into the workforce also coincides with a period when the risk of being unable to maintain their pre-retirement standard of living is going up, having jumped from 38% in 2001 to 50% in 2016 (Center for Retirement Research at Boston College).

Interestingly, one of the few areas in which these relatively new entrants to the workforce have seen their prospects improve is health care. Whereas 17.1% of the non-elderly population was uninsured in 2008, when relatively few Millennials were in the workforce, that figure went down to 10.2% in 2017, three years after the Patient Protection and Affordable Care Act went into effect. The right has been doing all it can to gut the ACA since it passed in 2010, of course.

In the mid-1990s, when the “Clinton prosperity” was in full swing and the Boomers were in their prime working years, much of this grim landscape was already in place—but it seemed likely to be temporary. Here’s what Fed Chair Alan Greenspan told the Senate Banking, Housing, and Urban Affairs Committee on February 27, 1997:

“The performance of the U.S. economy over the past year has been quite favorable.… Continued low levels of inflation and inflation expectations have been a key support for healthy economic performance.… Atypical restraint on compensation increases has been evident for a few years now, and appears to be mainly the consequence of greater worker insecurity. The willingness of workers in recent years to trade off smaller increases in wages for greater job security seems to be reasonably well documented. The unanswered question is why this insecurity persisted even as the labor market, by all objective measures, tightened considerably.”

“Restraint” on worker pay is a good thing for the economy, in other words, but it’s unlikely to last. And while we’ve seen some tightening on compensation in the past year, wage lag has become integral to many companies’ profit model. What once appeared to be a correctable quirk has hardened into an economic system. This is the world the Millennials are inheriting.

The conference wasn’t all gloom and doom—participants discussed new economic policies that can address changes in the nature of work; the future of health care reform, including the new Democratic proposals to expand Medicare access; and how to address misconceptions about Social Security. As the numbers suggest, Millennials will depend on social insurance systems, particularly Social Security and Medicare, more than any other recent cohort of workers, since they are likely to have less access to employer-based health care and less ability to save and accumulate wealth on their own, and because the cost of improving their career prospects through education is so high.

Expanding Social Security, happily, is back on the table in Washington, and some conference participants touched on the Social Security 2100 Act that Reps. John Larson (D-CT), Conor Lamb (D-PA), and Jahana Hayes (D-CT) introduced in January with the support of more than 200 House Democrats. The first proposal to expand Social Security in 45 years that stands a solid chance of passing a house of Congress, the bill would boost old-age benefits across the board by about 2% of the average benefit, increase the minimum benefit for people who worked in low-wage jobs most of their careers, and adjust the benefits formula to better reflect the expenses the elderly actually face in retirement. To pay for this, the bill would raise the payroll tax cap on earnings subject to Social Security payroll tax and raise the payroll tax rate to 14.8% from the current 12.4% over the next 24 years.

There’s a lot of justifiable excitement over the Social Security 2100 Act, but perhaps the most intriguing proposal discussed at the conference involved creating, in effect, a new social insurance program, starting on the state level: the first time this has been done in the U.S. since Medicare in 1965. Designed by Caring Across Generations, the national caregiving advocacy group, it’s called Universal Family Care; a ballot proposition embodying it failed in Maine last fall, but supporters vow to pursue it in the state legislature this year.

As a quick summary, Universal Family Care would include universal child care as well as home care for seniors and the disabled, plus paid family leave, and for care workers, a 50% wage and benefit increase, new quality standards, and payroll check-off to form worker advocacy organizations. The expectation is that both the child care and home care programs would scale up over five years. To pay for the new program, Caring Across Generations would apply an additional payroll tax on incomes above the Social Security cap of $118,000, amounting to 6.2% each for employers and employees. This would also be applied to non-wage income such as stock dividends (a “worker solidarity tax”).

Other contributions would come from federal appropriations like Head Start, TANF, and Medicaid. What’s most important, however, is that the benefits would not be means-tested. While Universal Family Care, like Medicare, would not rely exclusively on payroll tax, it would otherwise be a classic social insurance system—in concept, a form of mutual aid—and not a new kind of “welfare.” That’s vital to protecting it from the steady erosion that means-based programs have suffered for decades at the hands of both Republican and Democratic administrations.

Millennials would gain particularly, since caregiving is a bigger burden for them than for previous age groups. Seventy-three percent of Millennials who are family caregivers are also holding down a job compared with 62% of Boomers, and some 15% of their out-of-pocket expenses go to caregiving, according to AARP. “The future of work runs straight through caregiving,” said Indivar Dutta-Gupta, co-executive director of the Georgetown Center on Poverty and Inequality.

Without some support, the pressure will only get worse, noted Alexandra Bradley, who is leading the Academy’s Study Panel on Caregiving: caregiver support networks within families are declining from a ratio of 7:1 to 3:1, projected, by 2050. More care workers will be needed, and without something like the system of finance envisioned in Universal Family Care, the strain on state and local budgets will become severe. That’s another reason a social insurance-style funding system makes sense.

Universal Family Care “helps break us out of a box” in which most of the discussion has focused on long-term care alone, said Henry Claypool, policy director of the Community Living. Policy Center at the University of California, San Francisco. “I hope [Universal Family Care] will stimulate efforts at the state and eventually at the federal level,” said Dutta-Gupta, in part because caregiving is one need that simply can’t be solved through the free market. “You can’t offshore it, and nobody wants a robot to take care of them. The answer is a substantial public investment.”

It’s also an opportunity for the long-dormant project of social insurance, which began with the publication in 1935 of the report of the President’s Committee on Economic Security, to start moving forward again.

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