January 23, 2006

20-somethings face grim future, young authors say

Good thing my father owns a business — I graduated from college in the mid-1990s with a liberal arts degree that advertised no marketable skills or suggested an obvious career path. But as a short-lived employee at his mixing plant, I at least enjoyed free health insurance and the use of a company sales car.

Kamenetz

Draut

Most young adults aren't so lucky. College grads and others entering the work force face fewer benefits, steeper health costs and less job security than their parents did. Add mounting student debts, housing and child care costs, and the climb to the middle class can look steeper than a walk up the side of the Space Needle.

A Town Hall lecture series beginning next week features three authors — well, actually two — who have closely studied the financial challenges facing the 18-to-34 set, and concluded that the picture isn't rosy. The third author, humorist Dave Barry, will talk about his most recent book, "Money Secrets: Like, Why is there a Giant Eyeball on the Dollar?"

Anya Kamenetz, a 25-year-old columnist for the Village Voice, is concerned that young adults face "a diminishment of opportunity," thanks in part to the proliferation of low-quality entry jobs and temporary positions, the collapse of pension plans and the insidious lure of credit cards.

Policy failures are also to blame. Her new book, "Generation Debt," argues that amid runaway deficits and soaring entitlement costs, "it's not too dramatic to say that the nation is abandoning its children."

She builds her case with plenty of research:

For example, while only 38 percent of high school freshman go on to attend college (many fewer graduate), the majority of those that do attend for four years emerge, on average, with $23,000 of loan debt. Three out of four college students have credit cards, too, and carry an average balance of $2,169.

Young adults, then, are putting their dreams of owning homes and starting families on hold while they dig themselves out of debt, she argues.

"It's taking longer for people to establish themselves," Kamenetz said in an interview. "When you're just starting out, you're starting behind."

Older workers also face job insecurity and the effects of mercurial market forces, she acknowledged, but younger workers must also support a generation of baby boomers set to retire with Social Security and newly expanded Medicare benefits in tow.

Medicare alone, she said, will eventually take up 30 percent of the federal budget.

Kamenetz doubts such entitlements are sustainable, and wonders what they will mean for the economy in the decades to come.

She shies away from offering solutions, and instead counsels young adults to educate themselves about economics and avoid falling into debt.

"I don't want to advocate policy as panacea," she said.

Tamara Draut takes a different approach.

As the director of the Economic Opportunity Program at Demos, a public policy center based in New York, Draut argues that the government has let young people down, and it's time to demand more.

Her new book, "Strapped," like "Generation Debt," makes the case that young adults have it rougher than generations past, but it also considers how policy changes can help give younger workers a leg up.

"Oftentimes it feels like our vote doesn't make a difference," said Draught, who at 34 also can also identify with the group she writes about.

"It's sort of a vicious cycle," she said. We don't vote, so politicians don't listen.

Her first recommendation is to end what she calls the debt-for-diploma system. Grants, rather than loans, free college students of onerous debts and can help close the education gap between whites and African Americans, she said.

The government should take on health insurance, too, given that escalating health-care costs are holding back American companies — the auto industry is well-publicized example — from competing globally.

Despite the apparent good health of the economy, Draut worries that as wages stagnate and costs for essentials continue to rise, we'll see consumption start to decline.

"People are almost to the point where they can't leverage any more," she said.

Not everyone buys into the doom and gloom.

Todd Britsch, president of New Home Trends, a residential-construction research firm based in Mill Creek, said the past two years have been the best for first-time buyers in the past 25 years.

If anything, young adults suffer from inflated expectations, and few are willing to save.

"Kids out of college want the job that pays $50,000 a year with three weeks' vacation, 401(k) and 100 percent medical," he said. "The want to live like their parents live today."

With escalating land costs, few first-time buyers can afford newly built homes, he said, but condo conversions and older, smaller homes are realistic alternatives.

Young families that want big yards will face long commutes, he said, but many are willing to put up with the compromise. Pierce and Thurston counties, for example, will see big jumps in residential construction in the years ahead.

"The priorities that young adults have today differ extremely from what we had at that age," Britsch said. "They would rather have the nicer car."

Tamara Draut will speak at Town Hall at 7:30 p.m. Jan. 30. Anya Kamenetz will appear at 7:30 p.m. Feb. 9. Dave Barry speaks at 2 p.m. Jan. 29. Town Hall is located at 1119 Eighth Ave. in Seattle.