The Progressive Ensign

insights and analytics to build an economy that works for all

Category: Millennials

Opioids Are Killing Our Young People Reducing Our Labor Force

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab.)

Image: thetab.com

The Opioid Epidemic is devastating for our young people.  The size of the opioid addiction death wave is so high that it is leading to a sharp decrease in the size of the 24 – 54 year old labor force group.

Sources: JAMA Open Network, Marketwarch – 6/7/2018

A paper recently published in the Journal of the American Medi­­cal Association found that 20 % of all Millennials deaths in 2016 were caused by opioid overdoses.  From 2001 to 2016 opioid deaths have increased by 292­­ %.  Experts believe the dip in the size of the 25 – 54 year old group is in part caused by the opioid epidemic compared to other developed countries.

Source: OECD Employment and Labor Market Statistics – 6/7/18

A comparison to OECD countries finds the U.S. labor force in the key mid-career 25 – 54-year-old group at 5 % less, which converts to millions of our young people left out of the labor force. When our labor force is not growing in this key age segment we are in store for a continuing decline in GDP growth, standards of living and few people to support our retired population. The total labor force even with the recovery since 2008 has been dropping to a 10-year low of 63 % overall:

Source: Department of Labor, The Wall Street Journal, The Daily Shot, 6/3/18

Certainly, more than the opioid epidemic is contributing to our low labor force participation rate including: companies automating many jobs so they are not hiring more workers, workers leaving the work force due to not finding work, a skills mismatch between job openings and candidates with the right skill set and the baby boomer population aging into retirement.

Next Steps:

The opioid epidemic strikes hardest in our Heartland as we recommended in an earlier blog on Heartland Development Centers that among other development investments to fund mental health, addiction and counseling services to help our young people in rural regions of the Midwest and South to return to active productive lives. Every day, families are suffering from the drug addiction crisis and our economy is suffering along with our young people.  Our Congress, corporations, non-government organizations, government and health services groups need to establish a partnership to target the problem of drug addiction head on, with a major funding commitment, the latest strategies in drug rehabilitation, and job training programs which include high quality apprenticeship skills development leading to good paying jobs.

Millennials Buried in Student Debt Can’t Buy Homes!

 

Student debt has soared to $1.4 trillion in the last month according to the Federal Reserve.  Now millennials are faced with a combination of soaring student debt and high home prices are giving up on owning a home.

Sources: Federal Reserve Bank of New York, US Census Bureau, New York Times – 5/29/18

In 2003, 42 % of people under age 35 owned a home now only 35 % own a home.  The dream of owning a home is slipping away as our society allows the rich continue to enjoy huge tax reductions in the most recent tax bill, with continuous lack of state funding for colleges and universities and then a paucity of forgiveness programs for graduates.  The lack of household formations, now at a low point since the Great Recession means that durable orders will fall and sure enough durables (ie. appliances, furniture, cars) orders have fallen recently.  As millennials and working class are squeezed between stagnant wages and rents, college debt, car loan payments, and credit card payments:

Source: Bloomberg, The Wall Street Journal, The Daily Shot – 5/29/18

Next Steps:

We saw this problem getting worse in our blog last April and suggested several solutions related to student debt forgiveness and interest reduction programs:

As part of the spending bill that Congress passed last month, $350 million was allocated for a fix it forgiveness program for some types of student loans.  Senator Elizabeth Warren has been surveying the issue and individuals trying to take advantage of the provisions where she found that it was quite complex, answers were in complete from the Department of Education and work still needed to be done to setup the process. She found many firefighters and teachers having a difficult time getting into the program.  Prior to passage of the spending bill Senators Whitehouse and Kaine wrote a bill to setup a student debt forgiveness program and get it funded, their bill set the stage for Democrats to push for provisions of the bill to be included in the omnibus spending bill.

This solution is still not enough compared to the huge issue of $1.49 trillion outstanding placing an anchor of debt on our young people when they need to be investing in starting their families and careers and buying homes. In blog of February 16th in our archives, we review an idea to cancel all student debt.  We like the idea moving forward, yet recommend that forgiveness be done in stages, by reducing interest rates, offering Heartland Service, providing a universal national service option and corporate sponsorship of an internship by the student.”

Our ideas stand today, as they did six weeks ago as Congress, the Elite and Corporate Nation States continue to ignore the fact that we are not doing right by our young people entering the economy and starting their careers.

Millennial Buyers Hit by Shrinking Inventory of Starter Homes

 

Image: ccdallas.org

The number of starter homes for first time home buyers has continued to decline over the past six years. Millennial first time buyers are struggling with high student debt loads, car payments and sky high rents.  Many young people can’t afford to live on their own and live with their parents into their late 20s and 30s. New household formations are at their lowest level since before the 2008 recession.

Sources: Trulia, Bloomberg – 3/22/18

On top of all the personal finance issues for first time buyers the price of housing continues to sky rocket now at a 7 – 8 % increase year over year.  Plus, the GOP Administration has slapped tariffs on Canadian imported lumber a major building material for homes giving a even bigger boost to prices.  The difference between incomes for starter home buyers and their incomes continues to spread with the housing affordability index at a 9-year low. For our economy we need a boost in first time buyer homes to increase house formation which will increase sales in home furnishings, appliances, and floor coverings – which are now flat to growing at only 1 to 2 % per year.

Builders make more margin on higher priced homes, so when they have a choice to build a high priced home versus an affordable one they will choose the high priced home.  So, how do we provide incentives for builders to build more starter homes, and increase the pool of first time buyers so builders have a good market for starter homes?

Next Steps:

Home builders are business focused, they see a declining number of first time home buyers so they build more high prices homes and they have few incentives from loan providers to build first time homes.

First, we need to mitigate the student loan debt load by refinancing their loans at lower rates, providing more workouts on favorable terms or for public service out and out forgiveness of the loan.

Second, the lumber tariff needs to be ended, so we can balance lumber markets between the US and Canada to reduce lumber prices

Third, we need to work with federal home loan agencies to finance more first time homes on more favorable terms, so young couples, or others can purchase their starter home.

When people own a home they take care of it and their neighborhood looks better, they gain an intrinsic sense of reward in caring for their home and making it theirs – renting can never provide that feeling.  Home ownership is a key pillar of our democracy building the equality of ownership. Homes need to be available to all to own, not just the wealthy.

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