Young, broke and on your own in Ohio

Akron Beacon Journal - April 23, 2010
   

by Amy Hanauer and Nancy Cauthen, in The Akron Beacon Journal 

Ohio’s young adults are coming of age in a tough economy, ravaged by a deep recession and further damaged by 30 years of declining opportunity and security for all but the most highly educated and affluent. Economic opportunity for young Ohioans has expanded in some important areas — such as college enrollment and women’s earnings — but overall trends are worrisome.

Skyrocketing costs make it difficult for students to complete their degrees, employment has become less stable, earnings have declined steeply for workers without a four-year college degree, and young adults are increasingly saddled with debt.

Why do today’s young adults face steeper financial challenges than their parents did?

A new report by Policy Matters Ohio and Demos points first to changes in the economy itself. Since the 1970s, technology and globalization have contributed to the erosion of Ohio’s manufacturing sector. As unionized blue-collar jobs that paid decent wages and provided health and retirement benefits gradually disappeared, growth occurred in the low-wage service sector where jobs are typically nonunion and offer less security and fewer (or no) benefits.

In the process, earnings for men ages 25 to 29 with no education beyond high school fell by one-third in the 40 years since 1970. Our report, ”Building Ohio’s Future Middle Class: Addressing the Challenges Facing Young Adults,” also argues that public policy failed to keep pace as the economy changed.

In the decades following World War II, Americans experienced unprecedented opportunities. First, the GI Bill and then the Higher Education Act of 1965 increased access to college and made it more affordable. Homeownership increased as government programs enabled more people to obtain home loans, made mortgage interest tax deductible, promoted suburban housing development and enacted reforms to end discriminatory lending practices.

Income and wealth grew as public policy fueled the economy by ensuring a tight labor market, promoting full employment and erecting fewer barriers to union organizing. Federal legislation raised the minimum wage to a historical high in 1968.

Postwar federal policy efforts were bolstered by state investments — in a strong state university system, highways and other infrastructure — all of which created opportunities for hard-working Ohioans to enter the middle class. In short, the expansion of a thriving middle class in Ohio in the 1960s and 1970s didn’t just happen — government, business leaders and workers forged an implicit social contract that rewarded responsibility with opportunity.

The unraveling of the social contract has left us all more vulnerable in what’s been called the ”you’re on your own” economy, but young people must confront the full force of these trends. Earnings for full-time workers under age 35 are substantially lower today than a generation ago, except for women with a college degree.

All the hallmarks of a middle-class life — a college degree, a home, family security — are more expensive. Two-thirds of four-year college students in Ohio graduate with student loan debt averaging $24,000. Ohio renters ages 25 to 34 spend a third of their incomes on housing. The average annual price of full-time center-based child care for two preschool-age children in Ohio is nearly $17,000.

How are young Ohioans balancing lower earnings with higher costs? They are racking up debt not only to pay for school but also to cover basic expenses.

It doesn’t have to be this way. The right policies can restore opportunity for Ohio’s young people and rebuild entryways to the middle class. The health-care bill recently signed into law allows young people to stay on their parents’ plans longer and helps low-income adults afford care, an important first step toward an improved social contract.

The same piece of legislation — the Healthcare and Education Affordability Act — invests $36 billion in need-based financial aid for low-income college students by eliminating wasteful subsidies for private student loan lenders.

Last year’s recovery act hasn’t yet fixed an economy that had barely survived the car wreck brought on by decades of deregulation and disinvestment. But it has at least gotten things moving slowly in the right direction.

In Ohio, we must work to restore cuts made in the current budget to need-based grants and internships, particularly for community college students. Additional necessary steps include creating good jobs through the public sector to ease unemployment and regulating abusive lending practices.

Good public policy created America’s middle class in the era after World War II and now it is time to build a better future for the next generation.

Let’s not let the moment pass.

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