When you do not have a job (or have a low paying job), and are stuck with education costs that you cannot possibly pay back, what do you do?

Eight Unfortunate Choices

  1. You stay in school accumulating debt
  2. You go back to school accumulating debt
  3. You move back home
  4. You share an apartment with others
  5. You delay marriage
  6. You delay having kids
  7. You delay buying a house
  8. You wish and hope and pray for better times

Those choices are not mutually exclusive. In general you wait, hoping for something good to happen.

Generation Wait

Please consider ‘Generation Wait’: Share of young adults who move hits 50-year low

U.S. mobility for young adults has fallen to the lowest level in more than 50 years as cash-strapped 20-somethings shun home-buying and refrain from major moves in a weak job market.

Among adults ages 25-29, just 4.9 million, or 23.3 percent, moved in the 12 months ending March 2013. That’s down from 24.6 percent in the same period the year before. It was the lowest level since at least 1963. The peak of 36.7 percent came in 1965, during the nation’s youth counterculture movement.

Demographers say the delays in traditional markers of adulthood — full-time careers and homeownership — may prove to be longer-lasting. Roughly 1 in 5 young adults ages 25 to 34 is now disconnected from work and school.

The overall decline in migration among young adults is being driven largely by a drop in local moves within a county, which fell to the lowest level on record. 

While homeownership across all age groups fell by 3 percentage points to 65 percent from 2007 to 2012, the drop-off among adults 25-29 was much larger — more than 6 percentage points, from 40.6 percent to 34.3 percent.

More Young Adults Stay Put

Yahoo!Finance has an interesting chart that shows More Young Adults Stay Put.

Structural Issue

Unlike what Bernanke thinks, this is a structural problem. And I have been talking about it for years. Here are a few examples.

Percentage Employment

Here is a chart courtesy of Tim Wallace from the last link above.

In 1990 close to 60 percent of those 16-19 were working. Now it’s under 30%. In the 20-24 age group the percentage fell from 75% in 1988 to under 65% now. Why?

Structural Demographics Poor

This is what I said in my May 2008 post Demographics of Jobless Claims.

Structural demographic effects imply that prospects in the full-time labor market will be poor for those over age 50-55 and workers under age 30. Teen and college-age employment could suffer a great deal from (1) a dramatic slowdown in discretionary spending and (2) part-time Boomer reentrants into the low-paying service sector; workers who will be competing with younger workers.

Ironically, older part-time workers remaining in or reentering the labor force will be cheaper to hire in many cases than younger workers. The reason is Boomers 65 and older will be covered by Medicare (as long as it lasts) and will not require as many benefits as will younger workers, especially those with families.

In effect, Boomers will be competing with their children and grandchildren for jobs that in many cases do not pay living wages.

And here we are. Any Mish readers surprised?

Mike “Mish” Shedlock