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Workforce participation, unemployment and loan debt affect different Millennials differently

Millennial Workforce

The Millennial consumer

In 2015, the Millennial generation became the largest numerical segment of America's workforce. In 2016, they will become the largest percentage of the workforce. Although Millennials have been slow to enter the housing market, the National Association of REALTORS® indicates that 91 percent of Millennials report that they want to get married and own a home. As they do so — and many have already bought homes — they will become the largest generation of homebuyers in American history. In the first edition of the Insights report, professor Steve Malpezzi of the James A. Graaskamp Center for Real Estate at the Wisconsin School of Business provides information and insights about your future customers. 

Workforce participation rates for Millennial workers is declining 

National workforce participation rates are dropping for younger workers and rising for older workers. As a result, just over 1 million Wisconsin Millennials are estimated to be in the workforce at the moment.
National Workforce Participation Rates Millennials
Source: U.S. Bureau of Labor Statistics

Annual earnings, 25- to 29-years-olds (2011 income)

If earnings of college graduates have yet to fully recover, 25- to 35-year-old workers with some college but without a four-year degree took the biggest hit and are still hurting: $640 in 2007, only back to $560 today. High school and below started low and stayed low: $527 in 2007, and $500 in 2015. Data on unemployment rates show qualitatively similar patterns. The unemployment rate for 25- to 34-year-olds who hold a bachelor's degree or higher is currently 2.5 percent. The corresponding rate for 25- to 34-year-olds with an associate degree is 3.3 percent; with some college but no degree is 6.6 percent; with high school only is 7.9 percent; and less than a high school diploma is 11.2 percent.   
Workforce Participation Rates Millennials

 Source: Georgetown Public Policy Institute.

Total student loan balances by age group

Annual new student borrowing peaked in 2010 because of a combination of lower enrollments and lower propensity to take a loan if enrolled. Furthermore, most borrowers have a current balance below $25,000. Recent annual default rates are slightly over 3 percent; and combining recent and past defaults, about 11 percent of loans outstanding are in default and another 6 percent are delinquent. Forty-six percent are current on the loan but not yet repaying principal, and 37 percent are current and actively paying down. 

The New York Fed research did not have data on the current income of borrowers but did show that defaults are concentrated among borrowers living in low-income zip codes. The immediate and direct effect of student loans on the ability to purchase a home appears to be concentrated among the small minority of college students who borrow large sums and fail to graduate.

 Total Student Loan Balances By Age Group

Source: New York Fed Consumer Credit Panel / Equifax.


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