The Growing Financial Challenges Facing Young Adults in 2022

The financial landscape for young adults in America is shifting, with more than one third of 18 to 24 year olds reporting no income through wages or a salary in 2022, according to a recent report from the St. Louis Fed. This figure has increased significantly from about 22% in 1990, highlighting a concerning trend of young workers dropping out of the workforce before they even begin.

One of the key factors contributing to this trend is the mismatch between college degrees and skills-based jobs that employers are hiring for. A February report from Burning Glass found that about half of workers with a bachelor’s degree are underemployed, meaning they are working jobs that don’t make use of their degree within a year of graduating.

The youth mental health crisis is also playing a significant role in hindering young adults from seeking and holding jobs. The Fed report noted that mental health issues can act as a barrier to income and wealth creation, further exacerbating the challenges faced by this generation in the job market.

Despite the strong labor market in 2022, young adults are feeling financially unstable, with many believing that this period of instability is unlikely to end. Employers are increasingly focusing on skills-based hiring over educational credentials, emphasizing the importance of actual abilities and skills in the hiring process.

While the employment-to-population ratio among 20 to 24 year olds has been higher in recent years, the real incomes of young adults have remained essentially unchanged as zero-wage adults make up a growing proportion of the age group. It is clear that there are significant challenges facing young workers in today’s economy, and addressing these issues will be crucial in ensuring a more stable and prosperous future for the next generation.