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Over the last two decades, there has been much discussion noting and celebrating the diversity of young people, first with Millennials, then with Gen Z. The celebration of young, diverse generations can venture into wishful thinking territory — that young people will solve all of our country's problems with their diversity. That is a lot to put on the shoulders of generations that didn't create these problems.
Now don't get me wrong: I know the value of diversity and I truly believe in the power of young people — that's why I am the Executive Director of an organization dedicated to lifting up the voices of young people in the political process. Systemic racial gaps in wealth, income, and opportunity didn't just happen — they're the result of decades of deliberate policy choices — and they won't disappear just because of the diversity of today's young people.
Case in point: Young Invincibles just released a new report called the Financial Health of Young America that finds that racial wealth gaps are not getting better for young people. In many cases, they are getting worse. This is supported by a 2021 report from the Federal Reserve showing the wealth gap between white families and Black and Hispanic or Latino households growing over the past few decades.
The Young Invincibles report looked at the economic reality for young adults ages 18-34 across a number of metrics: income, employment, homeownership, retirement savings, and student debt. Pretty much across the board, young white people were doing much better than their Black and Latinx peers. Sometimes the differences were stark.
The report shows that in 2019, white young adult families had a median net worth of almost $46,000 higher than Black families in the same age cohort. In 2019, young white people were almost twice as likely to have a retirement savings plan as Black and Latinx young people. And many of these metrics were not trending in the right direction. According to the same report, "In 2001, white young adults were 11 percentage points more likely than Black young adults to own their home. In 2019, that difference rose to nearly 36 percentage points." The Fed conducted their own survey showing that Black wealth was less than 15% of white wealth.
All of these metrics paint a very uneven financial reality on the eve of the Covid-19 pandemic. The massive upheavals of this crisis affected nearly everyone, but not in equal ways. White young people were the least likely to be out of a job in the early days of the pandemic, behind their Black, Latinx, and Asian peers. The results of this were more instability for young people of color, who were more likely to report food insecurity and missing or late housing payments, according to the Young Invincibles report.
More than two years on from the start of the pandemic, sky-high unemployment has given way to the highest rates of inflation since the 1980s. Young people, who are especially likely to live paycheck to paycheck, have been hit particularly hard. While Congress and the Biden Administration have made bold moves to blunt the worst of the economic impacts, we know people are still struggling based in part on a report showing nearly half of Americans surveyed expect to increase their debt in response to inflation.
Our report includes a number of specific recommendations to start to roll back racial wealth gaps. There are concrete ways that policymakers can address these issues — like raising the minimum wage, reforming the credit score system, and expanding tax credits that help young adults. And while President Biden's recent announcement to cancel some student debt for most borrowers is a welcome step in the right direction, that cannot be the end of action to make college a more affordable reality for all.
While legislative change can move slowly, those in the private sector can make changes now to help young people gain financial stability and narrow these racial gaps. Employers can and should pay a living wage to employees of all ages. Intentionally recruit a diverse candidate pool when hiring and consider offering student loan repayment benefits to make your job more appealing to those struggling with high debt loads. And make sure quality candidates are not pushed out of your hiring pool by applications that ask about criminal backgrounds or use credit checks as employment screenings.
The stubborn persistence of the racial wealth gap among today's diverse young adults should be a wake-up call for lawmakers and employers alike. We cannot continue to sit back and hope for the best. It's time for action