Pew Research and APM's Marketplace are reporting that household income is not keeping pace with increases in rent. According to Pew, after the recession of 2007 - 2009 fewer people were able to transition from rentals to home ownership. Add to that the influx of millennials into the workforce increasing the demand for rentals, and the supply of rentals is down while demand is up.
Millennials are taking a double whammy. Home prices stagnated and fell during the recession and its aftermath have rebounded to the higher prices seen during the bubble of 2007. Millenials are priced out of the market. Millennials aren't the only demographic facing the financial pinch.
17 million are rent burdened and the numbers keep going up. Rent Burdened is defined by HUD as cost-burdened families. Those “who pay more than 30 percent of their income for housing” and “may have difficulty affording necessities such as food, clothing, transportation, and medical care.” Severe rent burden is defined as paying more than 50 percent of one's income on rent.
The Pew study finds 38 percent of all renter households are burdened. Severely rent burdened households—spending 50 percent or more of monthly income on rent—increased by 42 percent. It is now 17% of all renters.
The chart below demonstrates that the problem has been getting worse since 2001.
Less Disposable Income
Households that are rent burdened have fewer dollars to spend. They often make choices between healthcare, food and education. According to Pew's findings: Rent-burdened families are also financially insecure in many other ways:
Nearly two-thirds (64 percent) had less than $400 cash in the bank; most (84 percent) of such households are African-American-headed.
Half had less than $10 in savings across various liquid accounts, while half of homeowners had more than $7,000.
The growing disparity is leading to a growing underclass that is on the outside looking in with little hope of reversing their situation. Our economy is stronger when our citizens are able to participate as individuals and as consumers. Keeping large portions of the population on the outside will only further divide us. And there's a growing cost of poverty. The cost of child poverty: $500 billion a year. The United States has the second-highest child poverty rate among the world's richest 35 nations, and the cost in economic and educational outcomes is half a trillion dollars a year, according to a new report by the Educational Testing Service.
Bob Dylan once wrote, "20 years of Schooling and they put you on the day-shift." It was a smack at a system that was trying to assign all of us a number. Remember, Don't fold, spindle or mutilate? That was a counter culture rebellion against making all of us a data point. Both had underlying motivations in the desire to be valued as an individual. The Graduate was told his future was in plastics, and we snickered.
50 years later the data points have won. The best we can do is prepare for the future.
Gigging Millennials
Millennials are facing the brunt of a sea change in how we find work. The Gig Economy is taking over. Estimates are that 34% of the workforce participates in the gig economy. Intuit is estimating that within two years that in two years 43% will be in the gig economy. Work in the gig economy is temporary, with the best gigs going to people with the right skills. The best jobs are in IT and computers.
Education is how workers get the skills, but the model used by boomers, go to school, learn to think, get a degree and get a job isn't really working anymore. The required skill sets are much more specific.
With that in mind here are some of the weakest majors for today's job market.
A posting from from CollegeGrad.Com ranks the Top Ten Worst majors for Jobs. You'll see a lot of majors that were popular through the 90's. It is not surprising that Liberal Arts tops this list. With liberal arts colleges charging as much as $70,000 per year for a full ride, you might have to question, "Is this really worth it?" It sure seemed that way when I went to school.
Liberal Arts/Liberal Studies
English
Humanities
Journalism
Art
Music
Theater Arts
Marketing
Public Relations
Management
The Only Constant is Change
Change is coming at us faster than any of could have imagined in the 60's and 70's. We're all struggling to keep up, and that includes educational institutions. According to the authors the book Careermegeddon - Cracking the 21st Century Career Code, Marcia LaReau and Neil Patrick assert events are conspiring to make good scarce and hard to retain. They cite six engines of change:
Globalization and offshoring
Technology, artificial intelligence, and robotics
Disruptive business models
Education and the speed of institutional change
Demographics and the aging population
Fiscal policy
With job requirements changing so rapidly, and job skills becoming obsolete within five years, keeping current is the only hope for employment that provides a sustainable lifestyle. That coupled with the trend toward more contract workers makes the work environment a lot less stable. This book is a place to start working on your career plans.
Advancement and Education
Getting the right training and keeping skills current are essential, but are educational institutions able to keep up with the rapid change? When I went to college, we were supposed to follow our dreams. I was encouraged to pursue a career in a field that most closely matched my gifts and my dreams. It would all work out, and for 31 years it did. That is, until the great recession. Changes in how people consume media and age have conspired to force me to re-purpose myself, and I'm not alone.
Millennials and Uncertainty
Could it be as simple as a STEM education? It all depends on the direction. According to the National Science Foundation STEM careers in computing are going unfilled right now with many more jobs than qualified applicants. The same is not true for careers in engineering, physical sciences and mathematics. There are exceptions in engineering. Jobs that deal with extracting mineral wealth from the earth pay well with low unemployment rates. It's a highly skilled position with a limited number of openings. The gig economy has highs and lows matched with uncertainty. It's an uneven ride. We all need to be prepared.
Pew Research and APM's Marketplace are reporting that household income is not keeping pace with increases in rent. According to Pew, after the recession of 2007 - 2009 fewer people were able to transition from rentals to home ownership. Add to that the influx of millennials into the workforce increasing the demand for rentals, and the supply of rentals is down while demand is up.
