Sacrificing the Future of Gen Y Ambitions

Millennials (Gen Y) are beginning to show an ambition born from the events that have influenced their young lives and common culture. According to Payscale.com, “Gen Y has a reputation for being entrepreneurial in spirit, and it’s reflected in the fact that they are 9.85 times more likely to study entrepreneurship and marketing than Gen X-ers or Baby Boomers”[1] Part of this can be explained by higher unemployment (especially for youth at around 20%) while the bulk of fresh job openings have been for low or minimum wages – this severely drives up competition between the youth seeking to enter the workforce.

However, it’s not just their own generation that they’re competing against. Due to uncertainty regarding policies such as Social Security, and retirement investments that were wiped in the myriad of crashes since 2001 – notably 2008 – many “Baby-Boomers” are delaying retirement. With significantly more years of experience, a larger percentage of Boomers are able to leverage that advantage to retain higher-paying jobs. In turn, this closes openings for Gen X-ers and Millennials, making upward mobility even more difficult to achieve.

Besides abnormally high competition, two key federal policies are encouraging entrepreneurial disadvantages toward the youth: the Affordable Care Act (ACA) and the student loan program. Soon, the ACA will shift the burden of financing health care, in large part to the young – younger and healthier workers will be asked to pay more in insurance premiums in order to offset the costs of the elderly.

According to Sam Cappellanti of the American Action Forum:

“…on average, a healthy 30 year old male nonsmoker will see his lowest cost insurance option increase 260 percent.

18-35 year olds typically utilize fewer health care services then other populations, and as such, their premiums are needed to subsidize the costs of caring for more expensive enrollees. The administration admits that without these “young invincibles” the exchanges may well fail. However, unreasonable premium increases and an ineffectual subsidy-penalty system appear likely to discourage young people from signing up, threatening the stability of the insurance market.”[2]

Student loans have in large part been back by the Federal government, creating artificially low interest rates, and increasing the available supply or financial aid and demand for college attendance – this in turn has created ballooning tuition rates at universities.

In the CATO Institute’s “Making College More Expensive: The Unintended Consequences of Federal Tuition Aid” by Gary Wolfram, he argues just that:

“One result of the federal government’s student financial aid programs is higher tuition costs at our nation’s colleges and universities. Basic economic theory suggests that the increased demand for higher education generated by HEA [Higher Education Act] will have the effect of increasing tuitions. The empirical evidence is consistent with that—federal loans, Pell grants, and other assistance programs result in higher tuition for students at our nation’s colleges and universities.”[3]

The combined affect of increased mandated health insurance premiums and college education costs, significantly more than previous generations, erodes at the capital Millennials have available to leverage in starting entrepreneurial endeavors

With all of the aforementioned considered, despite ambitions from a budding entrepreneurial new generation, problems in programs such as Social Security, the ACA, and student loans are creating a business environment more hostile to youth based innovative start ups than our predecessors have seen. If a nation would want to capitalize on such unfulfilled potential – or gain the support of such voters – it could do so by making retirement more feasible for the Boomers in order to create high paying job openings for youth, lower the costs of health insurance on the young to an equitable burden or remove the mandate entirely, and consider serious reform to the Federal student loans program with its relationship to skyrocketing tuition.

The truth is that if Millennials had less debt from school loans while being asked to shoulder the healthcare burden of the elderly, and had job openings available from retirement aged employees actually retiring, our country would be on a path of creating many more new, innovative companies to solidify our position as a world trade power. Instead, the current political reality appears to be the sacrificing of a younger generation’s potential for the benefit of the former.

Cited Work
1. http://www.payscale.com/data-packages/generations-at-work
2. http://americanactionforum.org/research/premium-increases-for-young-invincibles-under-the-aca-and-the-impending
3. http://www.cato.org/publications/policy-analysis/making-college-more-expensive-unintended-consequences-federal-tuition-aid

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