A new survey by Bank of America shows that nearly half of working Gen Z adults need financial support from their family to make ends meet. More than half of Gen Z adults do not pay for their own housing. Of those who do, two-thirds report spending more than 30% of their income on housing. More than twenty percent spend more than half of their income on housing.
So, it makes sense that most working Gen Z adults will not volunteer to live in a county where the cost of living is 20% higher than average. That puts Washtenaw County at a distinct disadvantage in terms of economic development. We cannot guarantee that we will have a steady stream of young adult workers, so it’s very difficult for new industry to commit to operating here.
Our cost of housing is higher than all but one other county in Michigan. The unemployment rate (3.4%) is lower than the state average (3.9%), but that’s not all good news. The lower the unemployment rate in an area, the harder it is for people to switch jobs. Taking a new job is one way to increase income. With a very low unemployment rate, there’s increased competition for available jobs, and workers’ salaries can stagnate while the cost of living rises.
On the other end of the Gen Z spectrum, more workers under the age of 18 are entering the workforce. More than half of teens who work (currently 37%) report that they use a portion of their income to help pay household bills. In other words, nearly 20% of all teens work to pay household bills. This tracks with Federal Reserve data that indicate a 5% decline in the percentage of parents with minor children who say they feel financially secure (64%).
Gen Z may need additional support in school
Once in the workforce, teens may find it difficult to return to school based on the cost of higher education and demands on their time. Teens whose income is essential to household financial support may be unable to extricate themselves from the daily grind to focus on school. Not to mention that giving up a portion of their earnings may make moving out impossible.
Living at home is not a minor detail. It means the prospective student is not considered independent of their parents for financial aid purposes. This may disqualify them for grant aid and may leave them with student loans as the only option for paying for school. Faced with the choice of working full time or taking student loans, full time work might seem like the better option.
This scenario may seem improbable in a “wealthy” county like Washtenaw, but it is important to remember that the wealth here is distributed unequally. It’s also important to recognize that “financial hardship” isn’t just limited to attendance costs. Rather, some recent high school graduates may not be able to attend school even when it costs nothing because going to school means giving up the income their household depends on. If we are going to change the future for Washtenaw County, we need to work on solutions that distribute economic opportunity more fairly to all people in every city or township. Increasing the earning potential of all of WCC’s programs is one place to start.
Photo Credit: Ishmael n. daro , via Flickr
