Earlier this year, the St. Louis Federal Reserve Bank looked at employment data for young adult workers. Over the last 30 years, workforce participation rates among young adults ages 18-24 have declined. In 1990, one out of five young adults experienced long-term unemployment. By 2022, that number had shifted to one in three. Having these prime-age workers in the workforce could make a significant difference for the US economy, but many of these would-be workers can’t seem to break into the workforce.
There’s been a lot of discussion regarding the “real wages” of young adult workers. Data scientists at the St. Louis Fed found that after adjusting their wages for inflation, and accounting for workers who do not work full-time, year-round, the wages of young adult workers have been mostly stagnant since 1969.
Stagnant wages mean that young adults can’t break into the workforce in a way that enables them to support themselves. Earlier this month, Bank of America released a study that indicated that nearly half of young adult workers rely on their parents for financial assistance of some kind. BoA wasn’t talking about assistance like remaining on their parents’ health insurance policies. The “financial assistance” that BoA was referring to included cash subsidies and assistance with day-to-day expenses that would be part of a person’s normal monthly budget.
Combine stagnant wages with high student loan debts, high housing costs, high transportation costs, and high food costs, and you’ll quickly see why even fully employed young adults can’t achieve real financial independence.
Livable wages would attract young adults workers
The Fed looked at those places where young adults could make enough to become financially independent. One such site is the Paducah Innovation Hub in Paducah, KY. “The Hub” is a 100,000-sq. ft. training facility that focuses almost exclusively on high-wage, high demand jobs in skilled trades, healthcare, and technology fields. The Hub is part of the K-12 school system. This enables these young adult workers to graduate from high school and move immediately into a high-paying job.
It is not a happy accident that the Ford Motor Company located its BlueOval SK electric vehicle battery plant 2.5 hours northeast of Paducah in Glendale, KY. Ford committed to building the facility there because it could find the skilled workforce it needs to manufacture electric vehicle batteries.
But to land the plant, the State of Kentucky had to build the necessary workforce first. Building the necessary workforce means building the infrastructure and educational programs that employers like Ford and other vehicle manufacturers need without having explicit guarantees that employers would locate facilities in Kentucky.
Same story in Ohio, where Intel announced that it would invest $20B in a new semiconductor plant just outside of Cleveland. Cleveland – through its community colleges – built Intel’s workforce before it landed the plant.
We need this kind of investment in occupational education in Washtenaw County if we expect the county to remain economically competitive. This approach would also help us retain our existing young adult workforce, attract new young adult workers from neighboring states, and create jobs that pay enough for our young adults to reside in Washtenaw County.
Ask yourself: why is our community college using our educational taxes to operate a quasi-private health club instead of building the local workforce capacity?
Photo Credit: JW Sherman, via Flickr
