The Top Economic Blockers Young People Faced in 2022
Contributions by Yasmine Mahdavi
As DoSomething explores its strategic objective of unblocking barriers to economic mobility for young people, our internal research team - the DoSomething Discovery Lab - conducted a two-part survey of our members about economic blockers in the summer of 2022.
DoSomething members told us in September 2022 that the two most pressing issues they face are educational access and economic opportunity and mobility. We don’t have to look very far to understand their why. Young people bore the brunt of the first pandemic recession where the unemployment rate for young workers ages 16–24 jumped from 8.4% to 24.4% from the spring of 2019 to the spring of 2020. They also experienced learning losses due to the transition to remote learning. Young people are disproportionately harmed as they enter the labor market during an economic downturn, especially when coupled with the astronomical cost of higher education tuition leading to mounting student loan debt. These factors can stifle short-term and long-term economic mobility.
We set out to learn more about young people and their sentiments towards these top-of-mind issues, as well as how these issues impact their attitudes on purchasing decisions. Why? Corporations need to pay attention to young people — not only because they are current and future business and community leaders — but also because they are a large and growing percentage of their consumer base. DoSomething Discovery Lab designed the survey to assess how young people are faring economically, their outlook on their futures, and how they prioritize their spending. The surveys were completed by DoSomething members who had been active between June - September 2022. Below are the key findings.
The perception of financial well-being becomes more precarious based on the age of the respondents.
Older respondents were more likely to express worry about their financial obligations. Across age groups, respondents told us their financial situation caused them to worry. Twenty-eight percent of 18-21-year-old and 35% of 22-25 year-olds respondents told us they were worried. That number increased to 40% for those older than 25.
As the respondents got older, they reported being less likely to be able to save money. Respondents older than 25 were more likely to note that their financial situations didn’t allow them to save money. While we also noted the pressures in younger adults, ages 22-25.
Best practice suggests saving at least 20% of one’s income per paycheck and putting it away into savings or investments. Additionally, having at least three months to six months of expenditures saved up in case of emergencies is often the baseline suggestion. Not surprisingly, savings were also a less reliable source to cover expenditures the older the respondents got; many were unable to save up sizable amounts of money to reach the three months of savings goal.
Respondents value the importance of economic security, but their confidence in attaining it is tenuous.
Young people often measure their future prospects against their parents' outcomes. DoSomething found that the older the respondent, the less confident they were they would have better economic opportunities than their parents.
The percentage of respondents who didn’t think they had better opportunities than their parents was significantly higher in those older than 25 — only 20% said they felt confident they would have better economic opportunities than their parents. Consistently, 22-25 year-olds also thought they would be worse off than the 18-21-year-old group.
One of the most alarming issues facing young people is the cost of obtaining higher education. Many believe that the price of attending college is prohibitive. Education Data reports that in 2022 the average cost of attendance for a student living on campus at a public 4-year in-state institution was $25,707 per year; for out-of-state students it was $43,421 per year; and for private, nonprofit university students it was $54,501. Between 1980 and 2019, college costs increased by 169% — while earnings for young workers rose by only 19%.
Young people are looking elsewhere for opportunities — be it vocational, community college or trade schools, but data suggests a college degree advances economic mobility further. According to Georgetown's Center of Education and the Workforce (CEW), two of out every three jobs require postsecondary education.
College graduates have substantially higher wages and lower unemployment rates. Georgetown’s CEW also found that the average graduate is 24% more likely to be employed and average earnings among graduates are $32,000 higher annually and $1.2 million higher over a lifetime. Individuals with college degrees are also less likely to need social services, more likely to own a home, and more likely to have jobs with good benefits.
DoSomething survey respondents saw the value of higher education, though as they got older their uncertainty in its value increased. While more than half of the respondents thought the benefits of higher education exceeded its cost, they also overwhelmingly noted that the cost played a role in their decision to attend college. Young people were interested in seeing potential employers pay for courses and training; seeing this as leading to positive outcomes on their path to higher education.
Beyond college, the majority of respondents felt uncertain that they would be able to obtain economic security in retirement, savings, home ownership and more. 86% of respondents said that finding quality work, characterized by livable wages, benefits, hours, job satisfaction, in a place they can afford to live was important for their economic security. Yet, only 15% were confident they could attain it. This disparity speaks volumes about what this group of young people sees for their future selves.
The Gen Z workforce is expected to double in size from its current 13% to 27% of the workforce by 2025. For your company, this holds an incredible opportunity to set young employees up for success and inspire them to achieve their desired career outcomes that they feel are so out of reach. If you’re not prepared for the shifting landscape of the workforce and understanding what motivates them, you’ll be at a disadvantage in attracting and retaining employees.
Young people are purchasing products based on price, quality, availability, and customer reviews.
A 2021 report found that Gen Z currently has $360 billion in disposable income. That purchasing power will seem like a drop in the bucket when their representation in the workforce doubles. So, what do we know about this generation that might influence its spending habits?
Gen Z values purpose-driven brands, diversity and inclusion in product and advertising, feelings of community, and a mixture of online and digital shopping experiences. They are also more progressive than previous generations, and the most racially and ethnically diverse. So, when it comes to purchasing decisions, there’s a lot to consider.
We’re seeing an economically painful triage of inflation, layoffs, and a looming recession which are hitting consumers and their wallets — especially young people. This fall, Gen Z reported that price, quality, availability, and customer reviews are the most important factors they consider when purchasing from a company. Young people are discretionary when choosing where to spend their money, but it’s not just about the price, quality, availability or reviews.
“We’re seeing an economically painful triage of inflation, layoffs, and a looming recession which are hitting consumers and their wallets — especially young people.”
In our survey, 44% percent of individuals agreed that a company’s values were important to them, so they research before they buy its products and services. Only 12% disagreed that company values are important to them and 44% reported being neutral. Additionally, 47% said they’d refused to buy from companies whose values didn’t align with their own. Twenty-four percent indicated they did not mind buying from companies whose values were not in alignment and 29% were neutral. These findings reveal companies should be clear about their values because Gen Z, and their growing purchasing power, see it as important.
As it relates to brand perception, the numbers are even more decisive. A 2021 DoSomething Strategic study found that 88% of Gen Z said a brand’s association or support for a social issue or cause has a positive impact on their overall impression of that brand. Eighty-eight percent also said it’s important for brands to take action around purpose. If your company is interested in brand building with young people, these numbers may catch your eye because it might be time to define your purpose or social impact platform if you have not already.
WHERE DO WE GO FROM HERE?
DoSomething’s economic blockers survey offers companies a snapshot of the mindset and outlook of some young people. We found them to be rightfully concerned as it related to their future economic prospects, college degree value, savings and more. It's evident that there are opportunities for the private and public sectors to collaborate to make skills acquisition and compensation more equitable. Working together to help young people unlock their economic potential to create a better world for everyone is good business. Contact DoSomething Strategic if you would like to be part of the solution.
Footnote: DoSomething defines it’s membership as 13-24 year olds but sometimes individuals 25+ engage in our programming or surveys.