“Strapped” author Tamara Draut explains why young adults arent getting ahead

In her new book, Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead, Tamara Draut crunches numbers and interviews young adults across the country to show how, for the generations following the Baby Boomers, the transition to full-fledged adulthood—living on your own, launching a career, starting a family—has become difficult to accomplish without going broke. Today, she writes, non-college-educated young people can’t find decent-paying jobs, while those who do graduate from college are burdened by student loans their Baby Boom forebears largely avoided. Living in the places that are best for starting careers—places like Boston—has become so expensive that sharing the rent with roommates is not enough to avoid mounting credit card debt, and buying a home is possible only in the hinterlands. Starting a family only compounds financial difficulties, as couples combine debts as well as resources, and having children brings not only joy but, in a two-paycheck-minimum economy, mounting child care expenses.

Unlike the children of the 1950s, who manned the barricades in the social movements of the 1960s and ’70s, the post–Baby Boom generations have not rebelled against their increasingly difficult circumstances, but have suffered in politically disengaged silence. “Their biggest character flaw,” writes Draut, “is that they expect too little from our society—and too much of themselves.”

This pairing of economic analysis and political call-to-arms reflects Draut’s position as a staff member, since 2001, of Demos, a national think tank and advocacy group based in New York City. Founded in 2000, Demos engages in research and agitation to close what it calls a “prosperity gap” resulting from inequities in economic opportunity and a “democracy deficit” that leaves politics to insiders while most Americans stand helpless on the sidelines. As director of Demos’s Economic Opportunity Program, Draut has authored or co-authored such reports as Millions to the Middle: Three Strategies to Expand the Middle Class, Retiring in the Red: The Growth of Debt Among Older Americans, and Borrowing to Make Ends Meet: The Growth of Credit Card Debt in the ’90s.

Focusing Strapped on the particular financial struggles of younger adults is a function not only of professional duty but also personal experience. The daughter of a machinist and an office manager and the first—and still only—member of her family to go to college, Draut got her bachelor’s degree (from Ohio University) debt free. But graduate school—she got a master’s degree in public administration from Columbia—left her with “enormous amounts of student loan debt,” she says by phone from her Demos office. Living in New York City on what she calls, in the book, “unstable incomes from shoestring salaries and three bouts of unemployment,” she and her also-college-educated husband found themselves entering their 30s saddled with $57,000 in student loans and $19,000 in credit card debt, and, at one point, without two dimes to rub together. Draut opens her book describing their coping strategy:

“They say music feeds the soul. When you’re flat broke, it can also feed your stomach. Several years ago, my husband and I found ourselves sitting in the middle of our living room floor, our entire CD collection spread out before us. We had not a dollar between us and payday was three long days away. It wasn’t the first time we’d been strapped for cash, but we never imagined we’d be peddling our wares for food money at the age of 30.”

“We didn’t know whether to laugh or to cry,” says Draut, now 34, of her own dark financial days. “It was so ridiculously absurd, because in many ways—I had an advanced degree, he had a college degree, we lived in New York City—we should [have been] doing fine. But we were far from getting ahead, that’s for sure.”

What follows is an edited transcript of my conversation with Draut about her book and why so many in her age cohort are, like her 30-year-old self, so far from getting ahead.

CommonWealth: The main thesis of the book is that, for the generations who have followed the Baby Boom, the transition to adulthood—moving out of the parents’ home, getting a job, starting a family—has become more arduous and fraught with financial peril. Some are having a tough time making the transition at all. You report that, in 1960, 77 percent of women and 65 percent of men had reached those milestones by age 30, but in 2000, only 46 percent of women and 31 percent of men had done the same. Financial pressures, you say, are causing young adults to delay leaving home, delay getting married, and delay having children of their own. Are you suggesting that the economics of life today are, in essence, arresting human development?

Draut: Wow, that’s a tough one. I think that the delaying of the traditional markers of adulthood, whether it is child rearing or getting married, in some cases is a good thing. It is when that doesn’t line up with what people want to have happen in their life at that time that it’s a problem. There are certainly some 30-year-olds out there who are living together and want to get married but aren’t getting married because they can’t afford the engagement ring and the wedding and all of that stuff. Child rearing is a little more serious because I do think people are waiting a little longer because of the financial crunch, the impending cost of child care and knowing that it is going to be necessary to stockpile savings to deal with the birth of a new baby. [There’s] the new expenses and the drop in income that happens afterward. I don’t know about arresting human development, because I think young people today are, contrary to popular opinion, actually quite mature, particularly those who are working their way through college, or are not on a bachelor’s degree path. These are young people who have been working since age 16 and are responsible and pay their bills on time and are looking for any way to get the education they need, and often are falling very short of that goal. They are facing tremendous odds and understand the reality and the need to get more education and are working [while] going to school. So I think that this generation is actually quite developed, from a maturity standpoint. In many ways, they have their lives together more than the previous generation.

CommonWealth: Yes, it struck me that you said how frequently young people today are working more than one job and that the highest rate of holding two jobs was actually among young women.

‘Young people today are, contrary to popular opinion, actually quite mature.’

Draut: Yes. It is young women. This generation is working more hours than any generation before them. They are more likely to hold two jobs. There is a lot of responsibility underlying the flapping around, and what we call trying to find themselves, and trying to get established and on some secure financial footing. There has been a lot made about the new “exploration” of adulthood. I think there definitely is a new freedom for young people, particularly young people who come from well-educated backgrounds, from families that can provide them with the cushion needed to do the backpacking across Europe, do the self-exploration of themselves in terms of their professional lives. That is all very true. There has been an increase in freedom and independence for those who can take advantage of it. At the same time, there has just been an enormous shutdown in economic opportunity for young people who don’t have those advantages from the outset.

CommonWealth: Let’s be clear who we are talking about. You talk about two distinct generations post–Baby Boom. One is “Generation X,” born in 1965 to 1981, who are now in their mid-20s up to about age 40, and the other is “Millennials,” born since 1981, the oldest of them now in college or a little older—the kind of group that I think of as “echo boomers,” actual children of the Boomers. But a lot of your data are about Generation X, because this is the group that has gone through that transition to adulthood, or tried to. You write a couple of times in the book that “Generation X will be the first generation who won’t match the prosperity of their parents.” And that is a comment that I remember hearing before.

Draut: Right.

CommonWealth: When Generation X first came on the scene, and was given that name in the early ’90s, that observation was made as well, again in a context of tough economic times. People were unclear about where the economic future was for that generation as they went into the workplace. But then that sort of hand wringing passed out of fashion in the go-go years of the ’90s.

Draut: Yup. Right.

CommonWealth: I find it striking that we are back to hearing that same assessment of future prospects for Generation X. Didn’t this group catch that economic wave of the ’90s? What did it do for them—or not?

Draut: Well, the boom of the 1990s really diverted our attention from the major economic shifts that had happened and continued to happen even during the go-go ’90s. Gen X certainly saw some gains, and there were definitely some very wealthy young people who came out of the tech boom, as well as those who earned good wages for young people without college degrees. But the reality is, compared with a generation ago, and particularly for people without college degrees, [Gen Xers] are making much less than the previous generation was. And when we look at how college grads are doing, in this age group, we have also seen a drop in median earnings. The reality is that this generation is having a very hard time catching up with the prosperity of their parents —particularly those who don’t have college degrees, which is about 70 percent of the young adult population.

CommonWealth: You identify a number of challenges for young people today as they strive to transition into adult lives. One is the cost of higher education, which, as you point out, is going through the roof at the very time that a bachelor’s degree has become a minimum requirement for earning a middle-class income. In what ways is paying for higher education a bigger burden on young people than it used to be?

Draut: The moment of crystallization for me was when I [discovered that] 30 years ago the cost of going to private college, in inflation-adjusted dollars, was what it now costs to go to public college, a four-year state university. That, I think, really captures the growth in the economic burden of paying for a bachelor’s degree. It is an enormously difficult burden, both for young people and for their families, but increasingly for young people because the Baby Boom generation is also squeezed. The middle class has been squeezed, and [parents] are having a hard time saving to pay for their children’s education costs. As a result, young people have to take out student loan debt in order to afford tuition, as well as room and board. Today, nearly two-thirds of all students graduate with student loan debt—on average, $20,000.

CommonWealth: But isn’t college still a good investment? Shouldn’t it be worth borrowing for? New York Times columnist David Brooks has been writing about “cultural capital” in explaining social stratification, which he says is increasingly linked to education levels. He argues that poorer students are less willing to take out loans and are quicker to quit school and go to work. As a result, they underinvest in their education, and that opens up the divide even further. I take it that you would disagree that the problem in the educational divide is the risk aversion of the poor.

Draut: Oh, no. I don’t disagree with that. There is definitely risk aversion. Graduating, as the first person in your family to go to college, with $20,000 in debt is a risky proposition, particularly because these are students who can’t fall back on parental income when they graduate, in terms of setting up their apartment or if they get laid off. In addition to being risk averse, in terms of taking out student loans—and not being able to get enough student loans to even pay for a four-year college, because that is the other issue here—they end up going to community college and working, usually close to full time if not full time. What happens is the pull of work ends up winning over studying. I think David Brooks is right. People are underinvesting in their education and also underachieving according to their ability and their desires. The reason I focus on public policy is because we know that, when we offer grants to lower-income students, they will take them and go to four-year colleges and do just as well [as higher-income students]. And that is the best ladder of opportunity in the country, particularly in the new service sector economy. What I call the “debt for diploma” system is so pernicious because it not only straps the young adults who manage to make it through the system but it keeps a lot of bright, lower-income students from either enrolling in college to begin with or finishing college.

CommonWealth: Now, for those who do make use of them and leave college with a pile of debt on their backs, student loans turn out to be just a start of the debt problem plaguing young adults today. The other piece of it is credit card debt. How do young people get over their heads so far and so fast?

Draut: Well, debt tends to beget more debt. When you graduate from college [with student loans of $20,000], six months later you are on the hook for a $200-a-month payment that you have to scrape together in addition to the rent, the car payment, and the utility bill. Whenever anything happens—the car breaks down, you need a new suit to interview for a new job—those are expenses that young people put on their credit cards. So, in this period of the early 20s to the mid-20s, there tends to be a pretty rapid accumulation of credit card debt.

CommonWealth: Some of this, as you say, is the cost of starting out in life. You have to set up a household and you have to have those suits for job interviews and all that sort of thing, and these are expenses you have to pay out first, even if it means running up a credit card balance. But, once established, shouldn’t you be able to pay off those initial debts with what you’re earning? After all, this generation of young people is the best educated in US history, they show no aversion to living with roommates as they start out, and, when they do get married and settle down, both husband and wife stay in the workforce. Why aren’t they rolling in dough?

Draut: Good question. One of the things about debt is, we now have “until debt do us part.” When we get married, not only are we joining financial resources, we are now joining debt. A lot of married couples actually end up worse off because one ends up taking on their partner’s debt. One usually has more debt than the other, whether it is student loans or credit card debt, and you are still paying those things down. And the late 20s, which is about the average age that people are getting married, is also about the average age when people are going to graduate school. There is even more pressure to get an advanced degree today, in the fields of business, social work, teaching, all sorts of professions. In order to get ahead, you need to get another degree, another credential. Then, adding to that, this is also the time when people are starting families. It’s a collision course, because oftentimes those student loan debts haven’t gone away by the time people get married and start a family. It doesn’t magically disappear, unfortunately, and while there are now two incomes that can chip away at it—and it definitely helps to have somebody to share the rent or share a mortgage with—the debt still takes a while to go away.

‘A lot of married couples end up worse off because one takes on the other’s debt.’

CommonWealth: Housing is certainly one of the biggest-ticket items for young adults, especially in a place like Boston. And, as you point out in the book, many of the most expensive places in the country to live are also the ones that offer young people the best opportunities to get a start in their careers, so the Boston experience is not unusual. Of course, as the parent of a couple of Millennials myself, I was also stunned by the numbers you report of young people moving back home with their parents: four of 10 returning to the nest at least once after they have left home seemingly for good. What’s making it so hard for young people to keep a roof over their heads?

Draut: Well, the housing crunch just adds to the overall financial crunch. Remember, when we are looking to put a roof over our heads and hopefully move into homeownership at some point, we still are dealing with the student loan debt, the lower-than-30-years-ago starting salaries for college grads, all those things. So we have to keep it in that context. Then we have this enormous explosion in the housing market, in terms of what has happened to the price of housing in major metropolitan areas. And it is not surprising that young people are moving home after college, or end up moving when they get divorced or when they lose a job, because oftentimes there is no cushion to draw down on when something like a layoff happens. So it’s back to mom and dad’s house they go. And, all kidding aside, for people who are graduating from college now, if they are lucky enough to have parents who live near a major metropolitan area where the jobs are, the best thing they can do is stay at home for a year or two and really try to get ahead before they go out on their own.

CommonWealth: There has been a lot of concern expressed in Boston about the “brain drain” of recent college graduates leaving the region. But what we have discovered, in both MassINC research (Mass.Migration) and reporting in CommonWealth (“Moving In—or Moving On?CW, Winter ’04), is that it is really families that Massachusetts is losing, young people who have aged out of living with three roommates in an apartment in Allston and want to settle down in real homes of their own and start to raise families. This is where the real crunch comes for people in making a decision about whether the Boston area is really a place where they can lead their lives. Is this whole area, like other expensive metropolitan areas, pricing itself out of reach for the coming generations?

Draut: Absolutely. America’s major cities are becoming middle-class-free zones. It is happening in Long Island, which gave birth to America’s first affordable suburb, Levittown. The prices of homes in Levittown are now almost half a million dollars, which is about as far away from the concept of a starter home for a young family with children as you can get. So, what is happening in Boston is happening in New York and is happening in San Francisco. [Another aspect of] the economic reality of people needing to buy homes farther and farther away from the city, which leads to longer commute times and all of those time pressures, is that a lot of young people are put in the position of having to move far away from their family networks at a time when they need their family networks more than ever, when they are having kids. The idea of not being able to buy a house one town, two towns, even three towns over from grandma and grandpa’s is painful not only to grandma and grandpa but to this generation. A lot of people have grown up in middle-class homes that their parents could not afford to buy today, and that they certainly can’t afford to buy. The other thing that has happened is there has been a definite exodus from the Northeastern cities of non-college-educated young people, who are flocking to Denver, to Atlanta, to Las Vegas. But college grads are still coming to the major metropolitan cities because again that is where the jobs are.

CommonWealth: It’s true. MassINC research has shown that Florida is quite the destination for people who leave Massachusetts, and not just retirees.

Draut: Yes, that is interesting. I just did an interview about the crunch of young adulthood in Miami, and I have to say I was a little surprised. Yes, the South is really booming with young people. And Texas is also drawing a lot of new young people because the cost of living is so low.

CommonWealth: Another area of cost that you identify is children themselves. What makes it tougher for Gen Xers to raise children than it was for Baby Boomers?

Draut: I think it started with the Baby Boomers; definitely the younger tail of the Baby Boomers experienced this. It takes two incomes to buy a house in a place with decent schools. Therefore, you have to deal with the issue of child care, and that is a big new expense that 30 or 40 years ago was not nearly as needed as it is today. The unfortunate thing is that child care in this country is not publicly subsidized, for the most part, and it is not greatly regulated either. So finding child care that is affordable and high quality is very difficult. What many young parents find themselves doing is settling for one or the other. But getting both, something that is affordable and good, is very, very difficult. Are we depressed yet?

CommonWealth: We certainly should be—or at least today’s younger adults should be. Why aren’t they making more noise about the economic crunch they’re in?

Draut: That’s really the million-dollar question. I think there are a couple of reasons. Politically, this generation came of age at a time, in the Reagan years, when being materially successful was taken not only as a sign of hard work but as of having a strong character. They also came of age at a time when most young people could grow up never hearing one good word about the role of government in our society. So I think this generation tends to individualize their problems and only look internally to solve them. If they are not getting ahead, it is because instead of majoring in education they should have majored in business and gone to work on Wall Street. They don’t politicize their economic issues the way that previous generations have. The Baby Boomers invented the idea that the personal is political, but that has really been lost on this generation. When I interviewed people, I always asked them what, if anything, they thought government could do to help their situation, and I got a lot of long pauses. There is a real disconnect in this generation about how public policy and the decisions made by elected officials concretely impact their lives. That is one of the things I hope to do with this book, to show that because we have checked out, because we don’t vote dependably, the rug has been pulled out from under us. We need to start paying attention, because what happens in Washington, DC, and what happens in state capitals absolutely impacts our lives.

CommonWealth: What should be happening? What would be the solution to some of these challenges in making the transition to adulthood? What should be done to make higher education more affordable, or jobs more supportive financially and personally, or savings easier to accrue and debt easier to avoid? Can any of this be done on the state level?

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Draut: Absolutely. There is a lot that can be done at the state level. First thing is, states need to stabilize their funding of higher education. This up-and-down that is often timed with economic cycles has resulted in the spiraling of tuition, particularly over the last five years. So, when states have surpluses, they need to hang onto them knowing that the rainy day will come and hold off on doing things like tax cuts, because the first place that gets cut [when the budget gets tight] is always appropriations to higher ed, and then schools have to raise tuition.

At the state level, there are lots of interesting things happening—with a boost from the federal government in terms of funding to do these things. [For example, there is] much more career development in the sectors where jobs are going to explode, mostly health care services and education. There is going to be an increased demand for both the lower end of those professions, paraprofessionals, and increased demand for teachers and for registered nurses. What we need to get much better at doing is moving people up those ladders. And while it falls on the government in terms of allowing people who want to organize to do so, it’s become very difficult for workers to exercise what is supposed to be their right to from a union in this country. So we need better enforcement of labor laws. Finally, where the federal government could play a really big role is in financial aid for college, because the majority of students get financial aid from the federal government. Without any public dialogue, without any public debate, there has been an enormous sea change in how that financial aid is given out. It has shifted from grants, which don’t have to be repaid, to loans, which have to be repaid with interest. We need to get back to better funding of college for young people, so that anybody who wants to get a college degree and is able to do the work can do so, and that is not happening. We know that funding education is just about the surest bet you can get, in terms of return on investment. Those are dollars we will recoup many times over. Now, easier said than done. We are at record [federal] deficits, with essentially no end in sight. This is a much larger conversation about the priorities of the nation, and it is not going to happen overnight. And it’s not going to happen unless young people really start standing up for themselves, for the people who are coming up behind them, and for their parents as well, who are mortgaging the home three times to help put them through college.