Younger Generations 'Squeezed' by Economy
Viral social media posts are capturing the economic anxiety felt by Millennials and Gen Z. One popular thread with over 12,000 likes details a life squeezed by multiple recessions, stagnant wages, soaring home and childcare costs, and the new threat of AI-driven layoffs.
The Great Recession created a difficult job market and slowed wealth accumulation for many millennials, with those born in the 1980s having wealth levels 34% below what they likely would have had without the financial crisis. This generation also saw a significant increase in student loan debt, which more than tripled in the aggregate between 2005 and 2015. Gen Z now faces its own set of economic hurdles, including paying 31% more for housing than millennials did a decade ago, after adjusting for inflation. This generation also contends with higher debt loads, with their debt-to-income ratio at 16% compared to 12% for millennials at the same age. In Rhode Island, the challenge of housing affordability is particularly acute, with no cities in the state considered affordable for a typical resident to purchase or lease a home. A household income of nearly $130,000 is required to afford a median-priced home in the state, while the median household income is approximately $86,000. A full third of all households in Rhode Island are considered cost-burdened, spending more than 30% of their income on housing. For those in Woonsocket, the median household income stood at $58,614 in 2023, with a homeownership rate of 38.1%, significantly below the national average. While the median property value of $268,000 is less than the national average, it marks an 11.2% increase from the previous year. The overall cost of living in the city is slightly above the U.S. average. The rise of artificial intelligence introduces another layer of economic uncertainty, with some projections indicating that AI could automate up to 30% of current U.S. jobs by 2030. The World Economic Forum has estimated that AI will replace approximately 85 million jobs globally by 2026. Childcare costs have also become a significant financial strain, with the national average price of childcare rising 29% from 2020 to 2024, outpacing the overall inflation rate. In some cases, the cost of center-based care for two children exceeds median annual rent payments. The largest employment sectors in Woonsocket are Health Care & Social Assistance, Retail Trade, and Manufacturing, with CVS Health, headquartered in the city, being a major employer. The city is also focused on economic development initiatives, including a Small Business HUB offering free resources to entrepreneurs. Despite the challenges, there are some positive economic indicators for younger generations. Wages for workers aged 16 to 24 have seen recent significant increases, and Gen Z is on track to become the largest cohort in the global population and workforce. In Woonsocket, employment grew by 1.29% from 2022 to 2023.
