Oregon’s Senator Jeff Merkley, the Chair of the Senate Banking Committee’s Subcommittee on Economic Policy, held a hearing yesterday on the economic challenges facing young workers and recent high school and college graduates. The hearing, titled “Dreams Deferred: Young Workers & Recent Grads in U.S. Economy,” focused on key areas of concern for young people entering the workplace, such as unemployment, underemployment, and student debt.
The hearing noted that despite the economy’s steady but slow recovery since the financial crisis and recession, young Americans continue to face challenges finding employment and managing student loan debt. According to testimony by Dr. Heidi Shierholz of the Economic Policy Institute, the unemployment rate for young workers is over twice the national average, and 44 percent of college graduates are working in a job that does not require a college degree. These challenges have also impacted their ability to buy a home and start a family.
“Growing up, I know my parents shared the same hopes of many parents: that in America, their children would have a chance to go further than they themselves had,” said Senator Merkley. “It was what led my own father, a millwright and a mechanic, to believe that his son could do just about anything if he worked hard, got a good education, and went to college. Today, however, young Americans and their families worry about whether the post-recession economy will provide the same kinds of opportunities to this generation that their parents had.”
The financial crisis of 2008 dealt a devastating blow to the economy that all Americans, especially young Americans, continue to feel. Millions of Americans lost their homes and home equity in the financial crisis, and the recession sharply curtailed state governments’ investments in higher education. As a result, student debt has exploded in the last decade, surpassing every other kind of household debt except housing, having skyrocketed to over $1.2 trillion. The average Oregonian student who graduates with student loan debt owes over $24,000 upon graduation.
Emma Kallaway, the Executive Director of the Oregon Student Association and a recent University of Oregon graduate, traveled to D.C. from Oregon to testify about her and her peers’ experience in navigating high student loan debt and a challenging job market. She and other witnesses testified favorably about exploring potential reforms to the student loan repayment model, including reforms to income-based repayment and/or potential development of a “Pay It Forward”-type grant system, which would replace traditional loans with grants in exchange for a pledge to pay back a fixed, small percentage of income. This system, along with continuing to invest in higher education generally, would enable more students to go to college without fear of being trapped between high debt payments and low income immediately upon graduation. Oregon college students created a “Pay It Forward” proposal, which was then adopted unanimously for further development by the Oregon State Legislature. Senator Merkley has introduced federal legislation, the Pay It Forward Guaranteed College Affordability Act, to support state efforts to test out and transition to Pay It Forward models.
“The generation that is now graduating and entering the workforce is creative, resourceful, and increasingly likely to hold a college degree or have some form of higher education,” said Senator Merkley. “The key is for us to create the strong economy and good jobs that will allow them to fulfill their potential. As policymakers, we owe it to young Americans to hear their concerns and seek to develop policies that will better empower them to succeed. Because when they succeed, our whole economy does better.”
The other witnesses were Mr. Rory O’Sullivan, Deputy Director, Young Invincibles, and Dr. Keith Hall, Senior Research Fellow, Mercatus Center at George Mason University.