The Delayed American Dream

Unequal outcomes betray higher education’s promise as a lever of social mobility.

By Anthony P. Carnevale

Young people really do have it harder these days. It’s taking them longer to get a good job compared to generations past.

While just over half of older baby boomers had a good job by age 27, older millennials aren’t achieving the same milestone until age 30.¹ This has downstream effects, influencing the jobs that young people take and when they get married, have children, buy a home, or start a business. The rules of the game just aren’t the same anymore.

Our research highlights the enduring inequalities that make the road to financial independence even longer, and more bleak, for some members of society. The likelihood of holding a good job breaks down in predictable ways across race and gender — the groups who have historically been shut out of the American dream remain less likely to hold a good job at all levels of educational attainment. These include Black/African American, Hispanic/Latino, and American Indian/Alaska Native peoples. Women are less likely to have a good job than men across every racial and ethnic group (Figure 1).

Figure 1. At every education level, young women are less likely to have a good job than young men within the same racial/ethnic groups.

Source: Georgetown University Center on Education and the Workforce analysis of data from the US Census Bureau, American Community Survey (ACS), 2009–19 (pooled).

Note: Data are for 25-to-35-year-olds in the labor force. Nationwide, young workers with good jobs are those with earnings of $35,000 or more. The good jobs threshold has been adjusted based on cost-of-living differences among states, using data from the Massachusetts Institute of Technology (MIT), “Living Wage Calculator,” 2020.

The data also emphasize just how critical some form of postsecondary education has become to attain a good job. Young people with bachelor’s degrees are the only educational group more likely to hold a good job than similarly-educated baby boomers were at the same age (Figure 2).

The importance of college reinforces the need to strengthen existing pathways to postsecondary education, whether that be to community college, a credentialing program, or a four-year degree. From an equity perspective, it also speaks to the need to improve postsecondary access for racial and ethnic minorities at a time when existing pathways are at risk of being weakened should the Supreme Court ultimately rule against the use of affirmative action in college admissions.

Figure 2. Only young workers with a bachelor’s degree or higher are consistently more likely than those in the previous generation to have a good job.

Source: Georgetown University Center on Education and the Workforce analysis of data from the US Census Bureau and Bureau of Labor Statistics, Current Population Survey (CPS), 1972–86, 2007–20.

Note: Data are for 25-to-35-year-olds in the labor force. Nationwide, young workers with good jobs are those with earnings of $35,000 or more. The good jobs threshold has been adjusted based on cost-of-living differences among states, using data from the Massachusetts Institute of Technology (MIT), “Living Wage Calculator,” 2020.

Although earning a bachelor’s degree is the best bet for a remunerative career, the compound effects of slower progress toward a good job and growing debt levels are putting a damper on young people’s ability to save across all educational levels. In the 1990s, the median net worth of households headed by bachelor’s degree holders in their mid-30s was $125,500 (Figure 3). Fast forward to 2010, and the median net worth of similar households had fallen to $89,500. Put differently, the median net worth of households headed by similarly-educated thirtysomethings dropped by 29 percent in just over a decade.

Figure 3. A bachelor’s degree is associated with more wealth for young households, although the advantage is smaller than in the 1990s.

Source: Georgetown University Center on Education and the Workforce analysis of data from the Board of Governors of the Federal Reserve System, Survey of Consumer Finances (SCF) 1989, 1992, 1995, 1998, 2010, 2013, 2016, 2019.

Note: The data are restricted to 34-to-36-year-old adults and inflation-adjusted to 2019 dollars. The series labeled “1990s” shows the data for 1989, 1992, 1995, and 1998 (pooled); the series labeled “2010s” shows the data for 2010, 2013, 2016, and 2019 (pooled).

Despite this loss in median net worth, bachelor’s degree holders nevertheless still come out well ahead of their peers who have no more than a high school diploma or associate’s degree. Among households led by 34-to-36-year-olds with an associate’s degree, median net worth fell a precipitous 64 percent from the 1990s to the 2010s, making the 29 percent loss experienced by bachelor’s degree holders over the same time period seem relatively mild.

Yet even among those who have gotten a bachelor’s degree, there is a stark divide in wealth across race and gender (Figure 4). At the far extremes, young Black/African American women with bachelor’s or graduate degrees have a median net worth of just $900, while similarly educated young White men have a median net worth of $36,000.

Figure 4. Young Black/African American women have less than $1,000 in median net worth at all levels of educational attainment, while young Black/African American men and young Hispanic/Latina women have less than $3,000.

Source: Georgetown University Center on Education and the Workforce analysis of data from the US Census Bureau, Survey of Income and Program Participation (SIPP), 2014 (wave 1) and 2018 (wave 1).

Note: The data are inflation-adjusted to 2019 dollars. We have excluded data on the wealth of American Indian/Alaska Native and Native Hawaiian/Pacific Islander young adults due to small sample sizes.

Student loans have increasingly become a roadblock on the path to financial security, saddling too many young people with debt just as they are setting out on their adult lives. As college costs have spiraled, so has student debt. In the first quarter of 2022, federal student loan debt sat at $1.59 trillion, a figure that jumps to $1.7 trillion when taking private loans into account. Small wonder, then, that younger college-educated adults are less likely than those ages 60 and older to say that the benefits of attending college outweigh the expense.

This creates a catch-22 situation for many young people. While some form of postsecondary education undeniably gives young people the best shot at getting a good job, the resulting debt burden can hinder their ability to build up a nest egg. Or it might deter them from seeking out further education at all, believing that it is financially out of reach. And again, from an equity lens, certain groups tend to be more likely to need to take out loans and leave school with higher levels of debt, such as Black/African American and Hispanic/Latina women.

Many of the disparities across different racial and ethnic groups and by gender are long-standing structural problems. These include but are not limited to the persistent racial wealth gap, the discrimination that women and members of racial/ethnic minority groups face in the labor market, occupational segregation, and limited guidance along the pathway from high school to a career.

There is no easy solution to these broader problems. Generally speaking, students are more or less on their own to chart a career path as they progress from high school to college and beyond. Those with the social capital and familial wealth necessary to navigate the existing system will, by default, continue to have the best chances of success.

However, certain interventions hold promise. These include:

1. Student loan forgiveness: Student loans have clearly played a role in impeding young adults’ financial security and reinforcing racial and ethnic disparities in financial well-being. Still, blanket forgiveness would not fundamentally alter the problem of systemic inequality. Many student loan borrowers are wealthier than those who do not borrow for college. However, linking loan forgiveness to earnings, as the Biden administration appears to be considering, would be a more effective means of helping to relieve some of the financial burden that young adults in lower-income and, too often, Black/African American, Hispanic/Latino, and Indigenous communities face.
2. College affordability: College attendance should not require students to take on exorbitant debt. Recognizing this, 31 states have rolled out a range of “free” college programs, such as those that offer scholarships to cover tuition at community colleges and other public institutions. Such programs, coupled with an expanded Pell grant, can help make college attainable for more students and encourage students who might otherwise have thought college was not affordable. Strengthening the connections between community colleges and four-year institutions, along with incremental credentialing programs, would help smooth the pathway for students.
3. College and career counseling: Young people need better guidance and assistance in obtaining information about education and training options for fields of study and occupations they are interested in pursuing. Powerful tools already exist, such as the Education Department’s College Scorecard, but this information is not necessarily making its way to students who would benefit from it the most. Data-informed, person-to-person counseling would take advantage of new data on student labor-market outcomes to support students in making more informed decisions on the path toward greater academic and workforce success.

For further information about this topic, read two new reports from Georgetown’s Center on Education and the Workforce: How Limits to Educational Affordability, Work-Based Learning, and Career Counseling Impede Progress toward Good Jobs and How Racial and Gender Bias Impede Progress toward Good Jobs. The full release for both reports can be found here.

¹ We define a good job as one that pays at least $35,000 per year and a median of $57,000 for young workers (ages 25 to 35) nationwide, with adjustments based on cost-of-living differences among states.

Dr. Carnevale is the director and research professor at the Georgetown University Center on Education and the Workforce. CEW is a research and policy institute within Georgetown’s McCourt School of Public Policy that studies the links among education, career qualifications, and workforce demands.

Thanks to Kathryn Peltier Campbell, Catherine Morris, Martin Van Der Werf, and Emma Wenzinger for editorial feedback; Artem Gulish for quantitative feedback; Catherine Morris for figure design; Fan Zhang for graphic design; and Sojung Ha for publication support.

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