A growing group of Gen Zers who are neither working nor in school

• One in three Americans between the ages of 18 and 24 has no income, according to a new report.

• Younger Americans are also increasingly depressed and not enrolling in college.

• An analysis of the Federal Reserve of St. Louis analyzes the fate of younger workers.

Gen Zers might be remodeling world of work – but only if they have a job. And, for many, it may not be.

New research from the Institute of Economic Equity of the Federal Reserve of St. Louis delved into the challenges 18-24 year olds are experiencing today's economy. They found that more than one in three have no income.

In particular, the researchers looked at a group called “disengaged youth,” who are not working and also not at school. As of 2022, disconnected youth represented 13% of this age group; this quota has been increasing in general since 1998, according to the calculations of the Federal Reserve Bank of Dallas.

It is certain that many young people still have no income because they are still in school and living on loans or family allowances. But for those who aren't, the lack of income could hurt Gen Z's ability to save money for retirement or make bigger purchases in the future. It can also affect their mental health, weighing them down as they try to make progress in a tough economy.

Younger Americans face stagnant incomes

The Dallas Fed Found that, even after a post-pandemic decline, the rate of disconnected youth has risen since the late 1990s.

At the same time, university tuition rates have been falling as younger Americans contemplate if continuing education is worth it, especially in the midst of the student debt crisis. For many Gen Zers, stay at school it is not important to them.

Lack of income has weighed on many young adults' ability to generate wealth. For young adults, the median household had a net worth of just $11,200 in 2022, according to analysis by the St. Louis from the Federal Reserve's Survey of Consumer Finances, well below the typical US adult household at $192,100.

Entering adulthood without a job or any source of income can have significant implications for young adults later in life. For example, as the research explained, a lack of financial stability means a lack of savings: they won't be able to put money toward retirement and “invest in their future,” either by buying a house or starting a business. This comes when their fellow millennials and Gen Xers are already looking down impending retirement crisisas student loans eat into savings and pensions are replaced by income- and market-based retirement plans.

The story continues

And the number of young people without income has been increasing; in 1990, about one in five young adults said they had no wage or salary income. By 2022, it's more than one in three, according to the new study by the Fed in St. Louis.

“This is surprising because the labor market in 2022 was the strongest on record, but real earnings, including young adults on zero wages, remained essentially unchanged as this group made up a growing share of the young adult population,” said the St. Fed. Louis. the report said.

Inflation-adjusted earnings for Gen Z among earners have risen somewhat over the past five decades, though even excluding non-earners, young people have seen stagnant incomes compared to all adults

Struggling to maintain steady employment can take a toll on mental health, and rising health care costs have made it even harder for many younger Americans to get the care they need. Although young adults and older adults had similar rates of depression through 2017, after that point a gap opened up, and by 2022 young Americans were much more likely to report depression than older adults, according to the analysis of the National Health Interview of the Fed of St. Poll.

The rise of disconnected youth is worsening historical inequalities

White young adults have a median net worth that is roughly three times that of black and Hispanic young adults, despite relatively similar median incomes, due to the racial wealth gap. Achieving more equitable wealth outcomes could boost economic growth, as more people could afford homes or pay down debt.

“The report confirms that even during the tightest labor market since World War II, there is a limit to the ability of economic growth to reduce the 'structural' unemployment that many black and Latino youth face , plus a growing number of young whites,” said William M. Rodgers III, director of the St. Louis Fed's Institute for Economic Equity. Louis, he told BI in an email.

This comes after the youth were among the first to do so lose your job and your income in the consequences of the pandemic. The unemployment for 16-24 year olds rose to 27.5% in April 2020. After falling in the wake of pandemic rehiring, this rate has recovered to pre-pandemic trends, and also does not reflect those who they are not actively looking. work

The report notes that these growing disparities point to interventions such as improving access to community college and vocational training, creating more learning roles, and investing money and attention in structural barriers like the criminal justice system and mental health .

“Research affirms the importance of investing in the physical and mental health of young people. Otherwise, the economy cannot function at its full potential today and in the future,” Rodgers said.

Are you or were you a “disconnected youth” or are you supporting one? Contact these journalists at jkaplan@businessinsider.com, asheffey@businessinsider.comi nsheidlower@businessinsider.com.

Correction: April 3, 2024: This story has been updated with a more accurate description of the Fed's analysis of St. Louis of rates of depression among younger and older Americans.

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