A study conducted by the St. Louis Federal Reserve’s Institute for Economic Equity has found that over one in three members of Gen Z had no source of income whatsoever as of 2022.
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“This group has experienced what amounts to two distinct economies relatively early in their lives, one disrupted by a public health emergency and a recession and the other characterized by high inflation and the tightest labor market since World War II,” said the St. Louis Fed.
The group examined data from young people, aged 18-25, and found that the economic situation for young people in America has deteriorated significantly in recent decades.
The left-leaning organization, which seeks to examine the economy through an “equity” lens, and focuses many of its efforts on racial distinctions, has deemed the unemployed young people with no income “disconnected” youth.
In the 1990s, only one in five young people were disconnected youth, with that number growing significantly to the 2022 rate of one in three young adults with no income from wages or salary.
Disconnected youth accounted for 14 percent of all adults in 2020, the most recent year for which the St. Louis Fed provided that data.
The study drew a link between the increasing number of disconnected youth and the skyrocketing rate of mental health issues among young Americans.
Young Americans experience depression at more than 50 percent of the rate of older adults, and the number of young Americans reporting depression monthly increased astronomically, starting with a sharp uptick in 2017.
Since 2017, the percentage of young Americans reporting depression rose from just under four percent to over twelve percent in 2022, with an upward trajectory.
“Mental health challenges can lead to weaker labor market attachment. Conversely, weak attachment to the labor market can potentially affect mental health. For instance, inability to hold a job may result in stress and anxiety,” said the study.
In many cases, young Americans facing depression and despair lose their motivation to participate in the labor force and better their own lives.
Conversely, the difficult labor market which has emerged following the economic disaster brought on by the Covid lockdowns has left many unemployed Americans struggling to find work, which leads to more instances of depression.
The current economic situation has proven disastrous for young Americans in multiple ways.
As Gen Z has been opting out of the workforce in unprecedented numbers, a massive economic rift has grown between Gen Z and older generations.
The St. Louis study found that, while the median net-worth for U.S. households is $192,100, the median net worth for young American households is a mere $11,200.
The study attributed this difference to young adults holding less valuable assets overall, along with young adults going into debt with student loans and mortgages.
The increasing number of disconnected youth, the skyrocketing rates of depression and mental and illness, and the worsening economic conditions for Gen Z coincide with a decline in workforce participation among men of prime working age (25-54).
That decline has also been attributed, at least in part, to an increase in despair.
“A big part of the story is that these are people who have given up, and are kind of forgotten, and a big challenge for policy remains how to bring them back into the labor force and then back into jobs,” said Robin Brooks of the Brookings Institute, speaking to The Maine Wire.
