March 29, 2006

By ROBIN LINDLEY
Contributing Writer

The American Dream is dying. For young adults under 35, getting ahead is much harder now than a generation ago. They face crushing obligations from student loans and credit cards. Good jobs are scarcer and wages are stagnant as the costs of education, housing, childcare, and health care go up and up.

In her acclaimed book Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead (Doubleday, 2006), author Tamara Draut describes the financial ordeal of young adults and the policy and market forces arrayed against them. Draut, 34, is the director of the Economic Opportunity Program at Demos, a national public policy organization in New York. Her writing has appeared in the New York Times, Wall Street Journal, and Newsweek, and she has offered commentaries on CNN, CNBC, and Reuters Television.

Draut talked with Real Change recently about the fading middle class, today’s Darwinian economy, and what may be done achieve greater economic security.

Real Change: What drew you to the topic of the indebtedness of younger adults in America?

Tamara Draut: As the director of the Economic Opportunity Program at Demos, I’ve been looking at economic and public policy trends over the last three decades, [including] fundamental shifts making it more difficult for young people to either work or educate their way into the middle class. I decided to write the book because of misperceptions about why young people are struggling.

RC: And you’re in that age group with your own history of debt?

Draut: I’m 34, and I [had] credit card debt to establish myself, and then I got my Masters and now I have student loan debt. But I’m extremely lucky because I’m part of the minority of young people [who] actually have a college degree. If I’m having a tough time making it, how are others dealing in this economy? It turns out not too well.

RC: The media portrays of 20- and 30-year-olds as affluent and free-spending.

Draut: TV shows and commercials show young people driving expensive cars, living in expensive apartments, wearing expensive clothes, and that’s not the reality of most young people’s lives. They’re living at home longer, driving used cars, working longer hours than the generation before them, and likely to be holding more than one job.

RC: What are the major causes of this crushing debt you describe?

Draut: It starts with the debt-for-diploma system. Three decades ago, states were investing in higher education, so we had cheap state college tuitions, [but] that’s no longer the case. The cost of going to a public four-year college is now $11,000 [per year] on average — it’s more than doubled in the last two decades, even after adjusting for inflation. So young people are living with $20,000 in student loan debt on average, or they’re not getting the amount of education they want or need to compete in the economy. Only one-third of young people have bachelor’s degrees. Lots of bright kids want to go to college but can’t get aid to get there. States dropped the ball [by cutting] their investment in higher education.

We’ve switched, without any public debate, from a grant-based system to a loan-based system. In the late 1970s a person from a low-income family could get a grant that covered about three-quarters of the cost of college. Today, it covers about a third. [But] this is an investment that we should be making. It’s good for everybody. It’s good for our democracy, and it’s good for our economy if people can get the skills and education they need.

RC: And you discuss the added burden of credit card debt.

Draut: If you think of the path to adulthood as an obstacle course with a series of hurdles, you start weighed down by debt [for education]. Debt begets more debt, [and that’s] less to put away for savings to buy the things to start a professional life like a wardrobe — and I’m talking just one suit. So young people turn to credit cards. Young people are making less today than a generation ago, and the cost of housing, health care, college and child care have all grown much faster than inflation.

RC: You use the term “paycheck paralysis” to describe the stagnation of wages.

Draut: Absolutely. Compared to a generation ago, young people are earning less, and their wages are not growing as steadily. They’re stuck running in place. Meanwhile they’ve got the student loan debt, [and the] cost of housing is much more expensive than a generation ago. Today one out of three young people spend more than one-third of their income on rent. Housing debt is 66 percent higher than it was for baby boomers at this age, so the squeeze is coming from all angles.

RC: You describe “an unforgiving Darwinian economy” as a cause of indebtedness.

Draut: Right. Our public policy has reinforced it. Today, America is more unequal than since the gilded age of the robber barons. The winners in our economy are making much more than the ordinary person. Our public policy has shifted the burden of creating opportunity to the individual, and economic mobility is declining. [In] this hyper-capitalistic society, we’re all out for ourselves and government has been taking a back seat.

RC: What can be done to reverse these trends?

Draut: The best advice I could give to young people is to get active. We’ve checked out of politics. We’re not voting in nearly the percentages that we should be. The system [we’re] trying to get ahead in is not working. We have to fight for the American dream and change things — for ourselves [and] for our kids.

RC: Are young people getting politically active, and is anyone in Congress listening?

Draut: In the last presidential election young people turned out at the highest level in years; however, so did everybody else. This generation is a lot smaller, so we need to turn out at an even higher level to make an impact on the political process. We grew up in the era of personal responsibility. We were socialized to believe that if we weren’t getting ahead it was our own fault. The previous generation understood that the personal is political, that their lives were impacted by public policy. This generation doesn’t have that in their DNA. It’s a vicious cycle: the politicians don’t pay attention to our issues because we don’t vote, and we don’t vote because they’re not paying attention to us. Politicians aren’t going to all of a sudden pay attention to us. We have to be the driving force.

RC: How can people get more involved?

Draut: On my website, www.strappedthebook.com, I have a section called “Get Involved.” The great thing about the Internet generation is that it’s easier to make your voice heard [and] to get information. You can find organizations that support [what] you care about, sign up for e-mail alerts, weigh in, and let elected officials know where you stand on issues.

RC: Your book does not deal with the underclass, the extremely poor.

Draut: I look at people who at least made it past high school. Three-quarters of high school grads [get some] college, whether it’s a couple courses at a community college or at a four-year university. The book is about those who should be getting ahead: they’re doing all the right things, they’re employed, they’ve got some education beyond high school, and yet they are not getting ahead.

RC: As you point out, these issues are even more challenging for young African Americans and Hispanic Americans

Draut: There has been progress, but gaps in college enrollments among whites and Hispanics and whites and African Americans are growing today. The class divide in terms of who goes to college is as wide as it was 30 years ago. [We also] have a long way to go in terms of the wealth gap among the races.

RC: Once young people learn about past federal aid programs such as the GI Bill or student grant programs, will these models spur them to action?

Draut: I think they will. I believe knowledge is power. The middle class that America built after World War II, and continues to be the envy of the world, didn’t [happen] by accident. We got there by investing in public structures that benefit the common good. We have been retreating from that ideal, and it’s costing us way too much.

RC: You write of values and an agenda for change.

Draut: We’ve got to get back to the fundamental values of America. Education is the cornerstone of economic and social mobility. We’ve got to invest much more in our people, and we will recoup [that investment] over and over and over again. In an era of global competition with complex issues facing our nation, education is vital not only to our economy, but also to our democracy. Families should come first. That is a core value, but we only give it lip service. The U.S. is the only industrialized nation on the planet that doesn’t offer families paid leave after they have a child or to care for an ailing relative. We also need to provide affordable, high quality childcare. And finally, work should pay. We’ve got to raise the minimum wage.

RC: Given the current political situation, what are your hopes?

Draut: It’s not going to happen overnight, but everybody in this country has a real stake in fighting to strengthen the American dream. We need all age groups to work toward that goal, but young people in particular are so disempowered that they must start speaking up for themselves, to make an America with those core values. n