One in three Americans ages 18 to 24 have no income

Research conducted by the St. Louis Federal Reserve’s Institute for Economic Equity, focusing on Generation Z, reveals that over 1 in 3 young adults currently have no income, a stark increase from 1 in 5 in 1990. This shift could have significant implications, both on individual lives and the broader labor market.

Annually, the institute examines the nation’s economy through an equity lens. The study refers to youth without income as “disconnected youth” — young adults who are neither in school nor employed. The percentage of disconnected youth rose to 13% after the Great Recession in 2007-2009, declined by 2019, and then spiked to 14% in 2020, coinciding with the onset of the COVID-19 pandemic.

Concurrently, there has been a decrease in college enrollment rates, with more young people opting out of traditional four-year degrees due to the high cost of higher education. However, this shift does not necessarily indicate a lack of learning opportunities. Platforms like Khan Academy and online courses from Ivy League institutions offer high-quality education for free or at a fraction of the cost, allowing individuals to learn at their own pace and convenience.

The Fed study also highlights the impact of declining mental health among the younger generation, which likely contributes to their challenges in finding employment. The study authors suggest that building supportive communities focused on inclusivity and mental health awareness could help address these gaps in care.

Ryan Burge, research director at My Faith Counts, recently shared data illustrating a growing trend of low participation in public life across various demographics, including those identifying their religion as “nothing in particular.”

While disengagement seems to be increasing across all age groups, the economic trends have particularly serious implications for young adults in terms of establishing long-term financial stability. They are less likely to afford homes, save for retirement, or start new businesses. Additionally, disconnected youth are more likely to face health challenges later in life, as noted by the Federal Reserve Bank of Dallas.