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Too Big To Fail: Millennials on the Margins
Anita Sands and Madeline Goodman

Introduction

The whole people must take upon themselves the education of the whole people and be willing to bear the expenses of it.

—John Adams, 1785

We believe that this country will not be a permanently good place for any of us to live in unless we make it a reasonably good place for all of us to live in ... [A]ll of us will pay in the future if we of the present do not do justice to all in the present.

—Theodore Roosevelt, 1912

Broadly defined, education is a process of "imparting or acquiring general knowledge, developing the powers of reasoning and judgment, and generally of preparing oneself and others intellectually for a mature life."1 Educating the whole people, both in and out of formal institutional settings, ultimately benefits the whole people, as John Adams implies. If this were happening today in America, there would be no need for discussion. But it is not. Tens of millions of America's young adults—millennials—are not adequately equipped to thrive in today's world in terms of their level of human capital. This has implications not only for these 16- to 34-year-olds, but for our society as a whole.

Many millennials are entering the labor market, continuing their education, becoming parents, and setting up individual households of their own—often for the first time. Yet when we look more closely at those along the path to adulthood, a more complex picture emerges. As researchers have documented, a concerning number of the youngest in this group are "disconnected," a term used to describe those who are 16-24 who are neither employed nor engaged in formal education.2 Today in the United States, according to some estimates, nearly 6 million in that age bracket fall into the disconnected category.3 In this paper, we argue that disconnection defined entirely in relation to whether one is employed or enrolled in education underestimates the obstacles ahead. When we expand the definition of disconnection to one that includes the skill (or human capital) levels of our millennial generation, the problem becomes simply too big to ignore. Nearly half of America's estimated 77 million millennials—or around 36 million—are attempting the transition to adult roles with low literacy skills.4 More than half—46 million—are doing so with low numeracy skills.

The problem of low skills—particularly among a generation who will be the parents, workers, and citizens for many decades to come—will affect all of us. Human capital—and the varying opportunities to acquire and augment it—is a critical component of the larger condition of inequality we are observing in the United States today.5 This is in part because the quality of education, as well as the opportunity to learn throughout one's lifetime, is ever more closely tied to the accumulation of critical social capital (e.g., where one lives, one's social networks, and level of engagement in society) than either John Adams or Theodore Roosevelt would have envisioned it to be in the 21st century.6 When Roosevelt reminded Americans at the beginning of the last century—when inequality was at a similarly high level7—that the progress of our country rests in securing the well-being of all of us, he may well have been speaking to Americans today. We do well to contemplate that, as he warned, "[n]one of us can really prosper permanently if masses of our fellows are debased and degraded."8

Setting the context

How we got to this place is a complicated question. Policy decisions at all levels of government, not to mention globalization and technological advancements in the past three to four decades, have fostered an increasingly unequal distribution of skills. This has occurred at a time when higher skill levels are needed to enter the middle class and stay there and to fully participate in our increasingly complex society. As many have documented, the post-World War II American economy, built on an enlarging base of domestic manufacturing and consumption and bolstered by federal policies to open up education and housing opportunities for many, enabled the expansion of a broad middle class. American educational attainment surged past that of most other countries, and public investment in postsecondary education made college more accessible and affordable for increasing numbers of Americans.9 Through this period, the labor market, by and large, provided employment opportunities for a wide swath of the American population at levels generally sufficient to sustain a strong middle class, including the ability to acquire a home, invest in educational opportunities for children, and assure some security into old age. The provision of these benefits to some at the expense of others is an important element of this story, and much solid research has emerged to shape our understanding of how this prosperity was unevenly distributed by race and gender, further entrenching other forms of inequality.10 Nonetheless, it is fair to characterize the post-World War II period as one where skills attained in a U.S. high school and postsecondary education were largely matched by employment opportunities, with wages and benefits that made entry into the middle class possible for increasing numbers of American families.

Around 1970, the contours of this economic and social landscape began to shift. When the "blue collar" economy of the postwar period began to give way to the knowledge-based economy we have today, human capital took on increasing importance. This new economic reality emerged alongside advances in technology, globalization, and an array of corporate and governmental policies that weakened the power of organized labor and redirected funds away from public investments in families and communities.11 The cumulative effect of these changes has increased inequality of opportunity, resulting in a concentration of wealth at top income levels and placing significant strain on America's lower and middle classes.12 At the same time, other industrialized nations—both in Europe and Asia—increased not only their economic standing, but the development of human capital of their younger populations.

Take, for example, the Republic of Korea and Finland. In the past four decades, both countries focused political attention and economic resources on providing accessible, quality secondary and postsecondary educational options for their younger population. In one sense, they were playing catch-up to countries like the United States that had led in the post-World War II period in compulsory secondary education.13 Skills data from the Organisation for Economic Co-operation and Development's (OECD) Programme for International Assessment of Adult Competencies (PIAAC), 2012/2014,14 which compares the scores of millennials (ages 16-34) to older adults (35-65), demonstrate this. Millennials in Finland scored 25 points higher (on a 500-point scale) in literacy than adults over 35, and in the Republic of Korea, millennials scored 29 points higher. In the United States, on the other hand, the difference between these two age groups was just 9 points. But the PIAAC data highlight much more than this. Studies of the data show that while older U.S. adults outperformed their international counterparts in many OECD participating countries, the scores of U.S. millennials lagged behind those of many of their international peers.15 In other words, many industrialized nations have not only caught up to the United States in educational attainment, the skills of their young adults are surpassing those of U.S. millennials.16

The broad changes outlined above have had a profound impact on the role human capital plays in earnings levels that sustain a viable middle-class life. Labor economists have studied the dimensions of the new economy that have emerged over roughly the past four decades and demonstrated that the increasing "return to skills" (monetary gains expected from attaining higher levels of skills/education and training), coupled with a sharp and precipitous decline in the wage-earning potential of those with a high school education, has contributed to growing inequality on the one hand and increased the important role of human capital on the other. As economist David Autor perceptively suggests, this phenomenon is a double-edged sword. Investment in skills—particularly very high levels of skills—carries a payoff in the marketplace. But, Autor notes, "this trend also masks a discouraging truth: The rising relative earnings of college graduates are due not just to rising real earnings for college workers but also to falling real earnings for noncollege workers."17 Having limited opportunity to acquire and develop human capital, in other words, is more costly than it used to be.

In this report we first shift the emphasis of "disconnection" from a concern with attachments to employment and education to one that includes human capital, or skill level. Next, we use PIAAC skills data to provide a brief international context for the performance of U.S. millennials, followed by an in-depth analysis of the size and demographic dimensions of the problem of low skills in this cohort. Finally, we explore the relationship between skills and measures of social cohesion/social capital. In so doing, we argue that low skills are correlated to a larger sense of disconnection and disengagement from political and social life.

Notes

1 See Dictionary.com, s.v. "education," http://www.dictionary.com/browse/education?s=t, and Study Lectures Notes, http://www.studylecturenotes.com/foundation-of-education/etymological-meaning-of-education; see also Annual Report of the Board of Education, Vol. 38, 1873-1874, https://books.google.com/books?id=E5AXAAAAYAAJ&pg=PA202&lpg=PA202&dq=education+etymology+mature+life&source=bl&ots=OKAJKBySgv&sig=75Q0ceJPNq-SSwN1lDPf9JNbWEw&hl=en&sa=X&ved=0ahUKEwiYmviEoLbTAhXD6iYKHfvXAvYQ6AEIQjAF#v=onepage&q=education%20etymology%20mature%20life&f=false.

2 "Disconnected youth" are sometimes referred to as the NEET population: "Not in Education, Employment, or Training."

3 Kristen Lewis and Sarah Burd-Sharps, Halve the Gap by 2030: Youth Disconnection in America's Cities, Measure of America (2013), http://ssrc-static.s3.amazonaws.com/moa/MOA-Halve-the-Gap-ALL-10.25.13.pdf.

4 For purposes of this report, "low skills" includes those who perform at the lowest proficiency levels on the Programme for the International Assessment of Adult Competencies (PIAAC), defined as at Level 2 or at or below Level 1. For more details, see the "Understanding PIAAC" section of this report. When making comparisons, we report on these two subgroups of low skilled adults and compare them to those scoring at or above Level 3. For more details, see the "Understanding PIAAC" section of this report.

5 See, for example, the September 2016 Memorandum of Decision: Honorable Thomas G. Moukawsher: Connecticut Coalition for Justice in Education Funding Inc., et al. V. Docket, Superior Court, Judicial District of Hartford, https://assets.documentcloud.org/documents/3100630/School-Funding-Decision.pdf; Jacqueline Rabe Thomas, "What Does a High School Diploma Prove?", CT Mirror, December 13, 2016, https://ctmirror.org/2016/12/13/troubled-schools-on-trial-what-does-a-high-school-diploma-prove/; U.S. Accountability Office, Better Use of Information Could Help Agencies Identity Disparities and Address Racial Discrimination (GAO-16-345), Washington, DC: US Government Printing Office, 2016; Greg J. Duncan and Richard J. Murnane, "Rising Inequality in Family Incomes and Children's Educational Outcomes," RSF: The Russell Sage Foundation Journal of the Social Sciences 2, no. 2 (2016): 142-158, http://www.rsfjournal.org/doi/full/10.7758/RSF.2016.2.2.06; Organisation for Economic Co-operation and Development (OECD), In It Together: Why Less Inequality Benefits All (Paris: OECD Publishing, 2015), http://dx.doi.org/10.1787/9789264235120-en.

6 Irwin Kirsch, Henry Braun, Mary Louise Lennon, and Anita Sands, Choosing our Future: A Story of Opportunity in America (Princeton, NJ: Educational Testing Service, 2016); Irwin Kirsch, Henry Braun, Kentaro Yamamoto, and Andrew Sum, America's Perfect Storm: Three Forces Changing Our Nation's Future (Princeton, NJ: Educational Testing Service, 2007).

7 Thomas Piketty and Emmanuel Saez, "Income Inequality in the United States: 1913-1998," Quarterly Journal of Economics 118, no. 1 (2003), or, for a less technical summary, see Saez's latest update: Striking it Richer: The Evolution of Top Incomes in the United States (2015), https://eml.berkeley.edu/~saez/saez-UStopincomes-2015.pdf.

8 Theodore Roosevelt speech, Chicago, IL, June 17, 1912.

9 Claudia Goldin and Lawrence F. Katz, The Race between Education and Technology (Cambridge, MA: Harvard University Press, 2008); Suzanne Mettler, Soldiers to Citizens: The GI Bill and the Making of the Greatest Generation (Oxford: Oxford University Press on Demand, 2005).

10 For example, see Richard Rothstein, The Color of Law: A Forgotten History of How Our Government Segregated America (New York: Liverright, 2017), and Matthew Desmond, Evicted: Poverty and Profit in the American City (New York: Broadway Books, 2017).

11 For a discussion on the role of policies, for example, see Jacob S. Hacker and Paul Pierson, "Winner-Take-All Politics: Public Policy, Political Organization, and the Precipitous Rise of Top Incomes in the United States, Democracy and Markets, Understanding the Effects of America's Economic Stratification," A Tobin Project Conference, April 30- May 2, 2010, https://assets.aspeninstitute.org/content/uploads/files/content/docs/psi/BACKGROUND%20Reading%20Hacker%20and%20Pierson%20-%20Winner-Take-All%20Politics,%202010.pdf; and Jacob S. Hacker and Paul Pierson, "Making America Great Again," Foreign Affairs, May/June, 2016, https://www.foreignaffairs.com/articles/united-states/2016-03-21/making-america-great-again.

12 Kirsch et al., Choosing our Future; David H. Autor, "Skills, Education, and the Rise of Earnings Inequality among the 'Other 99 Percent,' " Science 344, no. 6186 (2014).

13 Goldin and Katz, Education and Technology.

14 PIAAC Round 1 (2012) was conducted on the household population aged 16–65 across 23 nations. They were Australia, Austria, Belgium (Flanders), Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Ireland, Italy, Japan, Korea, Netherlands, Norway, Poland, Russian Federation, Slovak Republic, Spain, Sweden, United Kingdom (England and Northern Ireland), and the United States. A supplemental round of data collection in the United States was conducted in 2014 (the U.S. National Supplement). Also in 2014, the PIAAC assessment and background questions, slightly modified, were used to study the population of incarcerated adults in the United States. The data used herein are based primarily on the combined samples of the U.S. PIAAC household data from 2012 and 2014, as well as select data from the U.S. incarcerated population (2014).

15 OECD, Time for the U.S. to Reskill?: What the Survey of Adult Skills Says (Paris: OECD Publishing, 2013), http://dx.doi.org/10.1787/9789264204904-en.

16 Madeline Goodman, Anita Sands, and Richard A. Coley, America's Skills Challenge: Millennials and the Future (Princeton, NJ: Educational Testing Service, 2015).

17 David Autor, The Polarization of Job Opportunities in the U.S. Labor Market: Implications for Employment and Earnings, Center for American Progress and The Hamilton Project, April 2010, 6, https://economics.mit.edu/files/5554. Italics in original.