Too Big To Fail: Millennials on the Margins Anita Sands and Madeline Goodman
Millennials in Transition
Broadly speaking, millennials are in a stage of transition in terms of their roles as they move toward and through adulthood; many are proceeding with their educational goals, entering the labor market, establishing their first homes, and creating families of their own. Demographic research has examined that the transition to adulthood for this cohort often lasts well beyond age 25.58 In fact, there is growing consensus among demographers that since the 1980s, America has witnessed a "lingering" pattern of transition to adulthood in contrast to a more rapid transitional phase in the middle of the twentieth century. In the postwar period (roughly 1945 to late 1970s), economic, political, and social forces converged to allow more U.S. adults, though certainly not all, to attain gainful employment upon exiting educational institutions (often high school), marry at younger ages, and set up independent households. For a time, demographers saw this as a new norm, differentiated from a late nineteenth-to-early-twentieth-century pattern where young adults transitioned to independence more slowly (e.g., marrying and setting up individual households later). When viewed through a wider lens, however, this shorter transitional phase for mid-century young adults now appears more aberrant than norm. Millennials are, as a group, delaying the end of school and the establishment of households with a partner.59
Clearly, then, it is useful to consider whether and how employment and student status (enrolled in formal education or not) affect skill levels of this cohort. Across both literacy and numeracy, millennials who were simultaneously employed full time and engaged in formal educational activities had the highest percentage that performed at or above Level 3 and the lowest percentage at or below Level 1 or at Level 2 (Table 6). These are, in essence, the doubly engaged millennials. At the other end of the spectrum, millennials who were unemployed and not enrolled in education—those who were most disengaged from skill-augmenting activities—had nearly twice the percentage (26 percent in literacy and 47 percent in numeracy) at or below Level 1 compared to millennials overall (14 percent in literacy and 25 percent in numeracy). These data largely corroborate the findings in the "disconnected" literature alluded to previously. By and large, those without ties to the labor market and education represent some of our most vulnerable young adults and are at greater risk of experiencing negative life outcomes.60
Nonetheless, the PIAAC data highlight that employment in no way guarantees skills. Nor, seemingly, do some avenues of formal secondary and postsecondary education. Tables 7 and 8 allow us to take a slightly different view of the data and bring the issue of connection—to both education and employment—and its relationship to skills into sharper focus. In these tables, the percentages are computed on the total number at each skill level, rather than across a category of employment/education, as in Table 6. When we do this, we observe that of the estimated 10.4 million millennials who performed at or below Level 1 in literacy, 30 percent—or approximately 3.1 million—were enrolled in formal education/certificate programs. In numeracy, an estimated 19.4 million millennials performed at or below Level 1; an estimated 35 percent of them, or 6.9 million, were enrolled in education at the time of the PIAAC survey.
To gain a deeper understanding of the relationship of skills—and low skills in particular—to education, we examined millennials currently enrolled in education by their highest level of educational attainment (Table 8). Of the approximately 3 million low-scoring U.S. millennials in literacy who were enrolled in education, nearly two-thirds (62 percent) had less than a high school degree. In numeracy, of the approximately 7 million low-scoring millennials in numeracy who were enrolled in formal education, 56 percent had less than a high school degree. Even though more than half of these millennials were high school students or currently obtaining a high school equivalency at the time of the PIAAC, performing at or below Level 1 at this stage should be a cause for real concern.61 With skills at such low levels, these individuals will likely face substantial obstacles to successfully completing a two- or four-year postsecondary degree or advancing in the labor market.62
Equally striking, however, is that 34 percent of those who performed at or below Level 1 in literacy, and 37 percent of this group in numeracy, were in fact enrolled in formal education and had obtained a high school degree/some college education (nondegreed). In addition, of the millennials who scored at Level 2, 42 percent in literacy and 46 percent in numeracy were enrolled in formal education and had obtained a high school degree/some college (nondegreed).
The PIAAC data here dovetail with a surge of scholarly work on important differences in the types and quality of formal education/certificate programs offered to millennials and underscore that in a country as large and diverse as the United States, postsecondary education is "far from a standardized product."63 Further, these findings support a robust literature that examines equity concerns regarding higher education. Recent scholarship has documented that many who begin college and do not finish, as well as many who attend unregulated for-profit institutions, often start and end at a distinct disadvantage. In a number of key ways, the complex interaction of racial/ethnic and income disparities are likely at play here.64 For example, on average Black and low-income students borrow more—and more often—than White and higher-income students to pay for their bachelor's degree, even at public institutions. In addition, Black and lower income students borrowing for associate level and for-profit degrees have spiked in the past decade even though some of these degrees often confer little in the way of increased skills and employment prospects.65 The student debt incurred to pay for these degrees is often differentiated along income and racial/ethnic lines as well, putting far too many millennials and their families at risk for other economic hardships down the road.66
The numbers of U.S. low-performing millennials with attachments to the labor market is the other aspect of connection that bears greater scrutiny. Here again, especially in a U.S. labor market that has a large proportion of jobs at the lower end of the skill spectrum, employment in no way protects individuals from exposure to the difficulties associated with low skills.67 In fact, as one study has shown, while many low-skilled individuals are more likely to be employed in the United States, this employment often does not provide much protection. Low-skilled employed individuals are more at risk of being expelled from the labor market in a downturn in the economy and to earn low wages, and are often not in a position to advance their skills.68 Of the estimated 10.4 million millennials who performed at or below Level 1 in literacy, nearly two-thirds (65 percent) were employed full time (43 percent) or part time (22 percent) (Table 9). That implies that approximately 6.7 million millennials who have some connection to the labor market may struggle with basic literacy skills such as comparing, contrasting, or reasoning about information provided. When we look at performance on the numeracy domain, the figures are even more striking: An estimated 12 million millennials who are employed full or part time may struggle with basic numeracy skills such as identifying and acting on numerical information and ideas—even when they are embedded in common contexts where the content is fairly explicit or visual and the information is conveyed with few distractors.
Adding to this are the number of employed millennials who perform at Level 2. In terms of employment, we observe that in literacy, an estimated 26 million (34 percent of all millennials) performed at Level 2; of those, an estimated 17.5 million (69 percent) were employed either full or part time. In numeracy, nearly 27 million millennials (35 percent of all millennials) performed at Level 2; of those, roughly 19 million (71 percent) worked full or part time (see Appendix Table A-3 for greater detail). In total, there were more millennials working full and part time below Level 3—meaning they were low skilled —than at or above (Figure 3). While this pattern was reversed in literacy, there were an estimated 24 million millennials with low skills.
When we examined Level 2 skills and educational status, we found that over 10 million millennials in each domain were enrolled in some form of education/certificate program. In fact, in numeracy, reflecting a pattern we found for employment, there were more millennials currently enrolled in education/certificate programs with skills at or below Level 2 than there were at or above Level 3 (Figure 4).
The PIAAC data give us some indication of the kinds of occupations and remuneration of these low-skilled millennials. In numeracy, while a little more than half (51 percent) of millennials who performed at or above Level 3 worked in skilled occupations (e.g., legislators, senior officials and managers, professionals, technicians, and associate professionals), 43 percent of those who performed at or below Level 1, and 43 percent of those who performed at Level 2, worked in semi-skilled white-collar occupations (e.g., clerks, service workers, and shop and market sales workers). In literacy, the patterns are similar. However, those millennials who performed at or below Level 1 in literacy were about three times more likely to work in elementary occupations (e.g., food preparation assistants, routine machine laborers, and cleaning persons) than those performing at or above Level 3 (Appendix Table A-7).
The link between skills and wages has been well documented in labor market surveys and research, and the PIAAC data are in line with the general findings. As a forthcoming report will demonstrate, there is a strong association between the greater productive abilities of workers, higher levels of educational attainment, and stronger literacy and numeracy proficiencies. These generally translate into "improved employment and earnings outcomes in U.S. labor markets," where the earnings advantages for adults 25-65 associated with high skills levels in both literacy and numeracy are quite large.69 This is also reflected in the PIAAC data for young adults: Those with lower skill levels earn less. Around three-quarters, or 76 percent, of those who scored at or below Level 1 on the PIAAC literacy scale earned in the lowest two quintiles of income; that is, less than $2,300 monthly and less than $28,000 annually (Appendix Table A-8). What's more, many of these millennials are all but locked into low-skilled/low-wage jobs.
Current research on occupations utilizing the PIAAC data demonstrates that while some employment-related upskilling occurs, businesses tend to prioritize opportunities for additional education to key management and staff rather than to their lowest skilled employees.70 A National Skills Coalition report also revealed that many adults employed in low-skills jobs in the service sector industry in the United States lack the necessary literacy and numeracy skills to fully exploit opportunities to advance within service-sector companies, which creates "an invisible drag on productivity and worker mobility."71 In addition to the obvious benefit of increased wages and educational prospects, a host of other advantages accrue to employees who have access to better employment opportunities (e.g., retirement savings plans, affordable health care, paid sick time, and so on). Though the latest PIAAC survey did not measure all of these indicators of employment benefits, the data do support that lower-performing millennials are less likely than their higher-skilled peers to have health insurance (Appendix Table A-9).
By highlighting ties to formal education and the labor market, the research on disconnection focuses attention on a clearly vulnerable segment of the youngest adult population. But the expanded notion of disconnection offered here—one of marginalization due to low skills—reveals a more nuanced picture of the challenges a generation of low-skilled young adults faces today. While there is clearly a positive relationship between skill proficiency and education, research has shown that there is a wide variation of skill levels within each category of educational attainment. Moreover, even though the U.S. labor market accommodates a great many of those with low skills, employment for these individuals may provide only limited advantages.72 Millions of millennials traversing the path to adulthood lack the necessary skills that could allow them to fully take advantage of the opportunities that may be available to them—even though many have finished high school, maintain connections to formal postsecondary education, or participate in the labor market. Equally important, research shows that skills correlate to individuals' feelings of connectedness to the larger society and their overall well-being, including their levels of trust and engagement with others and social institutions. In the next section, we explore these important non-labor-market factors associated with skills.
59 Jordan Stanger-Ross, Christina Collins, and Mark J. Stern, "Falling Far from the Tree: Transitions to Adulthood and the Social History of Twentieth-Century America," Social Science History 29, no. 4 (2005): 625-648.
60 Congressional Research Service, Disconnected Youth.
61 Sabatini, Basic Reading Skills.
62 Russell W. Rumberger and Sun Ah Lim, Why Students Drop Out of School: A Review of 25 Years of Research, Vol. 15 (Santa Barbara, CA: California Dropout Research Project Report, 2008).
63 Fogg, Harrington, and Khatiwada, Human Capital Investments.
64 Raj Chetty, John N. Friedman, Emmanuel Saez, Nicholas Turner, and Danny Yagan (2017), Mobility Report Cards: The Role of Colleges in Intergenerational Mobility, NBER Report No. w23618 (Cambridge, MA: National Bureau of Economic Research, 2017); Harry J. Holzer, "Improving Opportunity Through Better Human Capital Investments for the Labor Market," in The Dynamics of Opportunity in America: Evidence and Perspectives, ed. Irwin Kirsch and Henry Braun (New York: Springer, 2016), 387-412; Margaret Cahalan and Laura Perna, "Indicators of Higher Education Equity in the United States: 45 Year Trend Report," Pell Institute for the Study of Opportunity in Higher Education (Philadelphia: Pell Institute for the Study of Opportunity in Higher Education, 2015), https://files.eric.ed.gov/fulltext/ED555865.pdf.
66 Judith Scott-Clayton and Jing Li, Black-White Disparity in Student Loan Debt More than Triples after Graduation, Evidence Speaks Report (Washington, DC: Brookings Institution, 2016); Rumberger and Lim, Why Students Drop Out.
69 Fogg, Harrington, and Khatiwada, Human Capital Investments. For U.S. adults ages 25-65, Fogg, Harrington, and Khatiwada showed that for every $1 earned by workers in the lowest level of literacy proficiency, their counterparts at Level 4/5 earned $2.28.