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Labor market outcomes and the transition to adulthood

According to Sheldon Danziger and David Ratner, changes in the labor market over the past thirty-five years, such as labor-saving technological changes, increased globalization, declining unionization, and the failure of the minimum wage to keep up with inflation, have made it more difficult for young adults to attain the economic stability and self-sufficiency that are important markers of the transition to adulthood. Young men with no more than a high school degree have difficulty earning enough to support a family. Even though young women have achieved gains in earnings, employment, and schooling relative to men in recent decades, those without a college degree also struggle to achieve economic stability and self-sufficiency. The authors begin by describing trends in labor market outcomes for young adults—median annual earnings, the extent of low-wage work, employment rates, job instability, and the returns to education. Then they examine how these outcomes may contribute to delays in other markers of the transition to adulthood—completing an education, establishing independent living arrangements, and marrying and having children. They conclude that adverse changes in labor market outcomes are related to those delays but have not been shown to be the primary cause. Danziger and Ratner next consider several public policy reforms that might improve the economic outlook for young adults. They recommend policies that would increase the returns to work, especially for less-educated workers. They propose raising the federal minimum wage and adjusting it annually to maintain its value relative to the median wage. Expanding the Earned Income Tax Credit for childless low-wage workers, the authors say, could also raise the take-home pay of many young adult workers, with minimal adverse employment effects. New policies should also provide work opportunities for young adults who cannot find steady employment either because of poor economic conditions or because of physical and mental disabilities or criminal records that make it hard for them to work steadily even when the economy is strong. Finally, the authors recommend increasing federal Pell grants for college and improving access to credit for would-be college students to raise the educational attainment of young adults from low-income families.