Generation Z, young people ages 16–26, came of age and entered the labor market during the COVID-19 crisis, which constrained education and employment options and presented significant uncertainty and anxiety—and it could have led to years of labor market slowing for the youngest workers, as was the case after the Great Recession. However, Gen Z is now seeing the benefits of a strong labor market, cooling inflation, and continued economic growth, fueled in part by actions by the Biden administration’s economic legislation, known as Bidenomics—an economic agenda enacted to grow the economy by growing the middle class.
This column explores how Bidenomics is delivering for young people across six areas: jobs, wages, worker power, junk fees, rental housing support, and climate change. In a remarkable recovery from the pandemic-induced recession, young workers have seen record low unemployment and strong wage growth. On top of a strong labor market, the Biden administration’s support for unions has helped empower young workers to lead unionization efforts and negotiate for good jobs. To ensure that young people keep more of what they earn, federal agencies have also undertaken efforts to limit junk fees and support renters. Finally, the Biden administration has pledged to significantly reduce carbon emissions by investing in a major shift to a clean energy economy, support measures for climate resilience, and create good jobs in the growing clean energy sector. With help getting good jobs, low unemployment, and consumer and renter protections, young people can feel hopeful about their own economic security and path to the middle class.
1. Strengthening the youth labor market
The Biden administration’s investments in the American people, including those in the American Rescue Plan, have set up young workers for future economic success by prioritizing a faster, more equitable labor market recovery. At the height of the pandemic, actions such as expanded unemployment insurance, child tax credit enhancements, economic impact payments, and the student loan repayment pause offered financial support and flexibility to youth in a struggling labor market—and also helped spark unprecedented progress in the labor market from the pandemic-induced recession. The Biden administration made significant investments to support career opportunities for young workers and provide training and credentials to get more workers good jobs in high-demand fields such as health care, which has historically employed a significant amount of young workers.
Over the past 75 years, workers ages 16–24 have seen on average twice the unemployment rate of those ages 25 and older, and they are often more vulnerable to job losses during a recession. During the COVID-19 pandemic-induced recession, young workers were particularly vulnerable to job losses and business closures, as pre-pandemic, they were employed by the hardest-hit industries, such as leisure and hospitality, retail, and manufacturing. Young workers saw an almost 20 percentage-point rise in their unemployment rate at the onset of the pandemic, while workers 25 and older saw an increase of half of that, at around 10 percentage points. Over the past few years, progress has been made, with the unemployment rate for those ages 16–24 falling to a 70-year low earlier this year—a remarkable decline from its record high level in April 2020 of 26.9 percent. (Figure 1) Just three years after the height of the pandemic recession, young workers will be joining a significantly better labor market with much more promising outcomes and better job opportunities.
Over the past few years, progress has been made, with the unemployment rate for those ages 16–24 falling to a 70-year low earlier this year.
Compared with previous recessions, youth unemployment also saw its fastest full recovery from the height of unemployment in nearly 60 years, returning to pre-pandemic rates in only 18 months. Limiting the time that young workers spend unemployed lowers their risk of becoming more permanently disconnected from the labor market and losing skills or experience. Even a short-term disconnect can have long-term impacts on employment. For example, after the Great Recession, analysis showed lasting damage to the employment rates of recent college graduates entering the labor market and lower employment rates than expected based on pre-recession trends among more recent cohorts.
2. Creating impressive wage gains
After a recession, wages of young workers often take longer to recover than those of workers 25 and older. Partly due to policy investments that helped create the foundations for a tight labor market, wage growth among young workers has been strong. The tight labor market has empowered workers in low-wage industries such as leisure and hospitality—where young workers tend to disproportionately work—and offered them better job opportunities, often with higher wages. As young people had the least amount of wealth in 2019 compared with other generations, increasing wages can contribute to future financial security and ability to save.
After the pandemic-induced recession, young workers experienced higher-than-average wage growth compared with past recessions, even accounting for record high inflation. Wage growth for young workers even passed that of workers ages 25 and older three years after the peak of the recession. (Figure 2)
3. Supporting union wins for young people
Gen Z workers are the most supportive of unions, with a mean approval rating of 64.3 in 2020, higher than that of any other generation. Young workers have led a surge of nationwide organizing campaigns, in both industries with union rates above the national average and those less likely to have unions. With unions offering clear economic benefits, such as a higher wealth-to-income ratio for working-class households, they can be incredibly helpful to young workers, who are less likely to be financially secure. Collective bargaining can offer gains to young workers through health insurance coverage and retirement as well: From 2016 to 2021, 46.6 percent of unionized workers had employer-sponsored health insurance, and 39.5 percent had an employer-sponsored retirement plan—significantly more than nonunion workers, at 22.8 percent and 13.5 percent, respectively. Unions also help close racial wealth gaps, with larger increases for Hispanic and Black households with a union member than for white households with a union member. These benefits can help young workers of color attain better economic security.
The Biden administration has consistently supported unionization and the labor movement as ways to create good jobs that grow the middle class. The administration is taking steps to ensure new investments create “quality jobs that allow workers the free and fair choice to form or join a union” and pay workers prevailing wages that help to raise standards for workers of all walks of life and boost project quality. Moreover, President Joe Biden’s appointees to the National Labor Relations Board have already helped the board wield its authority under federal law to update rulings and regulations. These measures boost efficiency in recognizing unions and empower workers to negotiate with all corporations that set their workplace standards. Finally, with the guidance of the White House Task Force on Worker Organizing and Empowerment, the administration is taking a whole-of-government approach to ensuring that workers know and are empowered to exercise their rights on the job.
4. Tackling junk fees
Bidenomics is helping young people join the middle class by enabling them to keep more of what they earn. In particular, the Biden administration has targeted junk fees, which are more than just an annoyance when completing transactions; these fees have a big impact on young borrowers, who are more likely to have serious delinquencies on debt payments and are more likely to have credit card disputes. As young people enter financial markets, they might have less experience with financial services and can fall victim to predatory junk fees attached to certain kinds of services, such as college-sponsored financial products, which commonly have unnecessary fees and target young people.
The Consumer Financial Protection Bureau (CFPB) has cracked down on unfair late fees on student loans, auto loans, and payday loans; provides financial literacy tools and guides; and gives targeted support to student loan borrowers. Other federal agencies are also taking actions that help young people. For example, the Federal Trade Commission introduced a new rule to protect car buyers from surprise and fraudulent fees and to require upfront information of total costs.
Junk fees affect not only big items such as credit cards and cars but also day-to-day expenses such as tickets to concerts and sporting events. Fees can add more than 30 percent to the final cost of a purchase. Partly because of the Biden administration’s influence, major ticket sales companies have committed to increasing pricing transparency for consumers, making it easier to see the total ticket price before buying. Additionally, the CFPB has proposed a rule that would cap credit card late fees at $8, which would keep more money in young people’s wallets. These measures to protect young people can add to their peace of mind and help build economic security.
The SAVE plan: Saving money for student loan borrowers
The Biden administration has recently announced a new student loan repayment program, the Saving on a Valuable Education (SAVE) plan, that can save the typical borrower more than $1,000 annually. The program has several key features:
- Cutting payments: It could cut millions of borrowers’ payments to $0 while others could have their payments on undergraduate loans cut by half.
- Preventing growing balances: The program makes sure that loan balances will not get larger because of unpaid interest, preventing ballooning debt, as long as borrowers keep up with payments.
- Achieving quicker loan forgiveness: For those with low balances, borrowers may be eligible for forgiveness in as soon as 10 years instead of 20 to 25 years, helping young people save money sooner.
With this new plan, borrowers will pay back an average $6,121 for every $10,000 borrowed, a vast improvement over the $10,956 borrowers repaid under the old program. Borrowers can sign up for the new program by filling out a short application.
5. Increasing housing affordability
The Biden administration has also prioritized increasing housing affordability by supporting rental assistance measures and lowering mortgage insurance. Support for renters is helpful for young people, who are more likely than any other age group to rent. While about one-third of overall American households are renters, two-thirds of households that rent are younger than age 35. (Figure 3) To protect renters, the White House introduced in 2023 the Renters Bill of Rights. A patchwork set of state and local laws protect renters’ rights to varying degrees, but this introduces the first federal blueprint with actions to reduce rental costs and increase housing supply. Additionally, federal agencies, including the U.S. Department of Housing and Urban Development, the U.S. Department of Agriculture, the U.S. Department of Justice, and the CFPB, are taking steps to ensure that leases are clear and fair and background checks are not discriminatory. The Renters Bill of Rights also includes provisions for renters to organize and engage productively with housing providers.
Further actions enacted by the Biden administration are working to increase the supply of rental units over five years, including funding through the Greenhouse Gas Reduction Fund to support commercial to residential conversions; these policies have likely helped contribute to the largest increase in the number of new multifamily units since 1970 and to boosting housing supply, which can help bring prices down as there is less competition for each unit. While decreases in housing costs will take time, there is already evidence that inflation for new rental leases has been slowing since September 2021, providing young people with some relief. Rental affordability is critical to helping young people save money for a down payment to purchase a home. This is especially important for supporting young people of color and closing the racial wealth gap.
In addition to providing rental assistance, the Biden administration reduced the cost of annual mortgage insurance premiums for buyers who use a Federal Housing Administration-insured mortgage. This could save homebuyers an average of $800 annually and can make homeownership more reachable for young people in particular; young people are more likely to need mortgage insurance, which is charged when a homebuyer’s down payment is less than 20 percent.
6. Investing in a clean energy future
The Biden administration has intertwined economic growth with efforts to meet its pollution reduction goals and combat the climate crisis. While working toward a clean energy economy is good for many, it especially supports young people, who will likely benefit from the resulting new jobs, cost savings, and clean air in the future. This is demonstrated by a recent Montana court ruling that upheld the rights of plaintiffs ages 5–22 to have a clean and healthy environment protected from the threats of climate change.
Understanding the urgency of climate issues, the United States rejoined the international Paris Agreement and set the goal of reaching net-zero emissions by 2050. The largest single climate investment in U.S. history, the Inflation Reduction Act—as well as the Infrastructure Investment and Jobs Act and the CHIPS and Science Act—is driving a domestic clean energy boom. A year after the passage of the Inflation Reduction Act, Climate Power estimates that more than 170,600 new clean energy jobs have been announced. Federal agencies, including the U.S. Department of Labor and the U.S. Department of Energy, are partnering with businesses and educators to help young people access these new jobs through training and workforce development opportunities such as support for career pathways and skills-based learning. They include community college training programs and registered apprenticeships, many within the clean energy sector. The administration also just launched a new program, the American Climate Corps, that will help more than 20,000 young people prepare for jobs in climate resilience and clean energy through paid job training and service opportunities.
Finally, the Biden administration has taken steps to make climate resilience, home efficiency upgrades, and clean energy more affordable, with incentives that could save households up to $1,800 per year on energy costs. To help address climate injustice, the Biden administration launched the Justice40 Initiative—a commitment to direct 40 percent of federal investment benefits in climate and clean energy to disadvantaged communities, especially Black, Indigenous, and Latino communities, which are disproportionately overburdened with climate impacts. Investing in a clean energy future that centers racial justice and creates good union jobs is an investment in young people.
By providing a path to economic stability and security, Bidenomics is growing the middle class for young people. Through a wide range of policies—from those that help create a strong labor market, boost wage gains, and support union wins, to actions that fight junk fees, support renters, and invest in the climate—the Biden administration is improving outcomes for young people through quality jobs, affordable housing, worker empowerment, and a clean energy future. These policies and actions continue to address young workers’ clear and present issues and provide for their future.