January’s numbers for labor force participation are in, and it’s looking like Gen Z has finally caught on — they’ll need to work to pay their own way. Unfortunately, in North Carolina, they’re already late to the game.
On Feb. 2, the Bureau of Labor Statistics published new data for January employment, revealing that unemployment remained at 3.7%, and the economy added 353,000 jobs to the market — well over double the expected increase. This comes after North Carolina added an average of over 8,000 jobs per month last year, with an unemployment rate of 3.5%. Such a robust performance in employment data suggests a strong economic outlook for North Carolina as the new year continues into its second month.
In addition to these statistics, the national labor-force participation rate for workers between ages 20 and 24 jumped an entire percentage point to the pre-pandemic level of 72.7%, as Generation Z joined the workforce. While these are hopeful numbers for the economy as a whole, they raise two important question: Where were these younger workers in the past four years, and why are they joining the workforce now?
One possible cause of this sudden enthusiasm for work among young people could be the Supreme Court’s decision to block President Biden’s student-loan forgiveness program. In June, the court ruled that the Biden administration overstepped its authority last year when it announced plans to cancel up to $400 billion in student loans.
Since then, Gen Z, while extremely supportive of debt forgiveness, has been largely unimpressed with President Biden’s secondary plan to eliminate $127 billion in student debt by curbing existing programs that were previously hard to access for many borrowers. Although aiding 25,000 North Carolinians, this move failed to yield the desired reaction, as over two-thirds of students across the nation were doubtful that this loan forgiveness would happen. Furthermore, the North Carolina Department of Revenue has announced that any student loan forgiveness proposed by President Biden would be subject to taxation, adding another layer of complexity to the issue for many borrowers in the state.
It seems young people abandoning hope that Biden’s generosity will bail them out are doing the only thing left to do: they’re getting jobs.
It’s a step in the right direction, but these new workers face a long slog as they’re late to the game, and Biden’s student loan forgiveness saddled them with even more economic baggage than they had before. These workers can expect diminished retirement savings, prolonged dependence on familial support, and a lifetime of student loan payments. The situation is particularly dire for North Carolinian youngsters, who collectively hold $51.7 billion in student loans, with borrowers facing an average balance of $38,231.
While paused for over three-and-a-half years due to the pandemic, student loan forbearance officially ended in August last year. During this period, student loan debt continued to climb as new loans were issued, but few payments were made. In fact, 18% of student loan borrowers never paid on their loans since the pandemic began. Additionally, 8 million under age 30 never made any payments on their student loans.
Over a third of older Gen Z individuals, aged 20-25, have student debt, and a significant number are still accumulating more as they progress through their post-secondary education. The average outstanding balance for a Gen Z consumer with student loans is already $24,473 — over 10% more than their older millennial counterparts at this point in their life.
It’s yet to be seen what the fallout will be from young people’s delayed entrance to the workforce, but with the amount of student debt they’re carrying, Gen Z can expect a struggle. Federal bail-outs and loan payment deferrals have only exacerbated the situation for these new workers.
Students and future laborers, take note: When the government asks to pay your way, just say “no thanks.”