Kids these days: the socioeconomic situation of young adults in Israel

Each generation embodies its own attributes, values, standards, and work ethic. Generation Y, known as the millennials generation, is composed of individuals born in the 1980s and early 1990s.  Millennials indeed have a uniquely perceived image throughout the world, and many leaders of recent social protest movements have emerged from among this generation. The protests on socioeconomic issues in Israel, which began in the summer of 2011, were largely initiated by these young adults. The discontent ranged from issues about the price of housing to the price of cottage cheese.

Both external and internal factors influenced the situation of young adults. The external factors include those economic conditions that prompted the social protests, such as the challenges that many young adults face due to the rise in housing prices. The internal factors relate to the modern characteristics of young adults; Generation Y is often accused of being more spoiled than previous generations, with an attitude of self-absorption, lack of industriousness, and a spirit of pampering that affects their moral and professional code. A new study by Taub Center researcher Hadas Fuchs examines the social and economic conditions of young adults in the realms of higher education, employment, and housing, ultimately seeking to determine whether these perceptions are supported by the data.

One of Fuchs’ major findings is that Generation Y is more educated than the preceding generation. Over the last two decades, the share of students among the 18-34 year-old population has increased from 9% in 1995 to 15% in 2011.  The majority of this increase comes from students enrolled in academic colleges rather than universities. In 2014, 96,000 students were enrolled in colleges and 65,000 students were enrolled in universities.  In both the Arab Israeli population and the Jewish population there are more women than men with academic degrees. Young adults, particularly men, are both beginning their higher education and entering the labor force at a later age than in the past. These findings can likely be attributed to cultural or internal factors, such as the rise in popularity of traveling abroad after army service.

Even more than in the past, a high share of Jewish students, 65%, work while pursuing their degree, predominantly in part-time jobs. Between 1995 and 2011, employment rates among Jewish students rose as students progressed in their studies. Students are, however, mainly employed in clerical, sales, and service jobs with only a small share employed in occupations requiring post-secondary education.  As such, students often do not gain relevant work experience during the course of their studies.

Following their studies, educated individuals aged 31 to 34 have similar rates of employment and work in similar occupations as educated individuals ages 35-54. Nonetheless, as the first figure shows, there has been a decline in the real hourly wage for this group between 2004 and 2011. There are a number of potential explanations for this decline in wage. The delay of young adults in beginning their studies could lead them to have lower seniority – i.e., fewer years of experience – by the time they are in their early thirties. Additionally, the substantially higher rate of students pursuing an academic degree leads to a rise in supply of educated young adults.  It may be that there is no parallel rise in demand for those with academic degrees, which could also account for the decline in real wages, as Taub Center research shows.

Following their mandatory military service, many young adults continue to live in their parents’ homes. As the second figure shows, since 2005, there has been a substantial increase in both single and married individuals aged 22 to 28 living with their parents. In addition, the delay in marriage age results in an additional increase in the overall share of those living with their parents. The trend may also be related to a change in housing prices, since the rise in young adults living at home corresponds to the sharp rise in housing prices in 2005, as well as to the delayed entry of many young adults into the labor market.

The study finds that young married couples are also facing increasing obstacles to home ownership. Between 2003 and 2014, the share of married couples aged 25 to 30 living in a home that they own declined by 19 percentage points and stood at only 44%.This decrease aligns with the delay in initiating studies, and began prior to the sharp rise in housing prices. In the same years, young couples in the 31 to 34-year-old age group who live in a home that they owned declined by 12 percentage points and stood at 60% in 2011. For this group, most of the decline occurred after the rise in housing prices began.

In examining the situation of Israel’s young adults in the areas of higher education, employment and housing relative to the past, it is evident that since the 1990s there have been changes both in social norms and in the labor market. An overall delay was found in the initiation of independent adult living, which is reflected in the more advanced age for starting academic studies and entry into the labor market, in the later age for marriage and childbearing and in lower rates of homeownership among young adults. Despite these lags, by their early thirties most young adults conclude their studies (even those who have pursued higher education), successfully find employment, and leave their parents’ homes. Nonetheless, the research indicates that both social norms and external economic factors are associated with increased difficulty for young people in transitioning into adulthood.