Baby Boomers seem to think that the reason that Generation Y is in so much debt is cultural. Baby Boomers were raised in the era of cash only. If you don’t have the money to buy it, then you can’t have it. Getting ahead is about saving: putting aside money for life’s large expenses, such as a downpayment on a home, a car to get you to work, or necessary appliances and items that help middle-class families run. This argument certainly has some merit.
But the reason that Gen Y is in so much debt is that (with apologies to Tamara Draut, from whose book “Strapped” I stole this line) as young adults work to get into the middle class, they’re being hit by a one- two punch: the economy no longer generates widespread opportunity, and our public policies haven’t picked up any of the slack. The price of almost all of life’s necessities has increased since Baby Boomers were Gen Y’s age. The cost of a college education has doubled many times over; getting a mortgage is more difficult; health care is a much bigger burden; and necessities such as gas and childcare are on the rise too.
So as Gen Y’ers enter the workforce, up to 15 percent of their income goes towards paying off student loans. Homeownership isn’t possible until much later in life, especially in high-cost cities where jobs are most readily available. A college education isn’t worth as much, especially as manufacturing jobs that used to be widely available have vanished. And even jobs in high-tech professions that Gen Y’ers thought were a reliable bet — such as IT — are being shipped overseas. Many who were raised in middle-class suburbs by Baby Boomer parents are learning to live with less.
And it certainly doesn’t help that our nation’s most prestigious financial institutions make it very easy to get into debt. All the expenses that Gen Y can’t afford — what used to be standards of middle-class living — can now be swiped and put on a credit card.
walletwatch gives a big shoutout to conservative columnist David Brooks. In an October 2007 column, he says that the economic vise grip that Gen Y is stuck in is driving their culture — not that Gen Y’s culture of consumption is driving them further into debt. He writes that
During this decade, 20-somethings go to school and take breaks from school. They live with friends and they live at home. They fall in and out of love. They try one career and then try another.
While Brooks could have done a better job of describing these economic trends in more detail, he is spot on when he writes:
The job market is fluid. Graduating seniors don’t find corporations offering them jobs that will guide them all the way to retirement. Instead they find a vast menu of information economy options, few of which they have heard of or prepared for.
It’s possible to see that this period of improvisation is a sensible response to modern conditions.
The column is a great read.
Particularly impressive was the authors’ documentation that the middle class of the 1950s-1980s — which is now being fractured by increasing wealth inequality — was built by deliberate public policies that are now being eroded. That is, the prosperity that so many families experienced during those decades was the result of public-sector programs such as the GI Bill that made college affordable, the Federal Housing Administration that made homeownership a reality, social security that made it easy to save for retirement, and so on. But as our economy started to change, these programs have slowed eroded, and in part have been deliberately shredded by conservative politicians.
on Financial Services, Rep. Carolyn Maloney (D-NY) held a 
g into a handful of credit card practices. She recently introduced 