California's high cost of living is no secret, particularly when it comes to housing. With the highest gas prices in the nation and the second-lowest homeownership rate, millennials, including recent graduates, find it difficult to purchase homes. According to the World Population Review, housing costs in California are twice the national average. The average cost of a 780-square-foot apartment in Los Angeles is approximately $2,800, while in San Francisco, it's around $3,300 for an average-sized apartment. These figures are high, but they're not unexpected given California's reputation. However, they present a problem for young people who are burdened with student loan debt and face high costs of living.
The problem isn't confined to just a few freshly graduated college students, as millennials hold 31.94% of the total student loan debt in the United States. Combined with the recent rise in the cost of goods and inflation, it becomes even more challenging for millennials to buy and own a home. Compared to baby boomers, millennials have less wealth at the same age, primarily due to the debt many millennials carry compared to their parents.
Moreover, salaries and wages have not kept pace with the rise in costs, adding further financial strain on those trying to pay off their student loans while covering their necessities. Economists have proposed several reasons why wages do not rise with the cost of living.
One theory is that large companies employing thousands of people do not see the value in their employees. The boards of large corporations see more value in their shareholders and their status within the stock market. Paying their employees more won’t raise or tank their stock price, but funneling money into their shareholders does. In today’s capitalist world, the vast majority of big businesses are far more interested in the people who hold stock in their company than those who work for them.
Another theory is that if companies raise wages due to inflation or a recession, they will find it difficult to lower them again when the economy stabilizes. This is because reducing wages is not popular with employees, and companies risk losing their workers if they raise and then lower wages. As a result, employers are hesitant to raise wages, fearing that they may regret it in the future.
Although wages have risen in the United States since 1970, they have not kept pace with the rise in the cost of goods, which is why young people today face more debt than ever before.
While this issue is far from being resolved, several organizations help college students manage their bills. Student LunchBox is a non-profit in Los Angeles created to combat hunger among college students. Many other organizations like Student Lunch Box (SLB) exist, enabling students to take one step closer to success. By reducing the burden of high food costs, students' stress levels may decrease, and they may be better positioned to achieve success.
In sum, California's high cost of living poses a significant problem for millennials, particularly regarding housing. With the high cost of student loans, rising costs of goods, and low wage growth, young people find buying and owning homes more challenging. While there is no one solution to this issue, several organizations aim to support college students in managing their bills, such as Student LunchBox, Inc (SLB). Although it is only one step, this assistance could help alleviate some of the stress that comes with the high cost of living, and it may help put students on a path toward success.
By Allison Norberg