‎U.S. $39 Trillion National Debt Could Lead to Fewer Jobs and Lower Wages for Gen Z, Report Warns

By: Shawn
‎The debate over the risks posed by the U.S. national debt continues, but there is broad agreement that younger generations would bear the greatest burden if the country's fiscal challenges worsen.
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‎Citadel CEO Ken Griffin has previously voiced concerns about the nation's borrowing, writing in his 2023 shareholder letter: “It is irresponsible for the U.S. government to incur a deficit of 6.4% when unemployment is hovering around 3.75%. We must stop borrowing at the expense of future generations.”
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Report warns the U.S. national debt could reduce jobs and wages for Gen Z if current fiscal trends continue.
‎Getty Images

‎A report released by the Peter G. Peterson Foundation argues that Gen Z could face a smaller labor market and reduced earnings if the nation's current fiscal path remains unchanged.
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‎According to the report, “Rising interest costs not only crowd out resources for public investments within the budget, but also deter private investment in businesses, which slows economic growth and negatively impacts the labor market.”
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‎While the Peterson Foundation was created to promote a more sustainable fiscal path for the United States, the report also relies on analysis conducted by EY's Quantitative Economics and Statistics (QUEST) practice.
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‎The analysis estimates that the current debt trajectory would leave the U.S. with 1.2 million fewer jobs by 2035 compared with a scenario in which lawmakers stabilize the debt. The projected impact grows over time, reaching 2.7 million fewer jobs by 2055 and 3.6 million by 2075. As Gen Z and Gen Alpha are expected to make up most of the workforce by then, these generations are projected to experience the greatest effects.
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‎Some observers argue that advances in artificial intelligence could offset the need for as many workers in the future. JPMorgan Chase CEO Jamie Dimon has suggested that economically developed countries could eventually see 3.5-day workweeks due to technological efficiencies.
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‎However, Dimon has also warned about America's borrowing, saying he believes a bond market crisis is the most likely outcome. Speaking on a live podcast with Nicolai Tangen, CEO of Norges Bank Investment Management (NBIM), he said: “I just think maturity should say you should deal with it as opposed to let it happen.”
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‎Report Projects Declining Wages
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‎The EY analysis also projects that wages would decline over time if debt continues to rise unchecked. Compared with a stabilized debt scenario, annual wages are projected to be 0.6% lower by 2035, 3% lower by 2055, and 5.3% lower by 2075.
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‎Meanwhile, servicing the national debt continues to become more expensive. Recent Congressional Budget Office research found that net interest on public debt reached $857 billion for the fiscal year, or approximately $23.8 billion each week.
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‎The report notes that annual interest payments now exceed the combined outlays for the Departments of Defense, Commerce, Homeland Security, Education, the Environmental Protection Agency, the Small Business Administration, and the U.S. Coronavirus Refundable Credits scheme by $20 billion.
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‎The Peterson Foundation concludes that younger Americans have a significant stake in the country's fiscal future, stating: “The growing national debt will both shrink the labor market and drive down wages, contributing to an uncertain economic future for millions of younger Americans. The decisions that today’s leaders make about America’s fiscal future are extremely consequential to the next generation.
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‎“The good news is that young Americans can play a critical role in ensuring a more prosperous economic future by making their voices heard.”

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