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For generations, America has promised that hard work will lead to financial success. Most of today’s youth unfortunately no longer believe in that promise; six in 10 Americans under age 30 think the American dream is out of reach.

So what’s driving the pessimism, anger and apathy in young Americans? An affordability crisis at every stage of life. Rising costs for housing, daily living and education dictate their choices – where they live, if they get married, whether they have children – and those decisions affect the future of our country.

With Congress and the nation’s capital frozen by polarization and distrust, state and local leaders can step in and restore young people’s confidence by listening to their needs and adopting effective policies to help them achieve the American dream. These four strategies can help.

Elaine Maag and Bruce FullerJuly 10, 2025

Even small financial cushions make it possible to manage economic volatility. Helping young people build wealth encourages them to focus on the future. Early-life wealth building accounts, sometimes called “baby bonds,” can give children a financial foundation.

Trump’s “One Big Beautiful Bill” includes a version of these accounts called “Trump Accounts,” which will give every newborn American a $1,000 tax-advantaged investment account, allowing families to make capped annual deposits. Starting at the age of 18, the account holder may use the money for a down payment, tuition or a small business.

Trump Accounts have limitations, but they can be strengthened by recurring deposits from public, private or philanthropic dollars and by exempting the accounts from public benefit calculations. State and local policymakers can also create their own baby bonds – like Maine, Pennsylvania and California have done – to ensure greater returns for kids.

A college degree once nearly guaranteed a job, but for many of today’s graduates, the entry-level job market feels dismal and frustrating. The rise of generative AI has stoked concerns about the disappearance of entry-level jobs, making it a riskier-than-ever proposition to take on crippling student debt when there’s no guarantee a degree will lead to a good job.

We believe apprenticeships can help young people avoid the rising price of college tuition and research has shown they increase long-term earnings while creating sustainable talent pipelines for employers.

Several states already support apprenticeship systems. Arizona offers an earn-to-learn program that also provides matched funding for higher education if students choose to pursue a degree.

Rohan ShahOct. 16, 2025

The single most important factor driving America’s cost-of-living crisis today is the lack of affording housing for rent or purchase. Urban Institute’s American Affordability Tracker shows the average home sale price in the U.S. is now $206,000 higher than it was just eight years ago in 2017. Meanwhile, the median age of today’s first-time homebuyer is nearly 40, a decade older than in the 1980s, leaving young people with less time to build wealth as their home equity grows.

Building more affordable housing is a crucial first step, and some state and local policymakers are already pursuing creative ways to incentivize new construction. For example, Chamberlain, South Dakota, bought a tract of land and is awarding free lots to people or developers to build new homes. Salt Lake City, Utah, has leveraged underutilized public properties for affordable housing and other purposes. Henrico County, Virginia, created an affordable housing trust fund using taxes raised by new data centers to meet growing housing demand. And several state and local leaders are exploring ways to streamline permitting processes and revise zoning codes.

Policymakers can also provide purchasing support to first-time homebuyers. Several states and cities have created down payment assistance programs to lessen upfront costs, and property tax credits, like Washington D.C.’s Tax Abatement Program, to lower monthly mortgage payments.

Many young families struggle to pay for fundamental needs like child care. In 2017, the annual cost of child care for two young children was just above $20,000. By 2024, it was nearly $30,000. This steep increase has forced young people to make hard decisions: Can they afford to have children? And can they keep working if they do?

Investing in affordable child care reaps social and fiscal dividends. New Mexico recently became the first state to offer universal free child care to all families, regardless of income. And Washington, D.C.’s free pre-kindergarten program for 3- and 4-year-olds has kept families in the city and boosted public school enrollment.

These programs not only make starting a family more affordable, they also lead to better academic and social outcomes for kids.

Michael J. RomerAug. 22, 2025

Renewing America’s promise to the next generation will require policies that are proven to lower the costs of living. State and local policymakers should share that responsibility by giving young people a seat at the table.

Already, young adults advise on safety net programs in Santa Clara, California, and make policy recommendations in Washington state. State and local policymakers should involve young people in forging solutions and enacting policies to address the affordability crisis, restoring the next generation’s faith in the American dream.

Sarah Rosen Wartell is the president of the Urban Institute, a nonprofit research organization dedicated to equipping changemakers with evidence and solutions.

Tags: economy, housing, inflation

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