ABSTRACTMany young adult Europeans face difficult times. High unemployment rates, flexible labour markets, housing shortages, and low minimum wages can limit young adults' current and future development. European Union (EU) policy could encourage Member States to counter these circumstances, offer resources to support Member States in improving the lives of young adults, or at least recommend solutions. We aim to study the EU's 2010–2020 social policy approach to improving young adults' lives in relation to Member States' policy efforts. We contribute empirically and theoretically to the social policy literature by analysing EU youth policies from a capability perspective. Our longitudinal document analysis highlights an overly optimistic, narrow normative foundation for EU youth policy against a background of national‐level problems, resulting in agency inequalities for young people. As such, we demonstrate a crucial disconnect between EU policy and the lives, intentions, and possibilities of young people, hindering their opportunities to live valued lives.