Key Highlights
- Research shows that young people starting careers during an economic crisis are at lasting disadvantage with wages, opportunities and confidence in the workplace
- COVID-19 economic downturn the worst in generations and hitting young people with a vengeance
Make no mistake. The pandemic economy is punishing young people. From March to April, employment dropped by 25% for workers aged 20 to 24 years old and 16% for workers ages 25 to 29. Employment dropped approximately 12% for workers in their 50’s.
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For some younger workers, this economic nightmare is NOT their first rodeo. In an analysis by the McKinsey Global Institute, “the generation that first entered the job market in the aftermath of the Great Recession is now going through its second ‘once-in-a-lifetime’ downturn.”
In an article for Lawfare, a blog about legal and national security issues, historian David Kennedy and retired general Karl Eikenberry compared the current crisis situation to wartime when older people send their young to the front lines to fight and die, Eikenberry said, “It is the young – indebted students and struggling mortgagors, parents supporting families paycheck to paycheck, precarious recent graduates and anxious first-time job seekers – whose lives will be most deeply scarred.”
Researchers at the University of California at Berkeley, the University of Rochester, UCLA and Northwestern University found disturbing commonalities among young people who had graduated colleges into recessions:
- They had a lower employment rate than peers at the same age who graduated before a recession hit.
- They earned less and that lower earning persisted.
- They got stuck in low-quality, low-pay jobs and even after the economy recovered, they had a harder time moving into better jobs.
- Recession graduates start in jobs that are “a worse fit.”
- Recession graduates seem to be more risk adverse, do not change jobs as often as those who graduate into booming economies…such job changes are one of the best ways to get a raise.
- They earned less in midlife
- They were less likely to be married or have children or become homeowners.
- They had higher mortality rates beginning in their 30’s.
Unsurprisingly, young workers without a college degree do even worse than those who have that degree.
Lisa B. Kahn, an economics professor with the University of Rochester, said, “Recessions, in general, widen inequality. The more disadvantaged groups – minorities, the young, those with less education – are the hardest hit.”
Alicia Munnell and Wenliang Hou of the Center for Retirement Research at Boston College have studied the effects of the 2009 recession on Millennials born from 1981 to 1999. They found that these Millennials are less financially secure than their peers from preceding generations. They have more student debt and less, if any, money in their retirement plans. Their net worth is lower than that of Boomers or Gen Xers. Additionally, fewer are married and fewer are homeowners.
One woman, a 59-year-old mother who has watched her daughter’s generation experience two economic crises in just over a decade and tens of millions of workers lose their jobs almost overnight, now has a different perspective of the world and of the economy. Instead of thinking as she used to that people who lose jobs or face adversity should just persevere and “find another way to make stuff happen,” she now thinks “with all this COVID, you can’t just pick yourself up and find something different.”
Thanks to The New York Times’ Eduardo Porter and David Yaffe-Bella
Also read: “Gangbusters” Jobs Report Bodes Well for Housing, Podcast: 2020, The Sellers Market Returns (But, For How Long?) | Tim and Julie Harris, Country Homes in UK Making a Comeback Despite Bleak Market
