Facing Adulthood With an Economic Disaster’s Lasting
Scars
Those
entering the job market in a downturn may never catch up in pay, opportunities
or confidence.
·
May 19,
2020Updated 10:38 a.m. ET
·
Matthew
Henderson couldn’t be entering the job market at a worse time. As a senior at
Loyola University, he spent the spring semester interning as a trade policy
analyst at the British Consulate in Chicago. But his chances of turning that
opportunity into a permanent job after graduation ran headlong into the
coronavirus pandemic.
Now
Mr. Henderson is at home with his family in South Bend, Ind., unemployed and
considering jobs at Costco and Target to help pay off $24,000 in student loans.
“I’m in this bubble of anxiety,” said Mr. Henderson, who just turned 21. “I have to pay these, but I have no money to pay them.”
Saddled
with debt, and entering a job market devastated by the pandemic, he and
millions of his contemporaries face an exceptionally dicey future.
Young
adults, especially those without a college degree, are particularly vulnerable
in recessions. They are new to the job market — with scant on-the-job
experience and little or no seniority to protect them from layoffs. A large
body of research — along with the experience of those who came of age in the
last recession — shows that young people trying to start their careers during
an economic crisis are at a lasting disadvantage. Their wages, opportunities
and confidence in the workplace may never fully recover.
And
in the worst downturn in generations — one with no bottom in sight — the
pattern is beginning to play out with a vengeance. From March to April,
employment dropped by a quarter for workers 20 to 24 years old, and 16 percent
for those 20 to 29. That compares with about 12 percent of workers in their
50s.
In
an article for Lawfare,
a blog about law and national security, the historian David Kennedy and the
retired general Karl Eikenberry likened the current crisis to wartime, when
elders send the young to fight and die. “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,” they wrote.
For
some younger workers, this is the second blow in barely a decade. An analysis by the McKinsey Global
Institute noted that “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.”
Molly
Zerjal, a 32-year-old in St. Louis, lost a communications job at Wells Fargo
during the last downturn. Now, Ms. Zerjal works in marketing at a different
financial firm, and she’s afraid it could happen again.
“I’m
not an essential worker: marketing and communications is a ‘nice to have,’” she
said. “Every day, I’m like, ‘Oh, God, what could happen today?’ It’s like
P.T.S.D.”
The
question is what kind of scars this will leave in the hearts, minds and pockets
of younger people.
Jordan
Haggard, 33, graduated from Oklahoma State University in 2009 in the depths of
the recession. The job market was dire: When she applied for a job at
McDonald’s, she never heard back.
Ten
years later, Ms. Haggard works as an office manager for a small publishing
company in Seattle. She has kept her job during the pandemic, even as some
colleagues have been furloughed. But she still feels the effects of 2009.
“I
know I will never be able to afford a home in Seattle or even live by myself
without a roommate or two,” Ms. Haggard said. “Life is different from the one I
was told about or imagined.”
Indeed,
Jesse Rothstein of the University of California, Berkeley, followed college graduates who
entered the labor market after the 2008 financial crisis. By 2018, those who
had landed jobs in 2010 and 2011 had a lower employment rate than people at the
same age who graduated before the recession hit, and those working earned less.
The
effects are likely to persist. Lisa B. Kahn, an economics professor at the
University of Rochester, tracked young white men who graduated from college in
1979 and 1980, into the jaws of an earlier recession. Over the next two
decades, she found, they
got stuck in low-quality, low-pay jobs. Even after the economy recovered, they
had a hard time moving into better jobs.
The
causes seem varied. Recession graduates, with limited opportunities, will start
in jobs that are a worse fit. Once the economy recovers, they will compete for
jobs with people who have more experience. In addition, Ms. Kahn noted,
recession graduates seem more risk averse. “People that graduate into a
recession don’t change jobs as often as people that graduate into booms,” she
noted. And these job changes are one of the best ways to get a raise.
The
difficult start shadowed many through their careers. Till von Wachter of the
University of California, Los Angeles, and Hannes Schwandt of Northwestern
University followed Americans who entered the labor market in 1981 and 1982,
during the largest postwar recession up to that time.
They
not only earned less in midlife. They were also less likely to be married or to
have children, and more likely to die young, recording higher mortality rates
starting in their 30s — driven by heart disease, lung cancer, liver failure and
drug overdoses — what two Princeton scholars, Anne Case and Angus Deaton, have
called “deaths of despair.”
And,
of course, young workers without a college degree are likely to fare even
worse. “Recessions, in general, widen inequality,” Ms. Kahn said. “The more
disadvantaged groups — minorities, the young, those with less education — are
the hardest hit.”
In
the coronavirus pandemic, the lopsided impact of business shutdowns on the
young risks opening a generation gap with their elders who are more likely to
die of the disease.
The
diverging interests could affect policy as soon as this summer. In a research paper published last month, Dirk Krueger
of the University of Pennsylvania and three colleagues estimated that people
past retirement age would choose to close a much larger share of nonessential
businesses and keep them closed, while younger workers in those shuttered
businesses have the most to lose. “The conflict between the old and the young
is severe,” Mr. Krueger noted.
The
asymmetric aftershocks of this pandemic are likely to ripple across society far
into the future.
Jordan
Meier, who just graduated from the University of Missouri, has been hunting for
a job as a reporter since February. Despite a strong résumé, she’s been able to
find only a summer internship offering $250 a month, barely enough for her car
payments, and no full-time prospects beyond that.
“You
work for years, you go through school, and you get to this point where you’re
preparing to get a job,” she said. “And now I can’t do that. It’s very
frustrating.”
“It’s
not something I feel like any of my professors, my parents or really anybody
has any knowledge about,” she added. “They never had to deal with it.”
Ms.
Meier’s parents finished college in 1988, married and settled into fairly
stable careers and a comfortable middle-class life. Her father attended
graduate school and then got a job as a software analyst for Overland Park,
Kan. Her mother got a series of accounting jobs. She was laid off in the last recession
but found another position soon after.
“There’s
a big difference between finding a third or fourth full-time job and finding
your first job,” Ms. Meier said.
It
would be unsurprising if this economic upheaval changed the young’s perception
of the world, justice and the role of government.
Ms.
Haggard, the office manager who graduated in 2009, was a Republican in college.
She voted for John McCain in the 2008 presidential election. But the recession
changed her worldview. Now, she’s far more liberal, and she voted for Bernie
Sanders in this year’s Democratic primary in Washington.
“A
big Republican thing is, ‘Pick yourself up by the bootstraps,’” she said.
“Well, we don’t live in a world where that’s possible, at least in America.”
Paola
Giuliano, a U.C.L.A. economist, and Antonio Spilimbergo of the International
Monetary Fund studied how economic setbacks
affect personal ideology.
Looking
at data from the General Social Survey from 1972 through 2010, they concluded
that people who experience a recession in what social psychologists call the
“impressionable years,” roughly 18 to 25, were more likely to believe that
success in life depends less on effort than on luck, support redistributive
politics to help the less fortunate and mitigate inequality, and vote more
often for left-wing parties.
Among
those directly hit — young workers who have lost their jobs — the ideological
shift could be even stronger. “This, in principle, should create a divide
between generations,” Ms. Giuliano said.
Alicia
Munnell and Wenliang Hou of the Center for Retirement Research at Boston
College have documented how millennials,
born from 1981 to 1999, hit particularly hard by the recession of 2009, are
less financially secure than young adults from preceding generations. They have
more student debt and less money in their retirement plans. Their net worth is
lower than that of boomers or Gen Xers. Fewer own homes. Fewer are married.
This
is the generation that gave rise to Occupy Wall Street and propelled two
presidential campaigns by Bernie Sanders. It is the generation voting for
candidates like Representative Alexandria Ocasio-Cortez of New York, pushing
the Democratic Party to the left.
And
as it moves to the left, elders are moving in the opposite direction. In one recent study,
Vivekinan Ashok and Ebonya Washington of Yale, with Ilyana Kuziemko of
Princeton, found that even as income inequality has intensified, Americans 65
and older have become more resistant to redistribution. The old, they suggest,
worry that new programs to help the poor will come at the expense of cuts to
Medicare.
“The
disproportionate gains to the American elderly in terms of social spending over
the past several decades may make them wary of further extending redistributive
programs,” they wrote.
There
remains a crucial bond between generations: family. The young care for their
parents, and don’t want them to die of Covid-19. The old care about the
financial well-being of their children and grandchildren, as well as about the
balance in their 401(k). They don’t want the economy to go into free fall.
For
much of her adult life, Brenda Michael-Haggard, the 59-year-old mother of
Jordan Haggard, has felt that people who lose jobs or face other forms of
adversity should persevere and simply “find another way to make stuff happen.”
Now
she has seen her daughter’s generation experience two economic crises in a
little over a decade and tens of millions of people lose their jobs practically
overnight. It has changed how she looks at the world.
“As
the mom, golly, it’s too bad,” she said. “It’s something that I wish any one of
us could prevent. With all of the Covid, you can’t just pick yourself up and
find something different.”
