Young Adults Will Never Recover From Great Recession
In the most recent (alas, current) recession, almost every income group has been hard hit. Recent college graduates, though, may see the rest of their career negatively affected. In response to this year’s ACS report from the Census Bureau, Harvard economist Richard Freeman declared that the economic and human capital losses are enough that young people have become another “lost generation,” similar to the generation that lost their young adulthood to World War One.
According to the ACS report, twenty-something Americans have been especially ravaged economically by the recession. Associated Press explains: “Employment among young adults 16-29 was 55.3 percent, compared with 67.3 percent in 2000; it’s the lowest since the end of World War II. Young males who lacked a college degree were most likely to lose jobs due to reduced demand for blue-collar jobs in construction.” Likewise, this age-cohort is the most likely to be living in poverty.
There are lots of reasons why young adults are bearing the brunt of the economic downturn.
First off, there’s been a steep decline in construction jobs, meaning that young adults (especially men) without college degrees are much less likely to find a job. For those that did graduate from college, student loan debt has been exploding over the past decade. Over 2/3 of students take on debt to finish college, with the average among those students being $24,000. In order to service that debt, twenty-somethings need well-paying jobs shortly after college. Anything short of this means that young adults are forced to choose between paying off onerous debts and living in poverty. Meanwhile, it’s becoming harder for recent grads to find employment, as more experienced workers who have been laid off are competing for the same jobs.
It turns out, though, that even if the economy magically started working again tomorrow morning that the recession would have a lingering malignant impact on young adults. Since most firms aren’t hiring many new entry-level positions, recent graduates seeking to start off their career on the right foot have been forced to take stop-gap jobs unrelated to their prospective career path. This means that when the economy does (fingers crossed!) pick up again, these young adults will not only be competing amongst themselves, but against more recent college graduates as well for entry-level jobs. This is expected to depress employment potential and wages for years to come; when quantified, it’s like losing $100,000 each (inflation adjusted) over the course of their lifetimes, even when compared with other age groups that have been hard hit by the recession.
It’s really this last point that is turning American youth into a lost generation. Though every age group is having to make serious sacrifices, Freeman says that only the youth are going to be permanently “scarred” by it. As a recent college grad myself, this analysis hits a bit close to home. I know a lot of people who had to spend weeks and months looking for non-paying internships just so that they could get some experience on their resume. Many of them had outstanding student loan debt and saw their savings disappear within months. It’s all too real that my entire generation will have this lost income hanging over us for the rest of our working careers.
Hearkening back to the first lost generation, famed theater company the Elevator Repair Service has recently opened a new play based on the quintessential novel about the first lost generation, Ernest Hemingway’s The Sun Also Rises. The New York Times says that the play “exists in what appears to be a state of perpetual and severe intoxication,” not surprising given the source text. It’s ironic that the first lost generation was known for drinking heavily at bars; this one can’t even afford the cover charge.
Photo credit: Fibonacci Blue's Flickr stream.