Facing Adulthood With an Economic Disaster’s Lasting Scars19 mai 2020
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 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 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.”
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.”