Two new studies tell us what millions of Americans already know: It's a horribly tough time to be young in the economy
Two months ago, I posed the question, Who's Had the Worst Recession: Millennials, Gen-Xers, or Boomers? A Pew analysis of Census data released yesterday makes a strong case that it's the youngest generation that faced the worst of the economy -- and that's even before the recession started.
To review the litany of shocks visited on Generation Y, or the Millennial Generation, I'll break it down into employment, income, and wealth. You could argue that the youngest generation has had it worst in all three categories.
Employment: Every category of working -- such as the official unemployment rate and the labor participation rate -- shows up worst for the youngest generation.
Overall joblessness is between two and three times higher for
20-somethings than it is for older workers. The amazing graph to the left, from the Federal Reserve Bank of Cleveland tells an important story clearly: In 2010, the share of the population participating in the economy fell to its lowest level since 1980. But the group shedding work the fastest, by far, are young people. To be sure, some of them are going to school, and that's a good thing. But many of them are simply making do, or idling, outside the labor force because they can't find work.
Income: As go jobs, so goes income. For every
one-percentage-point increase in the unemployment rate, new graduates'
starting income falls by 7 percent, according to Lisa Kahn,
an economist at Yale. Two decades later, the unlucky graduates suffer a $100,000 penalty for being born in the recession rather than a boom.
Wealth: As I wrote this summer, wealth is all about debt-building versus asset-building. Gen-Yers are lucky to be short on assets (since home values have plummeted) but they're not lucky to have loads of debt. A study by the College Board Advocacy & Policy Center found that students are graduating $23,000 in the red and that student debt is growing at more than twice the rate of inflation.
No work, little income, and lots of debt adds up to the kind of predictable discontent you're seeing in the Occupy movement.
Pew's study this week adds an interesting wrinkle to the story. Even before the Great Recession, young families were already falling behind. The big loud statistic from the study is that household wealth for young families has fallen by 70 percent since 1984, while net worth for families with older heads-of-household is up 48 percent. As a result, the wealth gap between young and old families has quadrupled from 10X to 47X in the last 30 years.
Some of this yawning gap between old and young is demographic. The rise in single family households means that more young, poor households have one breadwinner instead of two. As more young people go to college and accumulate debt, they're putting off marriage to work and pay down college loans. Partly as a result of these changes, under-35 poverty levels nearly doubled in the last four decades (see graph to right). Meanwhile, politics came to the aid of the old. The creation of Medicare helped to cut senior poverty levels in half. Social Security is still growing faster than low-income wages.
But much of this change has nothing to do with counting breadwinners per household. Something in the economy dragged down income for new entrants. In households headed by adults younger than 35, Pew reported, the typical adjusted annual income has grown by 27% -- four times slower than for older households.
AN ECONOMY WASTED ON THE YOUNG*
If you isolate real wages for working class men, the picture darkens. Real wages for the typical guy have declined by 28 percent since 1969 and for men without a high school degree, they've fallen by a whopping 66 percent. Men once employed in construction have practically sat out the recovery. Since 2009, one in five has been idle.
It gets even bleaker for young men. The unemployment rate for males between 25 and 34 years old with
high-school diplomas is 14.4%, the Wall Street Journal reported this week. The share of this group of young men living with their parents has increased to nearly 19 percent in the last few years, a 50-year record.
For much of the 20th century, unemployment rates for women and men moved in tandem. But in the Great Recession, unemployment among men surged. Although guys have made up some of the gains in the slow recovery (job growth has been most brisk among low-wage positions) the fact that women now make up a majority of college grads suggests that they will hold on to and extend the gains they made over the last few decades.
But it's terribly misleading to look at graphs like these and conclude that women are somehow winning anything. We're all losing. For a while, women were just losing less dramatically. Still, female unemployment has been over 8% for two years, and if men came out worse in the sharp downturn, women are recovering more slowly in the aftermath. The local government recession has struck at industries like teaching that are female-dominant, while men have made some gains in industries like mining.
So let's degender the conversation. It is, very simply, a tough time to be young. There are 14 million unemployed people looking for a job and millions more sitting on the sidelines or working part-time. Into this mosh pit of clamoring workers and job applications, millions of college students are graduating with thousands of dollars of debt that won't be forgiven, and they're being joined by hundreds of thousands of straight-from-high-schoolers, as well.
*Section updated to include reporting from Conor Dougherty's WSJ article "Young Men Suffer Worst as Economy Staggers."