Will the recession result in a lost generation?
My parents came of age during the Great Depression, and, like many of their generation, they were shaped by the times. My father played football with a wad of tied-up newspaper because no one could afford a ball. His mother worked two jobs as a seamstress to support the family after his father lost his grocery store and sank into alcoholism. His family moved four times because they couldn’t pay rent.
Sometimes their depression-era habits drive me crazy, like my mom’s collection of used gift boxes and bows and my dad’s resistance to spending his hard-earned money. But the deprivation of their youth taught them lessons that seem both so fundamental and so foreign: the value of living beneath your means, avoiding debt, and saving. After all, my parents waited 9 years to buy their first car and 11 years to purchase a home. This generation’s ability to recover from the Great Depression and fight in World War II earned them Tom Brokaw’s coined term: the “greatest generation.”
The “greatest generation” has values far different than my generation. For us Boomers, delayed gratification is an anomaly. My generation assumed all goods are disposable, from particleboard IKEA furniture to the houses you could “flip” for a higher price. We believed the next new thing could be paid for tomorrow. After all, wasn’t ever-increasing wealth guaranteed?
When the recession began in 2007, Millennials were embarking on their professional lives, only to be smacked with a 37% jobless rate
The Great Recession has challenged that belief, and it may convert the next generation to develop habits more similar to my parents’ generation than mine.
Millennials are often described as driven to do meaningful work and improve the world, but criticized for being entitled, overly coddled, and plugged into their devices. But that description is bound to change as they enter a landscape of employment insecurity and dwindling wages.
When the recession began in 2007, Millennials were embarking on their professional lives, only to be smacked with a 37% jobless rate—which includes the unemployed and those who have given up on the job hunt. That’s 2-3 times higher than the rest of the population and above even the 25% unemployment rate of the Great Depression.
Long-term unemployment in your teens or early 20s often leads to a higher risk for depression and alcoholism in midlife, even if you ultimately find work.
And the recession has already begun to affect this generation’s consumer habits. Joe Peek, a professor at the University of Kentucky’s Gatton College of Business and Economics, says this group is reducing spending and upping savings efforts. Other research shows Millennials are becoming more risk-adverse in their investments.
The results may be long term. Lisa Kahn at the Yale School of Management says that 15 years after graduation, those who enter the workforce during a recession still earn 2.5% less than those who begin work in normal times. Other experts say major steps such as marriage and having children will also been delayed.
Graduating into a recession can impact mental health, too. Krysia Mossakowski, a sociologist at the University of Miami, found that long-term unemployment in your teens or early 20s often leads to a higher risk for depression and alcoholism in midlife, even if you ultimately find work.
A frightening comparison can be made to the so-called Lost Generation in Japan who came of age at the height of that nation’s decade-long recession, which eased up around 2003. Many in that generation only found temporary work. When new jobs were created, they often went to more recent graduates. “There’s a bad parallel to Japan,” Peek told me. “Their market collapsed and more than 10 years later, that generation is still not back in the workforce.” Japan’s Lost Generation also suffers from high rates of mental illness.
The ramifications of a financial upheaval take years to be fully understood and not all sectors of the population experience it in the same way. Millennials will be shaped both by how much longer the recession persists as well as our national response to it. Only time will tell if the end result is a Lost Generation or the next “greatest generation.”
How do you think the recession will impact Millennials?