Has the older millennial generation been economically stunted?
September 5, 2020 12:10 AM Subscribe
I had a bunch longer question drawn out, and I believe this is a bit subjective, but as an older millennial I graduated college right in the midst of the 2008-9 financial crisis / recession that seemed to last awhile. We are now supposedly in another worst financial crisis ever. How did this compare to other generations? The 70s were pretty bad when looking at the annualized GDP, but that's perhaps just one metric. More details within.
I saw an article talking about how WFH and the current crisis will impact the current college grads far beyond now and I remember seeing that when I graduated. At first I assumed it was a clickbait type article with requisite boomer bashing, etc. But then I realized looking at some broad metrics such as unemployment and GDP, the last recession and the current one were unprecedented. Furthermore while the Great Recession technically ended from an economist's definition, I don't believe it really felt like it ended until 2012-2013.
Again, having a bit of a hard time trying to define or really articulate whether or not this is similar to a F Scott Fitzgerald "Lost Generation" type of recession where the Baby Boomers did well by virtue of being in the later part of their careers and the nature of the recessions not impacting their retirements as much as it does those entering the workforce. In my mind I've only seen 6-7 years of my professional life not in a recession, and not just not in a recession but historically bad recessions since WWII.
I don't hear anyone saying that it is bad, but it was also bad in the 60s/70s/80s/90s. It seems really the dot-com bubble, the Enron crisis all rolled up into 9/11, then that became the a horrible recession and that became whatever 2020 is. I realize economists base careers off trying to define some of these things, but is there anything more than anecdotes that quantifies this?
Part of me started trying to convince myself that things really haven't been that bad. Except I found every economic indicator I looked up was bleak.
I saw an article talking about how WFH and the current crisis will impact the current college grads far beyond now and I remember seeing that when I graduated. At first I assumed it was a clickbait type article with requisite boomer bashing, etc. But then I realized looking at some broad metrics such as unemployment and GDP, the last recession and the current one were unprecedented. Furthermore while the Great Recession technically ended from an economist's definition, I don't believe it really felt like it ended until 2012-2013.
Again, having a bit of a hard time trying to define or really articulate whether or not this is similar to a F Scott Fitzgerald "Lost Generation" type of recession where the Baby Boomers did well by virtue of being in the later part of their careers and the nature of the recessions not impacting their retirements as much as it does those entering the workforce. In my mind I've only seen 6-7 years of my professional life not in a recession, and not just not in a recession but historically bad recessions since WWII.
I don't hear anyone saying that it is bad, but it was also bad in the 60s/70s/80s/90s. It seems really the dot-com bubble, the Enron crisis all rolled up into 9/11, then that became the a horrible recession and that became whatever 2020 is. I realize economists base careers off trying to define some of these things, but is there anything more than anecdotes that quantifies this?
Part of me started trying to convince myself that things really haven't been that bad. Except I found every economic indicator I looked up was bleak.
Searching google scholar with "impact historical recessions US unemployment" produces a bunch of potentially interesting articles. For example, here's an article titled "Who Suffers During Recessions?" by Hoynes, Miller, Schaller
The article isn't focusing the question you're asking, about differences between generations, but looking at differing hardship experienced by different groups during recessions within generations:
> The labor market decline during the Great Recession and its aftermath has been both deeper and longer than the early 1980s recession -- indeed, the longest and deepest since the Great Depression. The labor market effects of the Great Recession have not been uniform across demographic groups. Men, blacks, Hispanics, youth, and those with lower education levels experience more employment declines and unemployment increases compared to women, whites, prime-aged workers, and those with high education levels. However, these dramatic differences in the cyclicality across demographic groups have been remarkably stable since at least the late 1970s and across recessionary periods versus expansionary periods. These gradients persist despite the dramatic changes in the labor market over the past 30 years, including the increase in labor force attachment for women, Hispanic immigration, the decline of manufacturing, and so on.
[...]
> Despite these various distinctions, the overarching picture is one of stability in the demographic patterns of response to the business cycle over time. Who loses in the Great Recession? The same groups who lost in the recessions of the 1980s and who experience weaker labor market outcomes even in the good times. Viewed through the lens of these demographic patterns across labor markets, the Great Recession is different from business cycles over the three decades earlier in size and length, but not in type.
Searching for "nber magnitude of great recession" might also dig up some interesting reading
posted by are-coral-made at 2:35 AM on September 5, 2020 [1 favorite]
The article isn't focusing the question you're asking, about differences between generations, but looking at differing hardship experienced by different groups during recessions within generations:
> The labor market decline during the Great Recession and its aftermath has been both deeper and longer than the early 1980s recession -- indeed, the longest and deepest since the Great Depression. The labor market effects of the Great Recession have not been uniform across demographic groups. Men, blacks, Hispanics, youth, and those with lower education levels experience more employment declines and unemployment increases compared to women, whites, prime-aged workers, and those with high education levels. However, these dramatic differences in the cyclicality across demographic groups have been remarkably stable since at least the late 1970s and across recessionary periods versus expansionary periods. These gradients persist despite the dramatic changes in the labor market over the past 30 years, including the increase in labor force attachment for women, Hispanic immigration, the decline of manufacturing, and so on.
[...]
> Despite these various distinctions, the overarching picture is one of stability in the demographic patterns of response to the business cycle over time. Who loses in the Great Recession? The same groups who lost in the recessions of the 1980s and who experience weaker labor market outcomes even in the good times. Viewed through the lens of these demographic patterns across labor markets, the Great Recession is different from business cycles over the three decades earlier in size and length, but not in type.
Searching for "nber magnitude of great recession" might also dig up some interesting reading
posted by are-coral-made at 2:35 AM on September 5, 2020 [1 favorite]
> We are now supposedly in another worst financial crisis ever. How did this compare to other generations?
If we go back enough generations, there's the impact of the black death on europe:
> Europe’s population in 1430 may have been fifty to seventy—five percent lower than in 1290 (Cipolla, 1994; Gottfried, 1983). [...] Before the plague, rising population had kept wages low and rents and prices high, an economic reality advantageous to the lord in dealing with the peasant [...] As the Black Death swung the balance in the peasant’s favor, the literate elite bemoaned a disintegrating social and economic order. [...]the rural worker indeed demanded and received higher payments in cash (nominal wages) in the plague’s aftermath. Wages in England rose from twelve to twenty—eight percent from the 1340s to the 1350s and twenty to forty percent from the 1340s to the 1360s. [...] In some instances, the initial hikes in nominal or cash wages subsided in the years further out from the plague and any benefit they conferred on the wage laborer was for a time undercut by another economic change fostered by the plague. Grave mortality ensured that the European supply of currency in gold and silver increased on a per—capita basis, which in turned unleashed substantial inflation in prices that did not subside in England until the mid—1370s and even later in many places on the continent. The inflation reduced the purchasing power (real wage) of the wage laborer so significantly that, even with higher cash wages, his earnings either bought him no more or often substantially less than before the magna pestilencia (Munro, 2003; Aberth, 2001).
The Economic Impact of the Black Death
posted by are-coral-made at 2:47 AM on September 5, 2020 [2 favorites]
If we go back enough generations, there's the impact of the black death on europe:
> Europe’s population in 1430 may have been fifty to seventy—five percent lower than in 1290 (Cipolla, 1994; Gottfried, 1983). [...] Before the plague, rising population had kept wages low and rents and prices high, an economic reality advantageous to the lord in dealing with the peasant [...] As the Black Death swung the balance in the peasant’s favor, the literate elite bemoaned a disintegrating social and economic order. [...]the rural worker indeed demanded and received higher payments in cash (nominal wages) in the plague’s aftermath. Wages in England rose from twelve to twenty—eight percent from the 1340s to the 1350s and twenty to forty percent from the 1340s to the 1360s. [...] In some instances, the initial hikes in nominal or cash wages subsided in the years further out from the plague and any benefit they conferred on the wage laborer was for a time undercut by another economic change fostered by the plague. Grave mortality ensured that the European supply of currency in gold and silver increased on a per—capita basis, which in turned unleashed substantial inflation in prices that did not subside in England until the mid—1370s and even later in many places on the continent. The inflation reduced the purchasing power (real wage) of the wage laborer so significantly that, even with higher cash wages, his earnings either bought him no more or often substantially less than before the magna pestilencia (Munro, 2003; Aberth, 2001).
The Economic Impact of the Black Death
posted by are-coral-made at 2:47 AM on September 5, 2020 [2 favorites]
I graduated from college in 1968, so I have a somewhat longer view. The 2008 financial crisis was worse than anything in the last half of the 20th century. No one was saying back then that there was a chance of a total collapse of the economy nor did anything resemble the international consequences.
The possible difference between 2008 and now is that the Obama response was pretty much the minimum that could have gotten us through it and the Great Recession really called for a lot more from the government than the Republicans would permit. In the current case, the government response has been much stronger as compared to the need. I think the biggest drag on the economy in the next few years will be the loss of employment in small businesses that have closed.
After one of the terrible hurricanes in Florida, it was noted that, yes, they had money to rebuild, but once they did that, they were tapped out, with no money to spend on new cars and vacations etc, so commerce was slow to revive. That's what I expect the US to be like for a year or two.
On the bright side, it can be a good time to start a business if you have the wherewithal.
posted by SemiSalt at 4:42 AM on September 5, 2020 [3 favorites]
The possible difference between 2008 and now is that the Obama response was pretty much the minimum that could have gotten us through it and the Great Recession really called for a lot more from the government than the Republicans would permit. In the current case, the government response has been much stronger as compared to the need. I think the biggest drag on the economy in the next few years will be the loss of employment in small businesses that have closed.
After one of the terrible hurricanes in Florida, it was noted that, yes, they had money to rebuild, but once they did that, they were tapped out, with no money to spend on new cars and vacations etc, so commerce was slow to revive. That's what I expect the US to be like for a year or two.
On the bright side, it can be a good time to start a business if you have the wherewithal.
posted by SemiSalt at 4:42 AM on September 5, 2020 [3 favorites]
I'm not sure if this helps answer your question and it's possible you've already seen it - but have you seen some of the research from the St. Louis Fed? They churn out some fascinating research related to millennial wealth benchmarked against older generations that as a fellow old millennial I read every time I feel like I'm being gaslit by someone several decades older than me.
2018: "A Lost Generation? Long-Lasting Wealth Impacts of the Great Recession on Young Families"
September 2018: "Millennial Finances: How Do They Stack Up against Gen X at the Same Age?"
February 2020: "The Millennial Wealth Gap: Smaller Wallets than Older Generations"
May 2020: "Three Reasons Why Millennials May Face Devastating Setback from COVID-19"
I think one of the things that could make cross-generational comparisons really hard, at least within the last 100 years of US history, is that millennials are the first generation born entirely after the decoupling of productivity from workers' economic gains, and also nearly half of millennial households have student loan debt (compared to less than 30% for older generations).
It's really hard to think of any other period of US history in which an entire generational cohort (as opposed to specific demographic groups) carries both such a common experience of debt that is required to access "good" employment while that same employment landscape becomes increasingly insecure even for higher-status workers.
posted by mostly vowels at 5:34 AM on September 5, 2020 [20 favorites]
2018: "A Lost Generation? Long-Lasting Wealth Impacts of the Great Recession on Young Families"
September 2018: "Millennial Finances: How Do They Stack Up against Gen X at the Same Age?"
February 2020: "The Millennial Wealth Gap: Smaller Wallets than Older Generations"
May 2020: "Three Reasons Why Millennials May Face Devastating Setback from COVID-19"
I think one of the things that could make cross-generational comparisons really hard, at least within the last 100 years of US history, is that millennials are the first generation born entirely after the decoupling of productivity from workers' economic gains, and also nearly half of millennial households have student loan debt (compared to less than 30% for older generations).
It's really hard to think of any other period of US history in which an entire generational cohort (as opposed to specific demographic groups) carries both such a common experience of debt that is required to access "good" employment while that same employment landscape becomes increasingly insecure even for higher-status workers.
posted by mostly vowels at 5:34 AM on September 5, 2020 [20 favorites]
Lifetime earnings is the metric I remember from the 2008/9 crisis. I also graduated into a recession (2002) as a borderline GenX / Millennial, but both this and and the great recession are flat-out much worse from what I can see. I was underemployed for about 9 months after graduating, but I also turned down two poor-fit job offers during that time -- so I could have been working full time if I had to.
Here is an NBER post on the impact of lifetime earnings on graduating into a recession that includes a number of references on the topic. A salient quote:
The results suggest that changes in the quality of jobs and job mobility are important in explaining the long-term effects of bad luck for those graduating in a recession.
posted by chiefthe at 7:59 AM on September 5, 2020
Here is an NBER post on the impact of lifetime earnings on graduating into a recession that includes a number of references on the topic. A salient quote:
The results suggest that changes in the quality of jobs and job mobility are important in explaining the long-term effects of bad luck for those graduating in a recession.
posted by chiefthe at 7:59 AM on September 5, 2020
Just one data point. I graduated college 1976, Arab oil embargo. Not great for job hunting. Got a job at a software company in the Financial Services industry, then later a Bank, and was able to make steady career and income progress until 1997 with a lot of corporate consolidation. But got a new job same industry and it was OK until 2008 when I was lucky not to be cut during a big layoff. Continuous career and income improvements until now when I'm semi-retired.
But I know time machines are never invented or are strictly regulated because boy the advice I would send back to younger me about inflation, consumer debt and retirement planning!
posted by forthright at 9:37 AM on September 5, 2020
But I know time machines are never invented or are strictly regulated because boy the advice I would send back to younger me about inflation, consumer debt and retirement planning!
posted by forthright at 9:37 AM on September 5, 2020
Another data point: graduated college in 2006 with low 5 digits of student loans (state school). Laid off from my first industry job (tech but not coding) within a month, second one lasted a year, next one lasted 2 years. At that point it was the middle of the crash, so I worked retail (Genius Bar) for 5 years.
Through a friend of a friend I got a job doing support at a startup, and I’ve been there slowly crawling up the ranks for the last 6 years. We had an IPO and then were acquired, and I’m sitting on enough stock to probably pay for most of a house within the next year, depending on what happens in the stock market. If I hadn’t gotten lucky with early stock options and a successful IPO, home ownership would still not be an option for me.
posted by sleeping bear at 2:25 PM on September 5, 2020
Through a friend of a friend I got a job doing support at a startup, and I’ve been there slowly crawling up the ranks for the last 6 years. We had an IPO and then were acquired, and I’m sitting on enough stock to probably pay for most of a house within the next year, depending on what happens in the stock market. If I hadn’t gotten lucky with early stock options and a successful IPO, home ownership would still not be an option for me.
posted by sleeping bear at 2:25 PM on September 5, 2020
Another data point from someone born in 1981, no college degree... I've battled poorly defined ( but pretty crippling) dysphoria for twenty years, and job hunting was never my strong suit at all. Anything some of my peers aspire for.... Home ownership, children, vacations, retirement funds, anything luxurious over about 500$, absolute maximum seems insanely out of reach. I genuinely don't understand how people afford any of that.
Of course, making 32k a year plus my girlfriend's income (roughly 12k) still puts us snugly in the low end of middle class.
posted by Jacen at 8:48 PM on September 5, 2020
Of course, making 32k a year plus my girlfriend's income (roughly 12k) still puts us snugly in the low end of middle class.
posted by Jacen at 8:48 PM on September 5, 2020
Apologies if this is too subjective, but I’m a Gen Xer who has been reading a bit the past few years about Gen X/millennial distinctions, and it’s been a bit of a tougher road for millennials for sure. I wouldn’t discount how tough this current moment is for Gen Y. They will likely have lifelong trauma from this moment. I’m not sure any of us can say with confidence who will have it worse.
One thing that might benefit some white/more privileged millennials: the extraordinary wealth of Boomers being passed to their millennial kids. Pre-Covid, there were some articles about this upcoming wealth transfer as the largest ever and one that would exacerbate the wealth gap.
This might or might not apply to you, and I don’t want to suggest folks should be eager for their parents’ death and money. But Boomers have accumulated a lot of wealth, and it’s going to go somewhere.
posted by bluedaisy at 10:31 PM on September 5, 2020 [1 favorite]
One thing that might benefit some white/more privileged millennials: the extraordinary wealth of Boomers being passed to their millennial kids. Pre-Covid, there were some articles about this upcoming wealth transfer as the largest ever and one that would exacerbate the wealth gap.
This might or might not apply to you, and I don’t want to suggest folks should be eager for their parents’ death and money. But Boomers have accumulated a lot of wealth, and it’s going to go somewhere.
posted by bluedaisy at 10:31 PM on September 5, 2020 [1 favorite]
You might have a look at the writing of Anne Helen Peterson. The economic and work life situation of millennials is one of her areas of expertise. (She also writes on small towns and cities, these days.) Some relevant stuff on her Longform page if you scroll down. Her latest book is Can’t Even: How Millennials Became the Burnout Generation. There’s a buzzfeed article of the same name if you want a summary.
posted by Concordia at 12:55 AM on September 7, 2020 [1 favorite]
posted by Concordia at 12:55 AM on September 7, 2020 [1 favorite]
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posted by geoff. at 12:12 AM on September 5, 2020