Graduating into a recession

Louis Uchitelle, reporting for the New York Times, penned a long news feature about the challenges and dilemmas facing younger folks who are trying to enter the workforce in the midst of this recession.  His overall assessment is a bracing one:

For young adults, the prospects in the workplace, even for the college-educated, have rarely been so bleak. Apart from the 14 percent who are unemployed and seeking work…, 23 percent are not even seeking a job, according to data from the Bureau of Labor Statistics. The total, 37 percent, is the highest in more than three decades and a rate reminiscent of the 1930s.

The college-educated among these young adults are better off. But nearly 17 percent are either unemployed or not seeking work, a record level (although some are in graduate school). The unemployment rate for college-educated young adults, 5.5 percent, is nearly double what it was on the eve of the Great Recession, in 2007, and the highest level — by almost two percentage points — since the bureau started to keep records in 1994 for those with at least four years of college.

Uchitelle’s article centers around a young college graduate who is searching for work and assessing his options.  It weaves into the story a look at the job prospects faced by his father and grandfather at similar stages in their lives, making for an interesting generational comparison.

Recession generations?

The sheer luck of one’s birth year may impact both short and longer term earnings.  Uchitelle cites a study by Yale economist Lisa B. Kahn, who found that:

those who graduated from college during the severe early ’80s recession earned up to 30 percent less in their first three years than new graduates who landed their first jobs in a strong economy. Even 15 years later, their annual pay was 8 to 10 percent less.

I remember that recession well.  I graduated from Valparaiso University in 1981, holder of a B.A. in political science, looking for work in the depressed northwest Indiana region where I grew up.  The area’s economy was especially hard hit by the decline of the steel mills, and jobs in all sectors were sparse.  I ended up taking work at the local drug store chain where I had spent college summers and doing some part-time reporting for a weekly newspaper, while living at home with my parents.

I would be among the fortunate ones.  It was my plan to go to law school. A year after graduating from college, I would pack my bags and head off to law school at New York University.  Three years later, with a law degree in hand and buoyed by a stronger job market, my employment prospects improved considerably.

Nonetheless, one of my enduring memories of that interim year is of working for the drug store chain, hearing stories from cashiers of spouses being laid off from the steel mills, and experiencing the indignity of having my own hours cut to the bone because business was bad. For northwest Indiana, it was a harbinger of things to come.  Those mill jobs disappeared permanently, and the lower paying retail positions in strip malls lining the region’s boulevards have not bridged the income gap.

This one is worse 

Comparisons between the current recession and that of the early 1980s are frequent, but this one is worse.  In terms of severity, the Great Recession lies somewhere between the 80s recession and the Great Depression of the 1930s. We appear to be looking at structural changes in the labor markets, with the term “jobless recovery” frequently invoked to suggest a sluggish comeback for the stock market with little or no corresponding improvement in the employment situation.

To make matters worse, younger workers are competing with, directly or indirectly, older workers who are staying in or reentering the labor force after their already meager retirement accounts took a battering during the stock market meltdown.  (Several months ago, I wrote a short piece about this looming generational conflict, which readers may access here.)

In addition, many of today’s college graduates are burdened by student loan debt unheard of in previous generations.  It’s one thing to wait out a recession, bohemian style, when not encumbered by heavy debt.  This comparative luxury is not available to those who leave school facing huge student loan payments every month.

No easy answers

If there were easy solutions, we’d be implementing them.  I believe that we need a jobs program that will put people back to work rebuilding America’s infrastructure, such as repairing our crumbling roads, bridges, and public buildings and creating a first-class rail system.  But that’s only part of it. We’re paying the price for a lot of sins and mistakes right now, and we cannot undo all that in a short period of time.

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