The Great Recession and the youth

Every once in a while, when highlighting the rapid economic transformations across the world, I remark to students that it is not longer their grandfathers' world. Not even their mothers' world. And that they ought to be smart about their economic futures. And sometimes I take this to the next step and tell them, "you are screwed!"  And then, of course, give them what I think are the strategies to avoid getting screwed.

I suspect that most of them probably laugh this off because, after all, I too say all these with a big smile. But, a few students get the seriousness that lies underneath the veneer of humor.  To them, I now have one more piece of evidence: the chart below:

This is from Brookings' "The Hamilton Project" whose "most striking finding is that America’s youngest workers have been hit hardest by the Great Recession."

So, why this disproportionate impact?  The explanation makes sense to me:
"During the current recession both job openings and the number of people quitting their job (“quits”) plunged to extremely low levels. Very few older workers have left their jobs and are instead working longer and retiring later—perhaps in response to the recession’s effect on retirement savings and wealth. For younger Americans, such as new high school and college graduates, this has meant fewer opportunities to find work."

And even when openings come up, the experienced-but-now-jobless older person beats out the young.  So, is this temporary?  Now that the NBER has declared that the Great Recession ended last June, will conditions become better for the youth?  Not so fast:

According to one study (Kahn 2010), young people graduating from college during today’s severe recession will earn approximately 17.5 percent less per year than comparable peers graduating in better labor markets. This lower wage effect is highly persistent, fading away only after 17 years of work.

What does this mean in terms of lost income? For the average college graduate this year, this translates into approximately $70,000 (in today’s dollars) in lost earnings over the next decade. For the 2008, 2009, and 2010 classes combined that amounts to over $330 billion in lost earnings over 10 years. The projected losses are even larger for graduates who cannot find a job upon graduation.

There is a huge job-gap that might take a very long time to get filled (or maybe this is the new economic structural reality?)

And thus begins a new academic year :(

Maybe Bobby McFerrin was right with his "Don't worry, be happy"