Yesterday the New York Times ran a front page article, A New Generation, an Elusive American Dream, on how the recession has made the American Dream unattainable for many young folks. It’s a must-read article, however, it missed the long-term trends that have been exacerbated by the recession: youth unemployment and decline in quality of jobs.
Taking the story of Scott Nicholson, a Colgate University graduate, who is living off his parents while he optimistically searches for a job, the Times’ story generalizes:
Starved for jobs at adequate pay, the millennials tend to seek refuge in college and in the military and to put off marriage and child-bearing. Those who are working often stay with the jobs they have rather than jump to better paying but less secure ones, as young people seeking advancement normally do. And they are increasingly willing to forgo raises, or to settle for small ones.
All true, but these trends were already occurring in response to a difficult labor market for young workers. Businesses have been retaining older workers and not hiring young workers since the recession of 2001. According to a working paper, Out With the Young and In With the Old: U.S. Labor Markets 2000-2008 and the Case for An Immediate Jobs Creation Program for Teens and Young Adults, by the Center for Labor Market Studies at Northeastern University, from 2000 to 2008, the employment rates of each age group below 35 declined sharply with the most significant decline in teenage employment. Over the same time, older workers employment rate increased 4.6 points for 55-64 year olds and 4 points for 65+.
But its not just employment figures that matter, its also the quality of the jobs. Pay and employer-provided benefits for young workers has stagnated. Wages for 18 to 29 year olds was 10 percent lower in 2007 than in 1979. According to a report by the Center for Economic and Policy Research, Unions and Upward Mobility for Young Workers, the decline in union density has had a significant effect in diminishing the quality of jobs available to young workers. Unions boost wages for young workers by $1.75/hour on average and significantly increase the prospects of health insurance coverage (by 17%) and retirement security (by 24%).
However, the trend has been away from unions – not towards them. Meaning there has been a real decline in the quality of jobs young workers have available to them.
Scott Nicholson has the bad luck to graduate into a recession, yes, but the opportunities available to his grandfather (a retired stockbroker) and his father (a tool manufacturer) might never have been available to him at least not in the ways this relatives fell into them. Young workers have been hardest hit by this recession (as they have been in every post-WWII recession), but its these long-term structural problems that need to be addressed. The standard, slow job growth won’t dig young workers out.