newswire: 6/1/2020
- A new analysis of historical economic data argues that Millennials are “the unluckiest generation in U.S. history.” After getting hit hard by the financial crisis at the start of their careers, Millennials are getting steamrolled by another recession in their prime working years, straining their already limited savings. (The Washington Post)
- NH: Coming out of high school and college, both halves of the Millennial Generation have been slammed by back-to-back economic catastrophes. First, there was the GFC of 2008, which lingered on as the "Great Recession" and kept unemployment over 10% for Americans under 25 until 2016. And now here comes the Pandemic Lockdown, again hitting young Americans the hardest and lasting... well, who knows how long?
- Total U.S. nonfarm payroll in April fell to 131 million. (For even darker numbers, watch for Friday's BLS report for May.) Even so, that drops total payroll back to where it was in January of 2000 and barely above where it was in 2010 and 2003. See the first chart below. The young, of course, are the last to be hired and the first to be fired in these situations.
- Do we know, exactly, what has happened by age group since February of this year? See the second chart below, which tabulates (from iPUMS) CPS employment data by age. The biggest job losers by far are late-wave Millennials under age 25.
- OK, sure, many of them may be getting generous unemployment comp through the end of July. And a few of them may now have the time to get out in the streets to demonstrate against racial injustice. But while those benefits and that time will soon disappear, the enduring roadblocks to their economic future won't. Last week (see "The Bad-Luck Class of 2020"), we surveyed the abundant research showing how employment difficulties early in life often stick with affected birth cohorts, impacting their income, wealth, health, marriage status, and fertility for decades thereafter. And in extreme cases--think of the New Deal cohorts who came of age in the 1930s, some of whom joined the Communist Party--these are events that shape their politics for decades thereafter.
- Even before the Lockdown hit, inflation-adjusted full-time year-round earnings for Americans age 25-34 have experienced virtually zero growth since 2000--despite substantial improvement in their educational attainment. (See "Early-wave Millennials: Educated, Employed, but in Woeful Financial Shape").
- The wealth picture looks even worse. The net worth of this age group has declined over the last twenty or thirty years--along with the 35-to-55 age group currently occupied by Xers. See the third chart below. See also "The Graying of Wealth... in One Picture." Part of the challenge is the debt they have taken on to pay for their education. Part too is the rising share of Millennials who are nonwhite, who inherit less, and who historically have much lower rates of wealth accumulation.
- The fundamental economic problem facing Millennials is historically slow growth in real GDP. Even when the economy has been free from outright recession, low rates of demographic growth plus low rates of productivity growth translate into few new dollars of national income to share with the new arrivals--that is, the next generation.
- Here's where the "unluckiest generation in U.S. history" comes into the title of the WP story. The author (Andrew Van Dam) charts the estimated yearly growth path of GDP between age 18 and 38 for every U.S. birth cohort born since 1792. See the last two charts below. Millennials since 1999 have clearly been starting their careers in one of the slowest GDP growth eras on record.
- What I especially love about these charts are the names that the author gives to these historical generations: Transcendental, Gilded, Progressive, Missionary. Lost, and so on. These names and dates are taken straight from Generations (1991), the first book I co-authored with Bill Strauss. I'm gratified to see the media pay attention to generational history.
- For a comparative retrospective at how America's post-World War II generations have fared economically, see the long essay I coauthored a few years ago with Diana Eilliott for the Fed (“A Generational Perspective on Living Standards”).
