newswire: 9/9/2020
- Millennials hit by a second financial crisis may never have a chance to accumulate the wealth of older generations. Already a step behind thanks to the Great Recession and now hit the hardest by COVID-19’s economic fallout, young people are at risk of permanently falling behind. (The Wall Street Journal)
- NH: History may end up defining Millennials as a generation bracketed by massive back-to-back economic hits: the Great Financial Crisis (2008-09) and the Pandemic Recession (2020-?). The first hit first-wave Millennials in their early to mid-20s, and the second is hitting last-wave Millennials at roughly the same age.
- WSJ reporter Janet Adamy summarizes some of the economic evidence suggesting that high employment and scarce job openings for young workers have a negative impact on future life prospects that lasts long after--sometimes decades after--the crisis itself has passed.
- Since we've covered this topic often, I will simply refer here to NewsWire items we have already written. On the long-term impact of economic downturns on future employment rates and earnings, by age and birth cohort, see "The Bad Luck Class of 2020." On how Millennials may be affected financially--in their future net worth and in their acquisition of wealth and housing--see "Millennials Face Net Worth Shortfall," "Early-Wave Millennials: Educated, Employed, But in Woeful Financial Shape," and "Tiny House Nation: The Millennial Share of U.S. Real Estate Wealth." The last three pieces BTW were written before the 2020 lockdown hit.
- Adamy quotes me in the article for pointing out the obvious parallels between the Millennials and the G.I. Generation (born 1901-24). They have had a similar location in history. The first wave of G.I.s were hit by the Spanish Influenza of 1918-19 and the twin recessions of 1918-19 and 1920-21. And later on, of course, both the first and last wave of the G.I.s were hit by the Great Depression. As young adults, the G.I.s fell way behind earlier generations in employment, income, and net worth. But later on they were able to make up the loss--and more--with the help of a major "New Deal" political and social transformation that they helped usher in as voters, workers, and soldiers.
- Economists often refer to the long-lasting and path-dependent impact of an economic crisis on future employment and earnings as "hysteresis." The word has an interesting (and sexist) origin: In ancient Greek, the word for womb or (in Latin) uterus was "hystera," and it is a synonym for lack or absence. The only recognizable English cognate is hysterectomy. Anyway, what social scientists are aiming at is the idea that a "lack" of some critical life experience has enduring consequences.
- Another often-used word for this is "scarring." For a generation, as for an individual, a bad wound does not heal without changing people in lasting ways. Perhaps the first use of the word in this sense appeared in the title of Caroline Bird's book: The Invisible Scar: The Great Depression, and what it did to American life, from then until now. Her account, written in 1965 when everyone over age 30 recalled the trauma, is wonderfully generational. She explained how the collective personality of America's emerging generation of midlife leaders at that time, beginning with Jack Kennedy and LBJ, had been shaped young by economic scarcity and adversity. And already she foresaw how it was destined to clash with a younger generation, accustomed to affluence, born after World War II.
- The opening of her book is worth quoting here at some length:
- "It is a curious fact that the Great Depression is in danger of disappearing altogether from the collective consciousness. Already it seems unreal, even to those who lived through it. Did those things really happen? We pinch ourselves. Wasn't it a bad dream?
- "In spite of this tendency, the Great Depression was real, it was awful, and more to the point, it packed a bigger wallop than anything else that happened to America between the Civil War and the Atom Bomb. It had more far-reaching consequences, I happen to think, than either of the World Wars. Nobody escaped. Every individual in every walk of life was hit. What is overlooked and frequently forgotten is this: when the stock market crashed in October 1929, America stopped growing and did not really get moving again until the attack on Pearl Harbor in December 1941 mobilized our resources."
- Small-scale economic downturns show up as lifecycle blips that can be linked by economists to specific birth cohorts. Large-scale economic downturns shape entire generations in a manner which can subsequently move the entire society in a new direction.
