Odds Stacked Against "Recession Kids"
What a difference a recession makes. Kids entering the job market during a recession - dubbed as "recession kids - earn an average of $100,000 less during their lifetimes than do youngsters who begin looking for their first job during better economic times.
That's a bum deal for any college graduate looking for a first job today. And it's far from the only significant hurdle that "recession kids" face when entering the job market.
The National Bureau of Economic Research reported that the attitudes, saving habits and earning power of youngsters entering the workforce during a recession are forever different than those of young job hunters who are looking for work during more favorable economic conditions.
For instance, for every percentage point in higher unemployment rates, new graduates entering the workforce earn a salary that is 6 percent less than what youngsters who enter the job market in better times fetch. That's especially bad news today, when the national unemployment rate hovers near 10 percent. It's also a trend that will impact these young job seekers for decades. When you start out in a 6-percent hole, it's hard to catch up with those workers who took their first positions when companies were flush with cash.
"Recession kids" also have vastly different attitudes about both work and life. These youngsters support wealth redistribution and government intervention to help protect people who are struggling to land jobs or pay their bills. They also tend to invest their money more conservatively. They save more and spend far less. They also seek out the safest of jobs, hoping to avoid those dreaded layoffs.
Today's young job seekers definitely qualify as "recession kids," even though the recession has officially ended. After all, the unemployment rate for job seekers from the ages of 20 to 24 is more than 15 percent. That's even higher than the national unemployment rate of nearly 10 percent.
Of course, the recession, the worst the country has seen in seven decades, hasn't limited its impact to just young job hunters.
For instance, during the financial crisis the nation's personal savings rate has more than quadrupled from 2008 to now, when the rate has risen to 4.5 percent. People have also increased the amount of time they spend with their families by 2.25 hours a day.
These are actually positive changes: We should all be spending more time with our families, after all. And socking money away is a good habit.
Good thing, too, because the job market has shown little evidence of easier times in the near future, especially for the "recession kids." Employers report that they will hire 20 percent fewer graduates in 2010 than they did last year.