A Not-Lost Generation

Laura Vanderkam

The current downturn won’t spell doom for America’s young workers.

As economic doldrums drift into a fourth calendar year, pundits debate which groups have been hit hardest. Retirees? Homemakers who have returned to work? Blue-collar men caught in the “He-cession”? To this list, another group has been recently added: the young and expensively educated. In October, for example, BusinessWeek ran a much-discussed cover story called “The Lost Generation,” claiming that workers in their twenties were “bright, eager—and unwanted.” Around Labor Day, the AFL-CIO published a report announcing that young workers were experiencing a “lost decade.”

Some commentators have even raised the specter of what happened in Japan during the long recession of the 1990s. Japanese companies stopped hiring, many twentysomethings subsisted on contract work or parental largesse, and by the time the economy picked up, these young adults lacked the résumés to be attractive for career-track gigs. In Europe, chronically high youth unemployment, even in good times, likewise creates social instability. Now, American twentysomethings wonder, could it happen here? Is the U.S. economy about to waste the productivity of a whole generation?

Every year, about 1.5 million people graduate with U.S. bachelor’s degrees. In general, they enter the labor market and assume that there will be enough desirable jobs to absorb them. But “in order for new entrants to find jobs, there have to be job openings,” says Heidi Shierholz, an economist at the Economic Policy Institute, and there simply haven’t been many. There were 2.4 million job openings advertised in August 2009, according to the Labor Department—the lowest number since it started keeping track in 2000. With 7.3 million jobs lost from December 2007 to October 2009, everyone “starts competing down the line,” says Caroline Ceniza-Levine, owner of SixFigureStart, a career-counseling service. “If you have to look for people, why not look for the unsolicited, more experienced people who are coming in droves?” They take the entry-level jobs. That means that people who would normally seek entry-level jobs compete just to find “survival jobs.”

A survey from the National Association of Colleges and Employers found that only 19.7 percent of members of the class of 2009 who had applied for jobs had one by graduation season, compared with 26 percent for the class of 2008 and a still-not-stunning 51 percent for the class of 2007. “No question, for many companies, college grad hiring is on hold,” says John Challenger, CEO of outplacement firm Challenger, Gray and Christmas. (However, the unemployment rate for people with bachelor’s degrees is still lower than for those with only a high school diploma—in October, 4.7 percent versus 11.2 percent.)

The result is an economic inefficiency: a mismatch between jobs and potential, particularly among the young. People who graduate during a boom are more likely to land jobs that challenge them to the extent of their abilities. The early years of a career are when people invest most heavily in building their skills, so young people landing these jobs work hard to meet high expectations. “For the rest of your career, you reap the benefits,” says Lisa Kahn, an assistant professor of economics at the Yale School of Management. Society benefits, too, as these workers later use their human capital to create innovations for employers or launch their own start-ups. Even if these fortunate graduates lose their jobs at some point, they’ve built skills and connections in their chosen fields—attributes that make reemployment likely.

more…. http://www.city-journal.org/2010/20_1_youth-unemployment.html