Understanding the 'recession' generation: Part two

Yesterday, we took a look at the college demographic called the Millennial Generation and their place in our economy. Right now, Millenials, who are between the ages of 10 and 28, are graduating from college to the worst job market in ages. 

Lynne Lancaster is co-author of the new book, The M-Factor, How the Millennial Generation is Rocking the Workplace, and she says this generation is facing a rude awakening to the real world, thanks to the way they were raised:

LYNNE LANCASTER: This is a generation that has more. They have more access, they have more access to to credit, to money, to travel, to education, than any generation before.

In part two of her report, KALW’s Rina Palta brings us a look at how this generation compares to its predecessor, Generation X, and the specific challenges they face as we climb out of recession.

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RINA PALTA: When business leaders began speculating about how the Millennial Generation would behave when it entered the workforce, they pointed to the generation’s ambition, its idealism, and its competence. Contrast that image with that of Generation X:

LYNNE LANCASTER: Slackers.

Business consultant Lynne Lancaster says that Gen X-ers, born between 1961 and 1982, started entering the labor market in about 1980.

LANCASTER: X-ers got hit with a lot of really bad stereotypes. For one thing, they were following in the heels of that great big baby boom. And boomers were competitive and successful and hard charging and workaholics. And then X-ers showed up with a little different style and boomers were just completely taken aback by that, so there was a lot of friction there.

Lancaster says part of the conflict was just the natural way generations tend to feel about each other: older generations always worry that young people won’t work as hard as they do, and X-ers didn’t quiet the older generations’ fears.

LANCASTER: This is the generation that started lobbying for things like casual day, bring your dog to work day, flex time, working from home, and you can see how that ran smack up against these hard-charging baby boomers and these traditionalists who had very set ways of doing things.

The slacker reputation stuck with the X-ers, and Lancaster says a lot of that had to do with the state of the economy when they graduated—the recessions of the early 1980s and 1990s.

LANCASTER: So the leading edge of them couldn’t find jobs right away. And it was the time that TV shows like Friends were coming out, where you’d see the X-ers were sitting around in coffee shops, with no discernable means of support and no future, and nowhere to go. And that was kind of the gestalt of Gen X, which is, “I have all this education, but nowhere to go, and I’m aimless.”

OK, so thanks to the coming of the laptop, coffee shops went from a place to hang out to actual places of work. And that’s where I meet Enrico Moretti, Professor of Economics at UC-Berkeley.

ENRICO MORETTI: As usual, I had my cake, and my Earl Gray tea.

Moretti says it’s no surprise that Millennials are getting a slower start than they expected. Pampered or not, Millennials graduated into the worst job market in two decades. Moretti says people who graduate college into a recession don’t do so well at first. They underperform in terms of earning, careers, and they don’t get jobs as quickly as their predecessors.

MORETTI: But the most interesting, probably the most problematic thing that we do notice historically is that the people entering the labor market in a recession, even when you see them 10 years later or 15 years later, even then they’re underperforming. And again, they have lower earnings, a higher unemployment rate, and lower career, less fast career paths. And unlike the first fact, this is really surprising. Because it means that 10, 15 years out, these people are still paying the price of having entered the job market at the wrong time.

Moretti says there are several possible reasons for this underperformance.

MORETTI: One reason is that there is a scarring effect, that employers somehow don’t take into account that 10 years after the recession they’re comparing two job candidates: one has been unemployed for five years, and one has been unemployed for only one year. They really don’t discount the fact that the first guy was unemployed for so long was not his fault.

Another possible factor is a decline in what’s known as “human capital.” Human capital is a person’s education, work experience, focus, and drive.

MORETTI: And it’s well documented that being outside the labor force results in a depreciation of that human capital. Somebody who’s been out of a job for three, four years, is not going to be as productive as when they first lost the job. And then a third possible component is maybe a psychological factor, that being unemployed might make people less assertive in job search and less self-assured in interviews.

So what will happen to this massive, educated, idealistic generation?  Millennial Chris Hutchins was laid off from his first job out of college. He says for him, the recession has been humbling.

CHRIS HUTCHINS: My parents are always telling me no, you have to work your way to earn that. But we grow up in this society where we’ve got cell phones when we’re seven and we feel like we can do whatever we want. We’re starting to act like business people when we’re in middle school. And we kind of feel like we’re empowered. And so I think slowly, and what has happened during the recession is that people realize that they’re not.

Hutchins took his own layoff as an opportunity. He travelled with his girlfriend for eight months, then came home to San Francisco and started working as a contractor, teaming up with other laid-off workers to bid for consulting jobs. He says his generation, whatever else it might be, is also entrepreneurial, and is poised to rise to the challenges of an economy where you don’t have so much job security, and you don’t retire with the company where you started your career.

HUTCHINS: My resume doesn’t even really matter. The people I talk to about work, I’ve never even shown my resume to. So it’s not a society that’s based on what happened in the past, it’s about what you’re doing. And you usually get more creative when you’re put in extenuating circumstances.

Lynne Lancaster says people like Hutchins will be okay. She thinks the recession won’t be their greatest challenge.

LANCASTER: One of the worst aspects of this generation is that the divide between the haves and the have-nots has really widened during their formative years. The US dropout rate from high school is inching over 30 percent. 30 percent of our Millennials will not graduate from high school.  At the same time, jobs have gotten much more skilled in the United States. That means the millennials who aren’t completing an education have very little chance of being able to earn a living wage. And they are falling through the cracks, which is a huge concern for this generation.

And the same characteristics that make this generation so special—the confidence, the idealism, the optimism—turn sour when young people run up against consistent barriers to success.

LANCASTER: I think we’re developing an underclass of Millennials who feel very discouraged, very cut out of the world of success and the world of work. And then we have the haves, who feel like the world is their oyster and they’re going to be able to do really amazing things. One of the things that has defined the US is the fact that we’re great at working and to a large degree, we like to work, we’re good at work, and we find work that’s pleasing to us, that we can excel in and get excited about. When people get left out of that, think about what happens -- pride, the feeling you get from successfulness, the ability to support a family, the ability to create the “American Dream” and have a good life for yourself—all of that begins to fall away. And that carries with it many costs.

The truth of the matter is that the Millennial Generation may be defined less by its optimism, than by its realism. Right now that means figuring out how to use its education, technology, and confidence to make it through its current crisis and acheive its potential.

For Crosscurrents, I’m Rina Palta.