Who's Had the Worst Recession: Boomers, Millennials, or Gen-Xers?
Gen-Y has the worst unemployment. Near-retirees have the least
time to recover their savings. And Gen-Xers? They're caught between debt
that won't disappear and an economy that won't move.
Millennial generation got hit hardest by the Great Recession. You might
have heard this, over and over, especially if you read The Atlantic
or happen to have asked somebody from the Millennial generation.
Downturns like this one change the course of a lifetime for college
graduates, as low starting salaries snowball into a lifetime of
depressed wages, slim pensions, and even shorter lifespans.
Hogwash! a Boomer might retort.
Even if they have narrower prospects, Millennials have their whole
lives to make back lost wages. When the stock market tumbled and housing
prices collapsed, couples near retirement lost their nest eggs at the
very moment that they were looking to step out of the workforce. Surely,
they suffered the most from the timing of this recession.
Oh, come on! a Gen-Xer might respond, we got the worst of both worlds. The
46 million Americans between the age of 33 and 46 reached the prime of
their working years only to find salaries depressed by a bad economy and
promotions suppressed by lingering Boomers.
This is a debate
without a winner, and we're not going to name one. Instead, we're want
to look across three categories -- employment, income, and overall
wealth outlook -- and argue on behalf of each generation that their
cohort got it worst.
GenY: It's a simple case: Unemployment is worst for the youngest.
Overall joblessness is between two and three times higher for
20-somethings than older workers, and the greatest percentage increase
in unemployment between December 2007 and September 2010 happens to be
20-24-year olds ... with a college education!
Young people can move around with ease. But when you're married with
children and a house, it's harder to pick up and follow the job
openings. Worse for GenXers, the fastest-growing jobs are in positions
that a middle-class mother or father is disinclined to accept. Six in
ten jobs lost during the downturn were in middle-wage
occupations, according to the National Employment Law Project,
and nearly 75 percent of the jobs added since were lower-wage --
so-called McJobs. Gen-Yers can afford $10 an hour, for a while anyway.
For those out of work, it's bad to be a Boomer. Older workers suffered
the largest overall increase in long-term unemployment, and they face
the longest spells of joblessness.
In 2009, younger
workers were about as likely as prime-age workers to find work, but
unemployed older workers were the least likely of all to find jobs, with
only about 15 percent of jobseekers finding jobs each month in 2009.
For Millennials, it's not just the money they're not making today. It's
all the money they won't make tomorrow. For every one-percentage-point
increase in the unemployment rate, new graduates'
starting income falls by 7 percent, according to Lisa Kahn,
an economist at Yale. And 17 years later, those who had entered the
workforce in the worst of a recession still earn 10 percent less than
those who graduated in lusher times. When you add it all up, Don Peck writes, "it's
as if the lucky graduates had been given a gift of about $100,000,
adjusted for inflation, immediately upon graduation."
GenX: A recent study by the Center for Work-Life Policy (charticled
nicely by Bloomberg Businessweek) revealed Gen-Xers to be the chief
victims of the Great Recession. They're working harder -- a
two-parent family worked 26 percent more hours in 2010 than in 1975 --
and making less. Thirty-something men had an average income of $40,000
some 30 years ago; today, it's $35,000. Yet remarkably, hourly wages for
this group have fallen even more for women in the last ten years.
Finally, the ladder to the C-suite is crowded: Boomers have delayed
their expected retirement by another five years since the recession
Boomers: Since Boomers have the lowest
unemployment rate and the highest total income, it's hard to make the
case that 47-65-year-olds have the worst income crisis. Rather, their
greatest challenge is preserving wealth at a time when asset values have
been decimated. More on that in the next section.
THE FUTURE OUTLOOK
This overall wealth outlook category is all about debt-building versus
asset-building. Gen-Yers don't have a lot of assets, which is fortunate
at a time when housing values have fallen more than 25 percent in major
cities. But we do have debt, particularly student loan debt, and this is
a particularly nerve-wracking story. Total student loan debt infamously
eclipsed credit card debt last year at $850 billion, and tuition costs
are still rising even faster than health care costs. The hollowing out
of the middle class means that paying back that debt -- and finding ways
to pay for an education that keeps us ahead of productivity curve --
will be the challenge of a generation.
The kids behind us face
these challenges, and more. If their parents can't afford tuition and
extended health care coverage, that will mean more debt for today's
grade-schoolers. In the near future, the poverty rate for children is
projected to rise to a multi-decade high
of 26 percent in 2014.
GenX: Compare debt and assets:
The first is growing, the second is falling, and that's not the way you
want it. Low pay today is coming on the heels of a big student debt
increase. In 1977, when the youngest Gen-Xers were in 4th grade, a third
of students borrowed for college. By the time this generation was
finishing school, 65 percent borrowed to attend college. The average
homeowner entered the recession with debt equal to 125 percent of
income. Now with a fifth of homes underwater or close to it, millions of
older Gen-Xers (and Boomers) are drowning in what they thought were
their savings vehicles.
There is also the question of how this
plays out for retirement. X-ers are in danger of losing out on their
pensions, whether or not state and federal governments reform their
calculations. "When somebody loses a job at age 60, their pensions are
not as affected
because they've racked up enough lifetime earnings," said Till Von
Watcher, associate professor economics at Columbia University. "But for
somebody to lose a job in their 30s, they're facing lasting declines in
earnings that affect their pensions too."
Vacillations in the stock market might not worry a 20-something with
decades left on his savings account. They might not freak out a 40-year
old who doesn't expect to quit until she's 70. But if you're an older
worker on the lip of retirement, your investments are your savings and
your savings are about to become your principle source of income. "This
last recession has definitely not treated everyone equally," said Susan Menke, an economist at market research firm Mintel. "Younger boomers [are] the
'sandwich' generation, burdened with educational expenses for their kids
and, for some, health care
costs for aging parents." As tuition and medical services get more
expensive and the stock market lingers below its pre-recession high,
even Boomers who have kept their jobs, their homes, and their savings
and every right to be nervous about how the economy handles in their
last years in the workforce.