For younger workers, the coronavirus has been a disaster
The economic recession caused by the coronavirus pandemic has been unprecedented in many respects, but all too familiar in one: The crisis has taken a particular toll on young workers.
As unemployment around the U.S. was peaking this spring, more than a quarter of young Americans lost their jobs. Most of the country's youngest workers have either lost a job or taken a pay cut during the crash, according to Pew Research — and perhaps not surprisingly, they are also the most likely to report having trouble paying their bills or rent.
Younger people who still have jobs are least likely to have the option of telecommuting, according to a report from the Economic Policy Institute (EPI), losing out on a large added measure of protection from the virus, not to mention the cost savings of not having to commute. They're also most likely to have relocated due to the pandemic: For the first time since the 1930s, more young adults in the U.S. are living with parents than not, according to Pew data.
"Not only have many young people in this country faced the harsh reality of returning to school without in-person classes at their colleges and high schools, the job prospects for those seeking employment have been particularly bleak," economists at the left-leaning EPI said in a recent report.
Young workers were among those hit hardest by the coronavirus shutdown this spring. The unemployment rate for 16- to 24-year-olds peaked at 27% in April, according the U.S. Bureau of Labor Statistics. As of November, unemployment among the youngest workers was twice as high as among other employees.
First jobs vaporized
The pandemic has shuttered many of the service industries that have historically employed young people: restaurants, bars, coffee shops and retail stores.
Last year, one in four young workers had a job in the leisure and hospitality sector — an industry that lost 3.3 million jobs in 2020, the Bureau of Labor Statistics reports. Another one-fifth of young workers were in the retail sector, which is down 680,000 jobs since the spring.
"This crisis has delayed that very first step into the labor force," said AnnElizabeth Konkel, economist at the Indeed Hiring Lab. "It's that first experience of making money — it may have been an office internship, or a cashier in a book store, or restaurant job over summer."
Cole Stevens, who graduated from high school this spring, has been working since he was 14 to help with his family's expenses. In April, the Minneapolis-area coffee shop where Stevens worked part-time closed, putting him and other high school students out of work.
"It was all high school students that work there. And we lost that business, all of those students were out of a job," Stevens said at a recent roundtable discussion with Minnesota Governor Tim Walz. After a legal battle, he was able to collect unemployment benefits.
"My family never had a lot of money, so I learned the value of family and the value of the dollar when I was young," Stevens told CBS Minnesota. He has long wanted to start his own business, but working to support himself has delayed those plans, Stevens told Walz at the roundtable event.
Failure to launch
Delayed entry into the workforce is becoming far more common for American teenagers, whose rates of working have plummeted since the 1990s, according to data from the Census Bureau, the Labor Department and the Federal Reserve. However, the unprecedented breadth of the pandemic, which has permanently closed more than 100,000 restaurants and thousands more small businesses, raises questions about how much work there will be once the virus abates.
Meanwhile, those young people lucky enough to find a first job in these times can look forward to a lifetime of lower earnings, thanks to having entered the job market during a recession. Decades of research show that college graduates who start work during recessions earn, on average, less than their peers from other generations for up to 20 years, and in some cases for their entire working lives.
"Because of their initial bad start, they often get stuck in low-paying, low-quality jobs. Even when the economy gets stronger, it can be difficult for these workers to catch up to their pre-recession cohorts," EPI said.
Double whammy for millennials
Indeed, research on millennials, the generation that entered the job market during the Great Recession and whose oldest members will turn 40 this year, shows that the dismal economy had weighed on their ability to earn and keep money.
"They've really gotten hit twice — the Great Recession and now, again, a crisis. That's going to impact lifetime earnings," said Konkel.
"I feel like I've regressed to my teenage years: I'm in my childhood home, in my childhood bedroom. I have chores again," 30-year-old Eric Rivera told CBS This Morning. He moved from his apartment in Brooklyn, New York, to his parents' home in New Jersey after losing his job during the pandemic.
"You kind of start spiraling: Am I ever going to move out of this house?" Rivera said. "I'm still hopeful about finding a job and moving out on my own again, but that timeline's a moving target."
Millennials, as a group, are earning less than their parents. They have far less wealth and more debt than baby boomers did at the same age. Today, just 5% of national wealth is held by the millennial generation. Boomers, at the same age, held more than double that.
In personal finance lore, the 30s are a time to build up a savings cushion, pay into your retirement fund and perhaps buy a home. But, Konkel said, millennials "already didn't have a good cushion to start with, because of the Great Recession."
The current crisis will further exacerbate those decisions: "When to get married, whether to have kids, how many kids to have, because kids are expensive," Konkel said. Indeed, Brookings researchers have warned America to expect a "baby bust" next year, with 300,000 fewer births happening than would normally be expected.
Meanwhile, many millennials who are parents are finding their work and family in conflict — and are being pushed away from work. One in five working parents isn't working in order to take care of their children, the Census Bureau found this summer.
That burden largely falls on women, two million of whom have dropped out of the workforce this year, a reality reflected in the labor participation rates for men and women of parenting age. After losing jobs earlier this year, men are rejoining the labor force — but women aren't.
"We're just seeing so many women leaving the labor force, and there are concerns about will they come back?" said Konkel. "Have we lost the last 20 years of progress?"
She added, "If they don't come back, we are not going to return to where we were in the pre-COVID era. We're not going to get back a full, robust recovery."