Put more than one economist in a room and chances are slim they'll find much to agree on. However, lately there seems to be a consensus forming among economists that the economy's trajectory is heading up. That’s great news for struggling young people. But the question still remains how they will recover from having spent some important formative years mired in one of the worst recessions in decades.
Poor and Depressed
Online commentators have begun taking up the question of the recession's lasting impact on young workers in earnest lately. Carol Phillips, a professor of marketing at Notre Dame and the president of consulting firm Brand Amplitude, has argued that the early-career struggles of the so-called Gen Y will haunt them for decades. In a blog post written at the height of the recession she cautioned:
"There is evidence (BLB’s National Longitudinal Study of Youth) that periods of unemployment during the 15-year transition from youth to young adulthood is related to depressive symptoms later in life (age 29-37). The same data has yielded evidence (analysis by Yale School of Management) that early unemployment can damage earnings for decades."
Another analysis out of Stanford and U.C. Berkeley suggests a further long-term impact of beginning your career in a time of economic turmoil: a greater aversion to risk. The study found that early exposure to economic trouble like high inflation leads to more conservative investing for decades.
This tendency isn’t all that shocking (just think of the stereotypical, life-long penny-pinching of people who grew up in the Great Depression), but it might spell bad news for Gen Y, leading to lower investment returns. It might also be bad news for the economy in general, according to a report on the research in Stanford Knowledgebase.
“Because difficult economic times make investors less willing to take risk, bad experiences can lead to a vicious circle," the article claims. "Investors, skittish because of recent — and in many cases massive — losses, can be loathe to put money back into markets even after they stabilize."
And how about this generation’s much-vaunted craving for a work/life balance? Has the recession destroyed their dreams of achieving a healthier intermingling of the personal and the professional than they saw in their parents? Despite claims just a few years ago that young people were determined to avoid corporate drudgery, a couple of new British surveys indicate that the kids may have been scared straight into late nights at the office.
“Younger staff expressed 15 to 20 percent less desire than their older colleagues to choose their time and place to work. In fact, they actively seek out every opportunity to be in the office in the closest proximity to their boss," concludes a report from British consultancy JBA.
A second study, from O2, which I recently noted in a blog post at the Brazen Careerist, found workers “of all generations… feel they have to demonstrate long hours in the office to secure their jobs.”
A Silver Lining
Of course, not everyone is all gloom and doom about the long-term effects of the recession. At least one observer has suggested that the downturn, despite all the suffering it has caused, might actually be good for us. Writing in the Chronicle of Higher Education, Barry Schwartz, a professor of psychology at Swarthmore College, suggests that by forcing us to reduce our focus on material success, the recession may end up making us all a little happier. He writes:
There has been a research boom in recent years on the determinants of well-being, and it shows that material wealth contributes too little to well-being, once incomes are above subsistence, to justify people's efforts. And it shows us that lowered expectations may enable us to derive satisfaction from life events that would have left us disappointed in the boom years.
Well, there's an upside, at least.
Do you think the recession has left Gen Y with lasting scars?
Image used under Creative Commons by Flickr user leonorjr.