Another 2.1 million seek unemployment benefits. The Coronavirus Recession will stick it to millennials
The Department of Labor reported Thursday that yet another 2.1 million Americans, on a seasonally adjusted basis, applied for initial state unemployment benefits in the week that ended May 23. Counting these new applications makes for a total of 40.5 million workers who have filed for initial benefits over the past 10 weeks. Add in the millions of Americans who are receiving benefits under the federal Pandemic Unemployment Assistance that covers gig workers, the self-employed, people who were working part time, and some other categories not eligible for regular unemployment, and the total out of work could be 47 million. Unprecedentedly gigantic as that number is, even it could be undercounting.
But if the total who have applied for benefits in both state and federal programs were comprised solely of those 47 million, the official U3 unemployment rate—the one that gets the most headlines every month—would be about 30.2% based on April’s non-farm labor force of 156 million. That may seem outrageously high, but it is also the figure James Bullard, president of St. Louis Federal Reserve Bank said in March we might reach in the second quarter. (Note that the Bureau of Labor Statistics does not calculate the unemployment rate using benefit claims, but with a monthly survey. Its May report will be released next Friday.)
The labor market is clearly devastated. We just don’t know the full extent of the wreckage yet, and we won’t for another couple of months at least. Likewise, we won’t know how many of the negative effects will be temporary and how many longer lasting.
One thing we do know. Under all economic conditions, different demographics are affected differentially. Prosperity doesn’t lift all boats, much less all boats equally. Recessions damage certain groups more than others, in great part because they have pre-existing economic conditions that make them more vulnerable, as does their age, their gender, and their race. Deeper damage obviously lasts longer.
Vast numbers of the populace will be hurt by the Pandemic Recession. But millennials—born 1981-1996, by most definitions—are really going to get it in the wallet, with demographic groups within the millennial generation getting it worse than others, the less educated being vulnerable to far less severe economic perturbations.
Andrew Van Dam at The Washington Post wrote in detail about this Wednesday in a piece calling millennials the “unluckiest generation in U.S. history” under a subhead of Millennials have faced the worst economic odds, and many will never recover. Grimly he begins, “After accounting for the present crisis, the average millennial has experienced slower economic growth since entering the workforce than any other generation in U.S. history.”
The research data he cited shows just how right had been those analysts who warned more than a decade ago that the graduating classes of the Great Recession would suffer long-term financial consequences from that disaster. “The average millennial has experienced slower economic growth since entering the workforce than any other generation in U.S. history.”
Gray Kimbrough, an economist with American University who we’ve previously and accurately branded a serial millennial myth debunker, points out the oldest millennials, such as himself, lived through the 9/11 terrorist attacks and entered the labor market in the recession that hit around the same time. They spent their early years struggling to find work during a jobless recovery, only to be hit by the Great Recession and another jobless recovery. And, of course, yet another recession.
“The story here is not just that it’s a bad recession, and that it’s hitting young people more, but that it’s hitting people who have already been hit,” Kimbrough said.
- A report on ongoing research last year noted that in tracking 4.1 million people over a dozen years, it was found that millennial employment recovered over the period but millennial earnings did not. The average millennial lost about 13% of their earnings between 2005 and 2017, Gen X lost 9%, and baby boomers lost 7%.
- Millennials were forced by the Great Recession to choose worse jobs at the beginning of their work life, which suppressed their lifetime earnings. They also found themselves competing after a few years for entry-level jobs in their field against new graduates. Ana Kent, a policy analyst at the Federal Reserve Bank of St. Louis, told Van Dam, “If people enter the labor force during a recession, and they get into lower-paying jobs, that carries forward for much of their lifelong working careers. That’s going to have impacts on not only their income but their wealth and also their ability to save for a down payment and their ability to meet other lifetime goals.”
- Millennials had lesser financial cushions when the Great Recession struck, and since they haven’t as a group recovered their full earnings, they have even smaller cushions now in the Pandemic Recession.
- Millennials with a college degree aren’t too far behind in terms of wealth compared with previous generations when they were the same age. Their less-educated peers, however, have half the wealth that would be expected at this stage.
- A National Bureau of Economic Research found that even after controlling for differences in age, education, marital states, and income, the wealth gap among millennials between African Americans and white Americans continues to grow.
- Millennial Latinos, African Americans, and women are more likely than white male millennials to be economically pinched. They also are so far more likely to be unemployed during the Pandemic Recession.
When considering statistics based on a defining characteristic like age, it’s easy to forget that a group’s overall trajectory is not the trajectory of all individuals within it. Some portion of millennials will no doubt make out just fine. It should also be obvious given our experience with the Great Recession that it’s only a small portion of the population in every age demographic that escapes the negative impacts in a downturn. Based on what we’ve seen in the past two and a half months, there is no reason to believe the Pandemic Recession will be any different in that regard.
(Crossposted from DailyKos.)