The under-40 generation deserves our sympathy and compassion. Random chance and bad fortune have repeatedly decimated their careers, standard of living, and futures. Just as it looks like they are about to make up for last time a new recession, housing collapse or inflationary spiral hits them.
For them the social contract of upward social and economic mobility in exchange for loyalty and hard work no longer means anything. Buffeted by a series of recessions and longer and longer recovery periods, stagnant wages, crushing debt for worthless degrees, and a job market that cannot expand fast enough to accommodate an ever-expanding population, upward mobility is becoming a historic relic.
And it looks like they are in for another drubbing…
In the 1990’s there was a lot of talk about shifting from an industrial economy to a service economy. Sometimes you would also hear of an emerging knowledge economy.
The industrial economy that elevated millions into the middle class was on its deathbed, but few people could imagine life without the wealth it created. No one stopped to think whether service or knowledge economies could generate the wealth needed to continue that expansion of the middle class.
They thought upward mobility would never end.
Even today we think that having a job automatically propels people into a middle-class lifestyle. At the same time, we debate whether that the middle class is really disappearing.
Well, it is disappearing…
We are getting poorer as a nation and as a world. It has taken a rise in inflation lasting only a few months so far to throw a significant portion of the population into financial disaster. Credit card debt has increased significantly as people try to hold on to a lifestyle that was barely affordable last year, and is now totally untenable.
Inflation has outpaced income for decades.
Real income fell behind inflation for years and only caught up recently, only to begin a new era of being left behind by inflation. About half the people in the United States make less than $40,000 a year.
Gross Domestic Product (GDP) has been declining since 1978…
Gross Domestic Product is a measure of national wealth. Generally as national wealth increases so does quality of life for residents. Personal wealth increases, although not evenly for everyone, and public works like health care and social spending that benefit everyone enjoys increased funding.
GDP is nothing like what it was during the last decades of the industrial economy and there are no signs that it might reverse its decline.
Education doesn’t seem to be the ticket to a middle-class lifestyle…
A bachelor’s degree might significantly increase earnings, but the cost of the degree is higher than the income it generates. Millions of people earned degrees following the Great Recession. Instead of improving lifestyles because of education, the debt those degrees created put a significant damper on lifestyles.
Earnings might have increased, but those increases were swallowed up by student loan payments.
According to the Federal Reserve, student loan debt increased 137% during that time and accounted for as much as 30% of the decrease in homeownership.
It’s an unfortunate fact that people entering the labor market during or just after a recession will suffer financial loss for decades. Jobs are the first thing to go and the last to return in a recession. Wages and promotions stagnate just like lifestyles and the standard of living.
And it’s happening again…
Beginning in the early 2000’s there have been recessions so frequent and recoveries so long that an entire generation lost what they expected to be a prosperous future.
For people in their early forties, this will be the third or fourth time they are knocked back to their knees. For younger people just entering the job market, it’s a jolting introduction to adulthood in the 21st century.
First was the tech bubble recession in the late 1990s and early 2000s. Officially, this one started in January 2001 and ended in October of the same year. At the time it was excused as a minor blip. If you are old enough, you might remember the exuberance of politicians and policy policymakers during the short run to recovery.
The reality for young people starting a career is a different story.
And then came The Great Recession…
Next came the onset of the Great Recession beginning in January of 2008. If you are old enough to remember those days you know that things actually began in 2006 with the steady decay of the housing market, and finally the bankruptcy of Lehman Brothers — one of the largest banks in the world — in 2008 that nearly led to the collapse of the world wide banking system.
The banks got a bailout, but nobody else did. Millions of people lost their homes, experienced bankruptcy and even homelessness.
These numbers are shocking, but even more shocking is the realization that they stand for real people. During recessions social ills like suicide, drug overdoses, and fatal crimes increase dramatically.
We have come to call these “deaths of despair”.
Numbers cannot capture the true extent of the human misery that comes with recessions and economic hardship, but they are widespread and tragic.
I was in graduate school during the Great Recession. One of my colleagues had worked as a therapist for the Veterans Administration in Virginia. He was one of those who lost everything and ended up living like Tom Joad, traveling from place to place dropping in on friends, family and rumored opportunities looking for enough work to cover gas, lodging and auto repairs. I have no idea what happened to him.
He wasn’t the only one trapped in a 1930’s style diaspora…
The book and movie Nomadland captures the plight of people, mostly over 50, whose lives had been uprooted and then cast into a surreal lifestyle of impoverished movement — a permanent road trip on a shoestring budget.
In December 2007 when the Great Recession officially started there were over four million job openings. A year and a half later in June of 2009, there were less than half of that. The recovery took seven years. It wasn’t until June of 2014 that job openings reached the same level as they were in March of 2007, the highest point following the Tech Bubble Recession.
It wasn’t until August 2014 that job openings exceeded that of January of 2001.
It took 13 years for job openings to exceed the level they were at before the “minor” Tech Bubble Recession of 2001!
But that happy observation conceals a troubling truth. The population expands by about a million people every year. So does the labor market. About a million more people enter the labor market than exit it. Job openings might be back to the same level they were seven years before, but the number of people who need jobs has increased by around seven million.
The Labor Force Participation Rate — Back to the 70’s (Sort Of.)
But not all of them find jobs. They end up our of the labor market. Since the beginning of the century there have not been enough jobs to go around and the Labor Force Participation Rate (LFPR) — the portion of the population either working or looking for work — has been steadily declining.
Currently it’s at about the same place it was in the mid 1970’s when men were the primary breadwinners and women were just beginning to enter the workforce in large numbers. Now, like then, one wage earner must support three or four others — but now they are not a wife and kids. About 20% of Americans receive public assistance, but that does not include unemployment benefits, recent stimulus payments or food bank donations.
Back to the Dark Ages?
Joel Kotkin, a Professor of Urban Studies at Chapman University, thinks we are heading into a time similar to the Middle Ages. He’s written a book about it called The Coming of Neo-Feudalism.
Kotkin argues that we are heading into a world of three economic classes. Elites, or One Percenters, who own most of the wealth and pass it down to succeeding generations. The Professional Managerial Class — media savvy intellectuals, academics and policy wonks — who manage society and the economy. Finally, the majority of people in the “yeomanry”:
“… (T)he “yeomanry,” has two distinct parts. There is a property-owning middle class…being squeezed beneath the oligarchy. Second, there is a working class who are becoming more like medieval serfs, with diminishing chances of owning significant assets or improving their lot except with government transfers.”
(Source: Kotkin, Joel; The Coming of Neo-Feudalism (Kindle Locations 107–111). Lightning Source Inc. (Tier 3). Kindle Edition.)
Jon-Arild Johannessen, of Kristiania University College in Oslo Norway, sees the same inevitably. In his convincing and well documented book The Workplace of the Future he argues that most workers will be well educated, hardworking and impoverished.
The dream of living in a 4000-square-foot house in the suburbs, annual vacations to Europe or the tropics, and a couple of late model SUVs in the triple garage is no longer realistic for much of the under 40 crowd.
If futurists like Kotkin and Johannessen are right the Great Recession was just a prelude to a dystopian era for workers. Jobs, income security and the chance for socio-economic mobility swing in the breeze with every recession. There is no longer the sense that one is contributing to something greater than oneself — one of the most powerful motivators for long term happiness at work. Working remotely and frequently switching from one employer or project to another will eliminate the identity workers have always had with their employer, industry and brand.
The 21st century version of the dehumanized assembly line worker might be just around the corner.
Already many of the workers taking part in the Great Resignation regret joining their new employers. Higher salaries and promises of better work life balance, and social environmental consciousness have not met their expectations. Almost half of employees say they are considering leaving for another job in the next three to six months.
There is a bright side…
I don’t’ think things will get as dystopian as the futurists predict. And science backs me up…
Forty years of happiness studies are in general agreement that people overcome setbacks, recover from disasters and bounce back from catastrophes. Sure, there are some people who carry a lifelong burden of depression after a personal tragedy, but often that depression would have been there anyway.
But the decline in standard of living is not a personal tragedy. It’s a generational change affecting everyone. That makes it harder to see and easier to bare. The only people who noticed the end of the industrial economy, the slide in GDP or the return of the Labor Force Participation Rate were economists. The rest of us went on living as usual. We made adjustments to that fundamental economic change gradually. Life goes on.
The same thing is happening now…
Watts Wacker and Jim Taylor coined the term “Downward Nobility” in their 1993 book the 500 Year Delta. They meant that the human spirit always finds a way to thrive even in the direst circumstances.
Viktor Frankle does a masterful job of showing how dignity can triumph even in a Nazi concentration camp in Mans Search for Meaning. If human dignity can prevail in a place as inhumane as that, it can certainly flourish in a rigidly enforced class system of the kind business organizations seem to be evolving into.
People tend to be resilient, and even entering the job market in a recessions does not have long lasting effects on happiness or job satisfaction.
In fact, people entering the workforce force during hard times end up more satisfied in later years than those who joined in better times.
That’s what Emily Bianchi, Ph.D. found out when she compared the experiences and attitudes of people entering the job market in either good times or bad.
“Thus for the average well-educated graduate, first looking for work in a recession may pose enough adversity to promote positive subjective evaluations but not so much that it ultimately breaks one’s resolve.”
“Across three studies, people who entered the workforce when the economy was faltering and jobs were hard to find were happier with their current work than those who first searched for jobs during more prosperous times. Even when recession-era graduates earned less money, they still reported greater satisfaction with their jobs both early and later in their careers…People who graduated in worse economic times were less likely to fixate on ways they might have done better and more likely to feel grateful for the jobs they held.”
(See: The Bright Side of Bad Times: The Affective Advantages of Entering the Workforce in a Recession)
Finally a word from Viktor Frankl:
“Don’t aim at success. The more you aim at it and make it a target, the more you are going to miss it. For success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side effect of one’s personal dedication to a cause greater than oneself or as the by-product of one’s surrender to a person other than oneself. Happiness must happen, and the same holds for success: you have to let it happen by not caring about it.”
(Read: Man’s Search for Meaning)
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