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Millennials forced to put lives on hold
First of two parts
Nicholas Rastenis has been through the wringer. After getting a master’s degree in fine arts from Yale University in 2008, he expected to land a job at a top design firm. But nearly four years later, after many months of joblessness, austerity and anxiety, his ambitions in life have come down quite a bit.
Today, the Chicago resident toils at a photo lab at a major drugstore chain for $9 an hour and no benefits, using few of his creative design skills and earning only a fraction of what he once thought he could command. Still, he has had some designing gigs on the side, and he is glad to at least have a full-time job — any job — after years of doing without.
Mr. Rastenis, like many others of his generation, is a prime victim of the Great Recession. By most measures, he and his compatriots in their teens, 20s and early 30s bore the brunt of the worst job market in modern times. Even with slow economic improvement in the past two years, these so-called “Millennials” remain unemployed and underemployed at the highest rates of any group.
“It’s been a very hard road,” said Mr. Rastenis, who has taken jobs such as bike-cabbing and waiting tables to make ends meet while trying to land a full-time position in his profession.
“I’m doing things I never thought I’d be doing. I’m starting to question why I went to college. I could have done these jobs out of high school,” he said. “And not having an apartment or anything else … I’m miserable.”
Mr. Rastenis knows he’s not alone. It seems nearly everyone he knows in his age group is facing similar problems. “Nobody in the age range 20 to 35 are where they want to be right now,” he said.
Federal statistics as well as various opinion polls and studies bear him out. Joblessness among Americans ages 18 to 29, the Millennials, is at the highest levels since the U.S. Labor Department started keeping records.
The 15.8 percent unemployment rate for this group is nearly twice the national average. For those ages 16 to 19, the jobless rate is closer to 25 percent, and even for people 29 to 34, it’s closer to 10 percent — well above the 8.3 percent national unemployment rate.
The unemployment statistics represents only the tip of the iceberg. Millions of young people have delayed entering the workforce by staying in school, or they stopped looking for work so they aren’t included in the unemployment statistics. Millions of others have accepted short-term or seasonal work without benefits, and some are working without pay in hopes that it will land them a job.
Joblessness spawns heartaches
The woes in the job market have fed an ocean of other heartaches and difficulties, including postponed marriages and childbearing, homelessness and having to live for years with parents who expected to be moving toward empty nests and retirement.
A poll last year by Generation Opportunity, a Millennial group, found that 77 percent of Millennials are postponing major life changes, such as buying a home, getting married, starting a family and paying off student loans, because they can’t find good jobs.
While many Millennials have retained remarkable degrees of optimism in the face of such hardship, polls show that they think they are the first generation in modern U.S. history to face downward economic mobility compared with their parents.
Indeed, they are moving down the economic ladder. A study last year by Young Invincibles, a youth advocacy organization, and Demos found that Millennials are making about 90 cents for each dollar their fathers earned at their age. Millennial men are generally doing worse than women in keeping up with previous generations.
Still, more than two-thirds think they will eventually achieve the American dream of getting a good job and settling into the middle class.
Like no generation before them, Millennials understand the value of a good education. Labor statistics show that unemployment at any age is highest among people without college degrees, so many have stayed in school or returned to school to complete their educations.
Although the group is among the most educated in U.S. history, getting a college degree is more expensive than ever. State budget cuts drove up the cost of going to public colleges by 5.6 percent a year in the past decade, even as median family incomes shrank by 6 percent.
Student debt soars
The result was an explosion of student-loan debt as families stretched to send their children to school. Today’s college freshmen are taking on twice the load of student debt as freshmen did 10 years ago, according to Standard & Poor’s Corp. It is becoming more common for students to take on as much as $100,000 in debt just to get a bachelor’s degree.
While taking on debt to get the education and training needed to obtain good jobs makes sense, the dearth of entry-level job openings since the Great Recession started in late 2007 has made it impossible for many graduates to pay off their loans, said S&P analyst Robert McNatt. Defaults among young graduates have escalated to levels near 9 percent.
While graduates can postpone payments on their loans until they get jobs, the debt cannot be discharged through bankruptcy and “can become a serious burden” for people who have had trouble securing regular work or high-paying jobs, Mr. McNatt said.
The Obama administration has offered several programs to make loans and grants more freely available for schooling, help graduates consolidate their loans at lower interest rates and forgive any remaining loan payments after 20 years rather than 25 years.
Plagued with chronic unemployment and up to their ears in debt, one-third of the young people interviewed in the Demos study ranked simply making ends meet as their most difficult struggle in life.
“It used to be that hard work and education were the pathways to the middle class,” said Demos analyst Tamara Draut. But today’s graduates are confronted with a “debt-for-diploma system” that doesn’t even guarantee them a good job so they can pay off their debts once they get out of school, she said.
Life on a roller coaster
Mr. Rastenis said his parents, who did not attend college, have been shocked that his Ivy League education has not enabled him to get a good job. His first job out of school in 2008 was a good one in the design field earning $20 an hour. But after several months of work, the company found someone who was willing to do the job without pay and let Mr. Rastenis go.
After that, he found a job designing for a Chicago advertising agency and earned $50 an hour. “I loved it,” he said, but that contract job disappeared within months after the agency lost two big advertising accounts.
Things seemed to go downhill from there. Moving for a time to Texas, where jobs were more plentiful, didn’t prove to be a permanent solution.
With no help from his parents, Mr. Rastenis has had to depend on friends and roommates at times to help pay for essentials such as food and rent. Even getting clerking jobs at retail stores has been difficult because he is overqualified. To get his job at a drugstore, he left his Yale credentials off his resume.
With earnings of less than $10 an hour, even forking over the $40 it takes to go to a networking event to stay in touch with other designers in hopes of landing a better job is painful. “I could use that money for food,” he said.
Sympathy has been hard to come by, even from parents at times, but a poll by Pew Research found that Americans are increasingly aware that the Millennial generation has borne the brunt of the Great Recession and that young people are grappling with a more hostile economy than their parents’ generation.
While every age group was hit with higher unemployment rates and reduced incomes as a result of the 2007-09 recession, young adults were hit the hardest. The poll found that half of Millennials have taken jobs that they didn’t want just to pay the bills. One-fourth have taken unpaid jobs to gain work experience, and more than one-third have gone back to school because of the poor economy.
Parents step in
Besides postponing marriage and families, about one in four Millennials say they have moved back with their parents after trying to live on their own. That has the effect of spreading the economic pain, as the return of a grown child forces many parents to postpone their own retirement plans.
Still, many parents are well aware that their children are under financial pressures that they have never had to face and are glad to help.
Yvonne Schlueter of Centennial, Colo., said her son Brett lived at home for two years while looking for a job in his field. The competition for entry-level jobs was fierce.
“People who are getting laid off, with five or six years’ experience, are willing to take the entry-level jobs,” she said.
Some analysts worry that the whole generation could be scarred by their bad experiences in the job market and lead less-productive lives as a result.
Tom Porcelli, chief U.S. economist at RBC Capital Markets, said people who study the job market, including Federal Reserve Chairman Ben S. Bernanke, are concerned particularly that discouraged young people are dropping out of the market in record numbers.
“That the younger generation has witnessed a sharp decline in labor force participation poses a bigger problem down the road, as skills diminish or are never developed” once young people stop working in their chosen fields, he said.
The loss is deeply personal for those who can’t find jobs, but for the greater society, it will lower the productiveness of the future economy, he said.
The jump in youth unemployment in the U.S. was part of a worldwide trend spawned by the Great Recession, according to a study last fall by the Organization for Economic Cooperation and Development.
Youth unemployment averages about 17 percent in industrialized countries, but is as high as 40 percent to 50 percent in Spain, Greece and other hardest-hit countries.
The OECD warned that economic problems would continue to haunt countries that don’t help young people who are forced out of the job market or get marginalized in low-paying jobs. Many of those young people are in danger of becoming chronically or even permanently unemployed as adults as they “lose touch” with the job market.
OECD Secretary-General Angel Gurria noted recently that in many countries, there’s a mismatch between the science and technical skills sought by employers and the general education of many young people seeking jobs. Businesses often complain that they can’t find the right skills within the millions of applications they receive.
“A better match must be achieved between the skills youths acquire at school and those needed in the labor market,” Mr. Gurria said.
An OECD study this year found that nations such as Germany and Austria that provide good avenues for young people to acquire technical and vocational skills — without necessarily going to college — have the lowest youth unemployment rates.
The study found too much emphasis in the U.S. on generalized university educations without enough job-oriented training. Community colleges often provide more practical work-related training than universities and colleges.
While positions for engineers, information-technology staff, math teachers and machine operators can be hard to fill in growing fields such as robotics, space tourism and nanotechnology, some of the most difficult jobs are in popular areas of study such as architecture and design.
The administration and Congress have taken stabs at refocusing the education system on job-related training, but much more needs to be done, the OECD found. What’s at stake is not just individual careers, but the future competitiveness of the economy, Mr. Gurria said.
“Tackling the large human cost of unemployment, especially for those youths who fail to get a permanent foothold in the labor market, must be a priority,” he said.
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