The Millenial generation, according to Strauss & Howe are between the ages of 8 years old and 28 years old. Those in their 20’s are pretty pissed off. Their parents have ruined the US economy. There are no jobs for these kids. The unemployment levels for Millenials is at Depression era levels. They have a right to be angry. The question is how they channel this anger. The last Hero Generation came of age during the Great Depression. Their fate was to die by the hundreds of thousands in a World War. What will be the fate of the current Hero Generation? Will the government try to channel their anger in another world war? Will their anger spill into the streets in a civil war in the US? All I know is that there are alot of pissed off people in this country today. Based on past 4th Turnings, we are likely to see great bloodshed in the next 10 years. That is on no one’s radar screen. Below is an article from Casey Research about this issue.Is This Dad’s or Grandpa’s Recession?
The past is a great aide for any thinker, but it can also be a pitfall. Our thought process analyzes past experiences and compares them to the present. However, the past can also mislead us into thinking that the current situation is rosier than it really is. Could one have predicted a 15-year world recession on Black Tuesday 1929 with past experience as a guide? Probably not. Or what about the carnage of World War I at the onset? Highly unlikely. Relying only on past personal experiences would have been a mistake.
Plenty of smart people fall into this trap. In the fall of 2008, I remember discussing the market crash with an economics professor. He believed the market would rebound quickly, and we’d be out of a recession in no time. This wasn’t a Keynesian professor but instead an Austrian free-market guy. I brought up the concerning indicators, the stimulus plans, and the bank bailouts. But it didn’t convince him. He pointed out that every recession had stimulus and regulations. We’ve come through all those other recessions easily – hence, this one should be nothing to worry about.
By now, it’s safe to say that the professor was wrong.
Of course, he isn’t the only one to make mistakes like that. People see a tough labor market and naturally assume that the current market is the same as previous difficult labor markets in their lifetimes. Unfortunately, the data shows that the youth labor market hasn’t been this bad since the Great Depression.
Rather than reflecting on our personal experiences, let’s take a look at the data:
As the chart shows, the 2010 20-24 age group has the highest unemployment rate at 15.8%. The rate would be even higher without the Census. Prior to major Census hiring, the April rate peaked at 17.2%.
During the last 50 years, only 1975 at 13.6% and 1982 at 14.9% unemployment came close to this high level. These labor markets do seem comparable, but only without considering labor participation. Graduate school is a recession escape route for many young people. A student receives a useless undergraduate degree and then hopes to improve his lot by acquiring a useless masters or doctorate.
Though these students don’t appear in the unemployment statistics, they are captured within the labor participation rate:
In the past decade, there is a very noticeable decline in the age 20-24 labor participation rates, with a cliff in recent years. (The early ‘70s had a lower participation rate too. But this is partially explained by other factors, such as lower female participation in the workforce.) The peak participation rates were in 1986 and 1987 at 78.9%.
These students are basically unemployed, and a chart including them would get us closer to the real unemployment rate. To do this, I added the unemployment rate and the difference between each year’s participation rate and the 1986-1987 peak rate:
Now we can see a dramatic difference between today’s adjusted unemployment rate and the past 40 years. The current recession’s adjusted unemployment is a full five percentage points higher than the second highest peak in 1975. While many would like to compare this youth labor market to their personal experiences, today’s situation is significantly worse. This year’s college graduates will pray nightly that their labor market begins to resemble 1982 or 1975 by the graduation ceremony.
Graduates in 1982 and 1975 received a taste of modern-day unemployment. But kids today face a youth labor market closer resembling Grandma and Grandpa’s depression experience than Mom and Dad’s downturns.
There could be a ray of hope in all of this. After all, the Great Depression permanently changed the people who experienced it. My own grandparents still maintain thrifty habits such as saving every penny and growing their own vegetables. They really don’t need to do this anymore, but their psyche has been forever altered by hardship. Perhaps a few years of struggle could invoke a similar shift in the American youth away from the constant cycle of overspending.
So far, the future doesn’t look good. The younger generation fell head over heels for Obama in 2008. But how will they vote in 2012 after years of unemployment? If they once again choose him, even worse times are ahead. However, there is a real chance that this could be a turnaround generation. Right now, it’s hard to gauge the feeling of the whole age group – only a general anger seems to unify it. Anger at government, anger at capitalism, anger at anything. This angst properly directed could be a positive vehicle for change – though it may be a destructive force as well.