(09-09-2020, 05:24 PM)sbarrera Wrote: [ -> ]This article from Neil Howe's demography unplugged is relevant:
https://app.hedgeye.com/insights/88810-m...t-insights
09/09/20 11:07 AM EDT
Millennials Hit By Back-To-Back Recessions
Neil Howe
@howegeneration
Below is a [i][i]complimentary[/i] [/i]Demography Unplugged research note written by Hedgeye Demography analyst Neil Howe. [b]Click here [/b]to learn more and subscribe.
Millennials hit by a second financial crisis may never have a chance to accumulate the wealth of older generations. Already a step behind thanks to the Great Recession and now hit the hardest by COVID-19’s economic fallout, young people are at risk of permanently falling behind. (The Wall Street Journal)
NH: History may end up defining Millennials as a generation bracketed by massive back-to-back economic hits: the Great Financial Crisis (2008-09) and the Pandemic Recession (2020-?).
The first hit first-wave Millennials in their early to mid-20s, and the second is hitting last-wave Millennials at roughly the same age.
WSJ reporter Janet Adamy summarizes some of the economic evidence suggesting that high employment and scarce job openings for young workers have a negative impact on future life prospects that lasts long after--sometimes decades after--the crisis itself has passed.
Since we've covered this topic often, I will simply refer here to NewsWire items we have already written. On the long-term impact of economic downturns on future employment rates and earnings, by age and birth cohort, see "The Bad Luck Class of 2020."
On how Millennials may be affected financially--in their future net worth and in their acquisition of wealth and housing--see "Millennials Face Net Worth Shortfall," "Early-Wave Millennials: Educated, Employed, But in Woeful Financial Shape," and "Tiny House Nation: The Millennial Share of U.S. Real Estate Wealth." The last three pieces BTW were written before the 2020 lockdown hit.
Adamy quotes me in the article for pointing out the obvious parallels between the Millennials and the G.I. Generation (born 1901-24). They have had a similar location in history. The first wave of G.I.s were hit by the Spanish Influenza of 1918-19 and the twin recessions of 1918-19 and 1920-21. And later on, of course, both the first and last wave of the G.I.s were hit by the Great Depression.
As young adults, the G.I.s fell way behind earlier generations in employment, income, and net worth. But later on they were able to make up the loss--and more--with the help of a major "New Deal" political and social transformation that they helped usher in as voters, workers, and soldiers.
Economists often refer to the long-lasting and path-dependent impact of an economic crisis on future employment and earnings as "hysteresis." The word has an interesting (and sexist) origin: In ancient Greek, the word for womb or (in Latin) uterus was "hysteria," and it is a synonym for lack or absence. The only recognizable English cognate is hysterectomy.
Anyway, what social scientists are aiming at is the idea that a "lack" of some critical life experience has enduring consequences.
Another often-used word for this is "scarring." For a generation, as for an individual, a bad wound does not heal without changing people in lasting ways. Perhaps the first use of the word in this sense appeared in the title of Caroline Bird's book: The Invisible Scar: The Great Depression, and what it did to American life, from then until now. Her account, written in 1965 when everyone over age 30 recalled the trauma, is wonderfully generational. She explained how the collective personality of America's emerging generation of midlife leaders at that time, beginning with Jack Kennedy and LBJ, had been shaped young by economic scarcity and adversity. And already she foresaw how it was destined to clash with a younger generation, accustomed to affluence, born after World War II.
The opening of her book is worth quoting here at some length:
"It is a curious fact that the Great Depression is in danger of disappearing altogether from the collective consciousness. Already it seems unreal, even to those who lived through it. Did those things really happen? We pinch ourselves. Wasn't it a bad dream?"
"In spite of this tendency, the Great Depression was real, it was awful, and more to the point, it packed a bigger wallop than anything else that happened to America between the Civil War and the Atom Bomb. It had more far-reaching consequences, I happen to think, than either of the World Wars. Nobody escaped. Every individual in every walk of life was hit. What is overlooked and frequently forgotten is this: when the stock market crashed in October 1929, America stopped growing and did not really get moving again until the attack on Pearl Harbor in December 1941 mobilized our resources."
Small-scale economic downturns show up as life cycle blips that can be linked by economists to specific birth cohorts. Large-scale economic downturns shape entire generations in a manner which can subsequently move the entire society in a new direction.
1. The high-school Class of 2020 is probably not Millennial. The 9/11 attack may have created a very early divide between Millennial and Homelander youth. The disruptions of 2020 of many rites of passage (from First Communions to Bar Mitzvahs and quinceaneras, sports seasons from Pop Warner football and Little League baseball to high-school championship seasons to senior proms and formal graduations and first days of college) is a far bigger shock; I see the latter interruption of rites of passage certain to divide Homelander from GI generations. Rites of passage commonly define people.
2. People who knew the GI's only after World War II may think that in contrast to themselves that GI's had it good. If they did have things good after WWII it is because they made America a much better place than it was when they were children (if late wave) or approaching midlife (if early wave). Although GI's got far better protection and guidance from parents than did the Lost, GI life was hardscrabble for all but the elites and the tiny middle class. A large middle class is largely a GI self-creation. If others 'gave' them better educational opportunities during the Depression, then that was to keep children out of the workforce so that they would not compete with (then largely Lost "breadwinners". If they got the GI Bill, they certainly earned it for ensuring that an American who learns German or Japanese does so for some reason other than being able to obey some brutal boss or turn a trick as a prostitute (for lack of better ways of making a living) for a member of the local Master Race as determined by the administrative division between those who treat Hitler as a god and those who see the Emperor of Japan as a descendant of a god.
3. Neoliberalism, a clever way of dressing up exploitative plutocracy as if the only way to do things, has been the norm in America since Ronald Reagan. It will be the Millennial generation that takes it down, whether transforming America into a social-market state or into some revolutionary consequence (which could be an all-American revision of Marxism)... or nobody until at least the next Crisis Era. Should neoliberalism prevail, then Americans will endure the unprecedented situation of being exploited by every classic and novel elite (big rural landowners, tycoons, financiers, urban landlords, corporate and private-sector bureaucrats, religious hucksters, and organized crime) who ensure grinding poverty for all but themselves. Even the French before 1789 didn;t have so many rapacious exploiters as we Americans now know.
It is possible that Millennial adults who, following the pattern of other Civic generations, will insist upon an indulgent upbringing for their kids, and such is incompatible with grinding poverty. We do not yet see a new Idealist generation forming... yet. Once this Crisis Era comes to an end, children who will not know the Crisis will know a far safer and (for them) a more prosperous world -- unless neoliberalism becomes an indelible practice along with several Master Classes exploiting all wealth not needed for animal-like survival for the proles and their children. That would stall the generational cycle while perhaps not having the same effect elsewhere... Around 2100, the fecal matter will hit the fast-spinning rotor blades as AGW starts inundating heavily-populated prime farmland around the world if it does not desiccate much of it.
4. The demise of neoliberalism (should such happen, and that will require a huge change in American political life) will undo the extreme inequality in America. High taxes on large "unearned" income will create niches for small businesses -- especially if the Pandemic Recession forces "Too Big to Save" this time instead of "Too Big to Fail" as last time. If Corporate America did not clean up its act when Obama rescued it, then maybe we will have to start over from scratch in heavy industry, chemicals, vehicles, banking, and retail. Those industries came into being far more swiftly. High-cost ways of doing things will die due to a lack of consumer funds for buying their stuff. The new firms will be small businesses at the outset, firms that might operate small-scale stores once highly profitable for (and here I am naming a name) JC Penney. I remember buying lots of stuff from JC Penney in towns of 10,000 or so when the store was largely clothing stores with a catalog shop for hard lines... and preferring such a shop to the shopping-mall store. Those stores were profitable, and JC Penney chose to commit to its high-cost mall anchors* by preventing their smaller stores from 'cannibalizing' the sales in those mall anchors.
5. Depressions have a way of clearing out bad business practices such as overgrown bureaucracies (bureaucracies are good for control of bloated entities, but depressions may make the bloat unsustainable), businesses buying the political system (the difference between FDR and Obama), lack of concern for cost (captive customers will pay for a lack of alternatives), promotion of glamour that people cannot afford, and irrational choices in shopping. The 1930's may not have seemed the ideal time for starting new businesses from the standpoint of having customers flush with cash, but costs were low and so were owners' expectations. Start-up businesses have owners who can relate to the proletariat because the owners are close to being the proletariat; those businesses must create a customer base without lavish budgets for advertising. They can't buy the political process as can the bloated giants of our time through campaign contributions and lobbyists. Starting a small business is not easy, especially in a time of low yields and rewards mostly in the long term. At some point, low-yield and long term are better than no yield and never. Real estate is cheap, supplies and raw materials are available at fire-sale prices without the smell of smoke; good workers with solid work ethics are easy to find and inexpensive, and any employee has an incentive to get relatives to be a customer to help that employee keep a job.
Depressions and severe recessions are times of rapid growth, probably because of small-business formation and cost-containment in extant firms.
6. Surprisingly, despite their prosperity, Highs are times of slight activity in business formation. It may not be the promise of profits in the long term that induce the formation of small businesses but instead the absence of alternatives. Adaptive generations in the working class had well-paid (by the standard of the time) work in the manufacturing industry and transportation with the aid of union contracts. Well-educated Adaptive young adults may form businesses, but most of those are professional practices which quickly reach saturation and don;t really create many jobs once established. I look at the the Silent Generation and see relatively few founders of new businesses that grew into large-scale employers or as generators of wealth: Frank Thomas and Mike Illich (fast food), T. Boone Pickens (oil wildcatting), Ross Perot (government contracting), Michael Milken and Roger Icahn (somewhat-shady stock investment), Warren Buffett (venture capital, I suppose). There was Don Dixon (banking and real estate, but that proved a fraud). They may have been competent programmers, engineers, physicians, teachers, scientists, administrators, engineers, and creative people, but they generally did not form small businesses with growth potential. They created wealth but did not do enterprise enough. The entrepreneurial void associated with the Silent Generation would contribute to the faltering of the American economy in the 1970's and the "Little Depression " circa 2010.
7. Above all, we are approaching the end of an age in which more production of stuff has such a low return is unlikely to make people happier. This may force more attention to the distribution of the economic output than to making more stuff that people do not want because added stuff is clutter. .
*In the retail industry "anchors" are big department stores typically at the ends of those malls, at one time typically Sears (dying), JC Penney (probably moribund), Montgomery-Ward (deceased), Bon Ton (deceased), Mervyn's (deceased), Marshall-Field's (merged into Macy's), Dillard's and such regional chains as Bullock's, Capwell's, Jacobson's, J L Hudson, L S Ayres, Goldwater's, Foley's, etc. ... many of those 'anchors' have taken the leaky ship of the shopping mall down with them.