There are long-lasting, durable consequences of entering the world of work in bad economic times. For young people joining the labor force in the midst of the Great Recession, short-term well-being may not be the only thing at stake. Their lives will likely be scarred in important, negative ways for years to come.
We know that those who enter the labor market in times of economic decline are seriously affected. For example, economists have studied what happened to the cohort who tried to find a toehold in the market of the early 1980s, the last time unemployment exceeded 10 percent. Analyzing a rich longitudinal data set, Lisa Kahn at the Yale School of Management recently examined the outcomes for white male college graduates who entered the labor market before, during and after the recession of the early 1980s. She finds that even fifteen years afterward, the workers who had entered the labor market during the recession continued to face significantly lower wages.
Scarring is produced by biographies that are deemed deviant or suspect: long periods of unemployment, jobs with fewer responsibilities than one’s education should lead to and the like. We should all remember how hard it is to find work right now and cut future applicants some slack. Sadly, that is not what happens in the real world. Employers have choices in all but the tightest of labor markets, and they don’t willingly select people who look like oddballs, no matter who was (or was not) at fault.
The Great Recession is reminding us of how unequal the distribution of damage can be. While virtually everyone other than the top 1 percent is suffering in some fashion, the depth of the fallout varies a great deal by race, education and gender.
African-Americans have been hit hardest by unemployment, with the current jobless rate, 15.5 percent, nearly double that of whites and running almost six points north of the total unemployment rate. These figures are affected by many trends, including racial preferences in the labor market, but one of the key reasons for the disparity lies in educational attainment. Low-skilled workers, defined by high school qualifications or less, are disproportionately members of minority groups, and collectively they have been hammered in this labor market.
In the Great Recession, men have suffered more than women in the employment sweepstakes, leading some to deem this downturn the "mancession." The gender disparity is not unprecedented; during the 1930s, women had an easier time finding and keeping jobs than the men in their families because they were cheaper to employ and the occupations they typically filled did not feel the impact of the Depression in the same way that men’s jobs did. Construction, steel, heavy manufacturing—those were industries that men flocked to, and they were all but destroyed in the early 1930s. We are seeing a similar pattern of male disadvantage emerge now, exacerbated by the relative success of women in higher education, which is translating into some degree of protection in this storm that men are increasingly going without.