"The Lost Generation": Goldman Unemployment Charts Explain Just How Spoiled Millennials Are

This morning, Goldman's Econ team, led by Jan Hatzius, set out to identify why wage growth has been elusive despite the fact that unemployment rates and other labor utilization measures signal an economy at full employment.  For evidence of labor market 'slack' they decided to take a look at how recessionary college graduates handled the post-recession labor market as their lack of skills often make them the most vulnerable to a weak job market.

While the unemployment rate and other labor utilization measures signal an economy at full employment, wage growth has been weaker than expected recently, raising questions about the true degree of slack. To the extent that some pockets of excess slack remain, the cohort that came of age during the Great Recession would seem a natural place to ?nd it, given the pronounced and long-lasting effects of recessions on young workers.


In today’s daily, we review the labor market experience of the cohort graduating college or beginning careers during or immediately after the recession. Unsurprisingly, unemployment rose sharply in this segment from 2007 and 2010. However, since then, jobless rates have improved dramatically on both an absolute and relative basis – particularly over the last year – and the unemployment rate in this cohort is now under the national average. Relative wages have also partially recovered, and broader measures of utilization suggest that minimal excess slack remains in this cohort.

While not terribly surprising, they found that the young folks who graduated in the immediate aftermath of the 'Great Recession' suffered relatively steep wage degradation relative to the overall population. 

Average earnings trends in the household survey show a similar pattern of underperformance and subsequent recovery. As shown in Exhibit 3, usual weekly earnings in this cohort declined by 6% relative to the population during and after the recession (on an age-adjusted basis). However, despite a partial recovery, the earnings gap remains: relative wages on this basis have only retraced a third of the post-recession decline (qualitatively consistent with the predictions of the academic literature).


But what is surprising is why those wages haven't recovered meaningfully despite the fact that unemployment rates among the same cohort have fallen precipitously.  


And while Goldman didn't point this out, perhaps there are some interesting, if overlooked, clues in the following two charts that lend some insight into the behaviors and attitudes of the current millennial generation as compared to previous generations that came of age during previous recessionary periods.


The chart on the left is particularly telling if you just compare the 1981 recession to 2008.  In the immediate aftermath of the recession, the unemployment gap for young people declined in both instances for the first 4 quarters of the recession. 

That said, the experience beyond Q4 is quite different as the 1981 cohort experienced a massive surge in employment while millennials in 2008 simply continued to decline and only bounced slightly off the lows.  Now, one could say this is an unfair comparison because the 2008 recession was deeper and more protracted than the 1981 recession. But, what we find most intriguing is that the 1981 cohort saw a massive surge in employment despite suffering the greatest wage decline of any of the recessionary periods for the past 35 years, and nearly double the experience of the 2008 recession.

Translation, when recession struck in 1981, Baby Boomers and Generation X got off their asses and took any job at any wage they could find to make ends meet.  But, when recession struck in 2008, millennials simply moved in with mom as opposed to taking a job that didn't fully reward their extensive skillset garnered from 4 years of rigorous anthropology studies at a preppy New England liberal arts college.


VZ58 Son of Loki Fri, 07/28/2017 - 02:18 Permalink

No, those courses are now prerequisities imposed by universiy administrations needing to maintain a steady fodder of virgins for the SJW courses taught by middling professors that populate academia in the social sciences. Only those heading for carriers at the Huff Post, CNN or Google, Yahoo, FB etc. take these couraes voluntarliy.

In reply to by Son of Loki

johngaltfla VZ58 Fri, 07/28/2017 - 04:56 Permalink

Weird. The courses I was "forced" to take were English Lit, Classical Music, and Western Lit. I guess teaching the historical origins of the West is now forbidden as after all, the source of all of the world's problems is that evil white man which emigrated from Europe and killed all them thar natives worldwide as they colonized the planet.

In reply to by VZ58

DollarMenu johngaltfla Thu, 07/27/2017 - 21:41 Permalink

So, if you search ZH for "phony unemployment statistics", you will find many threads about how the real unemployment rate is multiples of the gov't rate.How do those observations square with the oness given in this article?Could it be possible that there are just no jobs besides coffee and burgers?The engineering and tech job providers are screaming for more H1B visas, so they don't have to pay real wages; something also discussed here..What is the real story here?Is this just click-bait for kid haters?

In reply to by johngaltfla

Ms. Erable DollarMenu Thu, 07/27/2017 - 23:12 Permalink

I'm too busy laughing at the economy at full employment line to read the article.There are currently some 94mm persons employed in the private sector, 21mm .gov workers of all stripes, and 102mm working-age 'Mercans without jobs. That's roughly 40% unemployment - not to mention that less than 94mm people (the fraction that doesn't work for an organization with some form of .gov contract, grant, or incentives) are working to support some 226mm+ people.Fuck global warming - this is your unsustainability right here.

In reply to by DollarMenu

boopetyboopclick DollarMenu Thu, 07/27/2017 - 23:30 Permalink

I also do think it is click-bait for kid haters.  I'd propose a more credible conclusion is that the 1981 recession was different from the 2008 recession because:

  1. 1980s had better demographic trends to support wage recovery, i.e. boomers coming of age, buying houses, etc.
  2. The 1980s were an era of pre -globailization, -financialization and -gini coefficient distortion  (to an extent, of course)
  3. 1980s didn't have the same DM wage pressure on compeition for high-skill jobs from EM labor, as you mention on the H1b issue

It's intresting to see how research on this site gets politized these days.  An insightful analysis until the conclusion / headline were added:

Translation, when recession struck in 1981, Baby Boomers and Generation X got off their asses and took any job at any wage they could find to make ends meet.  But, when recession struck in 2008, millennials simply moved in with mom as opposed to taking a job that didn't fully reward their extensive skillset garnered from 4 years of rigorous anthropology studies at a preppy New England liberal arts college. 

(Full disclosure, I come from the 2008 recession cohort)

In reply to by DollarMenu

random999 boopetyboopclick Fri, 07/28/2017 - 02:19 Permalink

what is the point of working?? seriously?I have hardly worked for someone else in my entire life (mid 80s). I made more money the past 5 years owning an apartment than i would have from working. I have worked some but I hardly got anything for it.If i wanted to work half of my salary would be going to a gov i dont support as taxes. tons of it to rapefugees who get 80% of their salary paid with my tax money if they want to compete with me and help dumping my salary. Then again i dont have a bachelor degree or lots of experience in engineering which seems to be a basic requirement for all interesting jobs. I cant study it because i didnt get top highschool grades. but i still get to pay for others who do qualify.next step, buying something? a house? att current prices id have to be a slave rest of my life to pay it off. nah this country isnt for me. I can buy a house in cash somewhere else and i got resources left for both education and starting a buisness. fuck off europe, enjoy your new population. 

In reply to by boopetyboopclick

VZ58 boopetyboopclick Fri, 07/28/2017 - 02:29 Permalink

Give me a break. No previous generation has had so much going for it, yet most are wasting their lives. I get it, it's tough facing the reality that your generation is filled with cry babies and losers all around you, that are propped up by mom and dad. However if you accept the truth, you will win, since anyone with half a brain from this current generation could really go places if they show initiative. And therein lies the problem. Guess, what? I'm from the 1981 cohort and I'm the guy who decides if you get hired or not.

In reply to by boopetyboopclick

Jubal Early (not verified) boopetyboopclick Fri, 07/28/2017 - 05:37 Permalink

Well you have to admit that there could be some truth in that statement, that Millenials are perhaps a little less motivated, a little more distracted, and perhaps a little less fit for employment?I graduated with a BS in Math and Business in '81 and there were practically no jobs to be had.  Unemployment was over 10% and interest rates were at 17%!  I finally found meaningfull employment in '83.  Computer games were just getting started and there was NO INTERNET PORNOGRAPHY.  Millenials minds have been warped, its part of a very large plan.

In reply to by boopetyboopclick

sheikurbootie D Nyle Thu, 07/27/2017 - 20:45 Permalink

The parents are mostly boomers and they're going broke from the mooching millennial kids.   I have several friends with mooching millennials kids with degrees or multiple degrees.   They'll never grow up until you cut the cord.  I know it's tougher for the parents, but you have to do it.

In reply to by D Nyle

Shadow1275 Thu, 07/27/2017 - 20:17 Permalink

All aboard the Millennial hate wagon I guess..... again Pay no attention to the FED, Leftist Politicians, Feminism, etc. Hell I wish I was the one in the driver's seat. The Baby Boomers are currently driving us right over the Cliff

Crypto Kevin (not verified) Moving and Grooving Thu, 07/27/2017 - 20:58 Permalink

It's their bullshit, hippy, socialist ideas that fucked this country up back in the 60's. Then it was the boomer yuppies that led to the debt fueled materialism of the 80's. The boomers will go down as the worst generation in the history of the US. They were handed the wealthiest most economical advantaged country the world has ever known and drove it into the ground on their watch.

In reply to by Moving and Grooving

silverer Shadow1275 Thu, 07/27/2017 - 20:25 Permalink

Marxist educators have succeeded beyond their wildest dreams when you look at millennials. Admire them, complement them, adore them and celebrate them. For they are the perfected Marxist future the government and teachers designed them to be. Parents, you didn't fail at all. You served your government well (instead of the government serving you), by opting out of being connected parents while chasing your own desires and goals, putting your kids last. Not all parents did that, of course, but way too many went down that road. Congratulations.

In reply to by Shadow1275

lasvegaspersona Shadow1275 Thu, 07/27/2017 - 21:06 Permalink

Boomers will be the most screwed generation in history. The loss of pensions will be shocking. They will move in with their kids who might get a McDonalds job.It has always been the reitrees who get hit the hardest.All the BS about Boomer wealth depends upon a strong economy...which we do not have. Their 401ks will go to zip and Social Security will lose purchasing power...all unless the Fed really can do magic.

In reply to by Shadow1275

oldguyonBMXbike (not verified) Thu, 07/27/2017 - 20:36 Permalink

They're not spoiled.  They're utterly lazy and incompetent and have no grasp of reality or any confidence in themselves or their abilities (which are typically NONE).  Hell, they said most kids these days can't even read an analog clock.  Gen X was the LAST real generation.   With the sperm count cut in half of the Western Male, we're looking at a real Children of Men situation. Please don't blame the ignorant slaves. Blame the Jews.Again, fuck the Jew that down-voted me!

Falling Down oldguyonBMXbike (not verified) Thu, 07/27/2017 - 20:59 Permalink

Amen.I've had the displeasure of having worked around millenials in a factory environment, in recent years. Small business, 2nd shift, and they outnumbered the Gen X (me and one other guy) group and the two great Boomers I worked with, 2:1.  Even in such a small group, they were pulling "Children of the Corn" bullshit about every shift. They'd constantly fuck around on their phones, we even had one who was a wanna be cop trying to get into local LE, who would watch movies all night on his phone with his ear buds in.This country will get its clocked cleaned, economically, when these clowns actually start getting serious about work, 'cause they'll be forced to

In reply to by oldguyonBMXbike (not verified)

Spike the Railroader oldguyonBMXbike (not verified) Sat, 07/29/2017 - 12:11 Permalink

So many people have no idea what or who the crypto jews /sabotean jews are and have been.  They are Babylon /Talmudic black magicians originated from some time during anciant Atlantis when the Lucifer Project was in full swing. They are Satanic blood drinking vampires.https://www.youtube.com/playlist?list=PLTQSTGefsTgxb9m_TjWCcHB_IGsCPA638

In reply to by oldguyonBMXbike (not verified)

Moving and Grooving Thu, 07/27/2017 - 20:19 Permalink

They don't whine and bitch about employment any more than any other 'cohort', in my observation. This has been a slog, with little wage growth forever, it seems. But there are jobs unfilled all over the place.