2016 NewYorksMillennialsinRecessionan
- (NYC Comptroller, 2016) ⇒ Office of the Comptroller City of New York. (2016). “New Yorks Millennials in Recession and Recovery." City of New York, Office of the Comptroller.
Subject Headings: U.S. Millennials.
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Abstract
Millennials, defined as those born between 1985 and 1996, entered the workforce during the greatest economic downturn in almost a century, and faced enormous financial setbacks as a result, according to a new analysis released today by New York City Comptroller Scott M. Stringer. This group is even larger than the Baby Boomers, but Millennials have taken a back seat in our City's economy, earning about 20 percent less than the generation before them. As Millennials advance in their careers, they may never catch up after starting off with this disadvantage.
Executive Summary
From 2007 to 2009, the nation suffered the worst recession since the Great Depression. During the same period, children of the baby boomer generation – a large population cohort known as the millennials – began their working lives. Not since their grandparents or great-grandparents generation have young people entered adulthood during such adverse labor conditions. The lingering impacts of the recession on this large group of young workers – and the national and local policies adopted to address their unique challenges – will reverberate through the national economy for decades to come.
In New York City the need to understand and address the plight of millennials is even greater. The City has always been a magnet for young people, and this trend has accelerated since the recession. Today the city is home to 1.6 million millennials, nearly one-fifth of the city’s population. Their future economic well-being is critically important to New York’s long-term ability to thrive.
This report examines how entering adulthood during and after the 2007-2009 Great Recession impacted the earnings and life choices of millennials in New York City. Data from the U.S. Census Bureau and Department of Labor were used to establish trends in employment, wages and other economic factors for young people before, during and after the recession in New York City and nationwide.
Defined in this report as people born between 1985 and 1996, New York City millennials experienced many of the same challenges as their national counterparts – escalating educational requirements for entry-level jobs, soaring higher education costs, and a proliferation of low-wage jobs. In New York City, the challenges faced by the millennials have in some ways been even greater, as housing cost inflation has made the transition to adult independence more arduous. Nonetheless, in some key ways the millennial experience has been more positive in New York City than the rest of the nation.
An analysis of millennials in New York City finds the generation that came of age as the nation began to shed nearly 9 million jobs faces the following obstacles to a bright economic future: higher unemployment, lower real wages, more low-wage jobs, and increased under-employment.
- NYC young worker unemployment spiked during recession but has since declined.
In the immediate aftermath of the 2007-2009 Great Recession, the unemployment rate among the city’s 18- to 29-year old labor force soared to over 18 percent, more than doubling in the space of one year. At its peak in the city, the young worker unemployment rate was 8 percentage points above the overall city rate.
From 2009 through 2015 total employment of 18- to 29-year olds in New York City increased faster than in the rest of the nation but not fast enough to keep pace with the growth of young workers. Thus, the city unemployment rate among young workers has not yet returned to its prerecession level.
One positive employment trend for the millennial generation is disparities along racial lines appear to be improving. By 2014 the unemployment rate for young Blacks and Hispanics in New York City reached their lowest levels in a decade, falling to 11 percent and 9 percent. While racial disparities have decreased since the beginning of the Great Recession, the young Black and Hispanic unemployment rates still far exceed the current rate for young Whites (5 percent) and Asians (7 percent).
- Millennials are earning lower real wages than the previous generation.
Although the unemployment rate among young people has declined since the recession, their earnings have continued to lag. Compared to their counterparts in the previous generation, employed millennials in New York City in 2014 earned about 20 percent less in real terms. For example, the average real wage incomes of employed 29-year olds decreased from about $56,000 in 2000 to $50,300 in 2014. Although millennials entered the labor market at various stages of the recession and the recovery, the decline in average real earnings held for every age between 18 and 29, suggesting a fundamental deterioration of the earnings opportunities available to young workers in New York City. Given the lower earnings of millennials today will influence what they earn later in life and the types of opportunities they can access, this trend is particularly concerning.
The erosion in the earnings of young workers in the city is due to a disproportionate increase in the number of jobs in low-wage industries and to a significant decline in the wages paid to them in many industries. Arts and entertainment has been the fastest-growing sector of employment for young people in New York City, but the real wages of young workers in the sector fell nearly 26 percent between 2000 and 2014. Hospitality and food service and retail trade were the second - and third-fastest growing sectors of employment, but real wages in both of those sectors fell by about 16 percent. Conversely, the real wages of young people in the finance sector rose 14 percent between 2000 and 2014, but the number of young people in that sector fell by almost 11, 000. With such a dramatic decline in real earnings, it is small comfort that wages in the city have actually slumpedfor young people in the rest of the country. Additionally, as many millennials are still struggling, others have fared well in the New York City labor market. While financial and law firms are not hiring as many young people as they did 15 years ago, there were over 100,000 millennials employed in those sectors in 2014, and the city was home to over 12 percent of all millennials in the country earning $100,000 or more. NYC millennials are well-educated but under-employed.
The millennial generation is the most educated group of young workers in the city’s history. The share of young people ages 23 to 29 with at least some college education has increased from 61 percent in 2000 to 72 percent in 2014. The city is also increasingly a magnet for the well-educated; fully four-fifths of 23 - to 29-year olds residing in the city but born outside New York State had a bachelor’s degree or higher.
Due to a greater number of young people earning a college degree and the increasing educational demands for entry-level jobs, the linkage between higher education and employment has weakened. Many millennials are working in jobs below their level of educational attainment, leading the share of young workers in low-wage industries who had at least some college education to grow from 52 percent in 2000 to 63 percent in 2014. About one-third of young New York City workers in low-wage industries have a bachelor’s degree.
Despite these economic challenges, New York City’s millennials have adjusted in many sensible, and even admirable, ways, including more housing independence, less “idleness, ” and lower incarceration rates.
- More NYC millennials are living independently.
Contrary to national trends, more New York City millennials are living independently and a smaller share is living with their parents. Continuing a trend that was in motion even prior to the recession, by 2014 only 45 percent of young Americans lived independently (not with their parents, other relatives, or in college housing), compared to 51 percent in 2007. In New York City, where young people have always tended to stay in their parents’ homes longer, different adjustments have been made. Since 2007 the number of the city’s young people living independently has actually risen from 39 percent to 41 percent.
- Fewer NYC millennials are disengaged from the workforce and school, and incarceration rates have fallen.
Although the millennial population is greater than previous young generations, 15,000 fewer young people in 2014 were disengaged from the labor force or from formal education, known as “idleness, ” compared to fourteen years earlier. Crime rates, historically highest among young people, have continued to fall and so has the incarceration rate among the city’s youth, from an estimated 2.1 percent in 2008 to an estimated 1.3 percent in 2015. Childbirths to 18 - and 19-year old mothers in the city plunged 31 percent from 2007 to 2013, and birthrates among women in their young twenties have also declined.
Many of the challenges faced by young people in the city are beyond the means of local government to resolve. The macroeconomic environment will largely determine the lifetime career opportunities and earnings growth available to young workers, but whether the nation chooses macroeconomic policies favorable to the millennial generation or favorable to vested interests will be determined in the national political arena.
Nevertheless, maintenance of a healthy business climate in the state and city is fundamentally important for promoting career opportunities for young people, while maintaining a city that is hospitable to young people is, in turn, a critical ingredient of a healthy business climate. State and city policies could ameliorate some of the most distinctive problems faced by the millennial generation. In particular, young people would benefit disproportionately from policies aimed at raising minimum wages and paying workers fairly for overtime hours, from policies aimed at keeping public universities affordable and reducing the burdens of student debt, from programs aimed at creating more affordable housing and encouraging new housing models, from more effective workforce training programs and more summer employment opportunities, and from new approaches to criminal justice and rehabilitation.
1. Introduction
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| Author | volume | Date Value | title | type | journal | titleUrl | doi | note | year | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2016 NewYorksMillennialsinRecessionan | Office of the Comptroller City of New York | New Yorks Millennials in Recession and Recovery |