Surveillance Special: Generation Interrupted

sixty and it's been up almost double that. Plus the pitfalls and setbacks tied to learning and starting a new job in a virtual world, entering the workforce, entering an organization, getting to know people, and doing that virtually. It creates challenges for younger people. It's the kids trying to struggle through zoom school. We're not paying enough attention to the harm that is happening among those kids, and also how young workers can respond and pivot to adapt to the

pandemic technology. Those skills are very much in demand. Healthcare obviously, human services, financial services actors because they support the stay at home economy. From navigating the stay at home economy to overcoming setbacks from virtual learning and weathering a job market forever changed by the pandemic. It all lies ahead

for a generation interrupted. The coronavirus pandemic and ensuing recession has had an outsized impact on Generation Z. Young people have had their education disrupted, their career plans upended, their financial prospects diminished. Any recession is going to hate young workers hard, but this one comes with unique challenges. Betsy Stephenson is former chief economist for the U S Department of Labor and current economics professor at the University of Michigan.

Whenever we have a recession, the kids who are graduating from high school or college right around that time do face really significant labor market pains that can last a decade. Usually there's a traditional path for graduates fresh out of college, one that sets them on a path to the financial stability needed to start a family in the years that follow well, no demographic group has been untouched by this recession. The long term effects might be hitting college grads harder

than most. The people graduating from college into this pandemic. They're really getting hammered, and that's because they would normally think, I just spent all this money on a college degree, and I should go into, you know, an entry level job that's gonna let me climb up the career ladder and I should be earning a pretty good wage by the time I'm thirty, and that's exactly the path that

gets disrupted. You can see it in the types of jobs that are getting cut across the country, jobs the young workers either go to after graduation or rely on to help them pay for college. I spoke with Richmond Fed President Tom Barkin about the impact he's seeing in the labor market. This virus has gone directly at the personal contact jobs, their restaurants, their retailers, their amusement parks, and a jobs are disproportionately held by hourly people, by

part time people, and importantly by young folks. Can you give us a sense of how bad the jobless rate has gotten among young folks? The overall jobless rate has been up about five For people between sixty and twenty four, it's been up almost double that. The long term fallout from that jobless rate can have massive implications for Generation Z. Research from the Richmond Fed bears it out, pointing to a long term impact for workers in their early twenties.

Our research team says that most of life outcomes in terms of wealth, you know, the biggest driver is where you sit at age three, and so if we can't get folks into the workforce, into school, paying for school with their jobs in the workforce, by his tin, I think there's a real threat to what's going to happen at these folks throughout their career. When the pandemic hit, the US unemployment rate shot up more than ten percentage points In a single month, nearly fifteen percent of the

workforce was unemployed. But when you break it down a workers age sixteen to nineteen, the jobless rate sword to more than thirty percent. For twenty to twenty four year olds, it hit twenty five percent. Those are both all time highs for those age groups, and at the same time, new job postings across the country virtually disappeared. Cheryl Brooks runs career in professional development at the University of Massachusetts. In the spring, we saw a decline of new jobs posted.

About the biggest week was decrease, and that was the week of April. This spring, the labor force participation rate for people aged sixteen to twenty four dipped under fifty percent for the first time since the government started tracking the data eighty years ago. Jobs are disappearing that may never come back. Professor Stevenson says that's especially true of certain sectors. You know, leisure and hospitality employments down, so

they're not entry level jobs for them right there. So trying to build that those skills and really coming into entry level, minimum wage leisure and hospitality jobs. Um, you know that it's been a blood bath and it probably will be for a while. For those who have been lucky enough to land jobs, they've had to lower expectations. That means lower pay and worse prospects for long term career growth. Even those who do have jobs are often having to take jobs that are lower in terms of

their entry point than they would otherwise take. They're not getting the promotions that you usually get. And for young people, the way you climb up and build your career is you get a lot of movement in your twenties. You know, you change jobs, you get promotions, and that's also missing, and the data around that movement right now is very

telling and discouraging. Tourist In Slock is one of Wall Street's best known strategists, leading the economics team at Deutsche Bank for more than a decade before becoming Chief Economist and Apollo Global Management. He sees some troubling trends developing. Normally, people who are switching jobs. You see that wage growth in the data from the FIT shows that wage growth

normally goes up for people who are switching jobs. But this time around where you seeing wage growth go down, which probably is telling us that people are willing to take jobs at lower pay just to get into the labor market again. So that's also, from a very broad perspective,

not helping new gradgrets. That's not helping people who just finish their education very broadly, because there's not a lot of competition from people who've been in the labor market for five, ten, twenty years who are not willing to take jobs at a lower paying What matters now is how long the effects will last and how does it threaten to leave permanent scars on this generation. I pose the question to Tom Barkin, President of the Federal Reserve

Bank of Richmond. You know, folks that graduate college, for example, in a recession often started a different place than folks who graduate college in an upturn. That's just an obvious difference.

Instead of the longer of the recession last I think the more risk we do have of this kind of scarring what's the difficulty in younger workers getting jobs at a time when you do see recovery in the economy, but you have an unemployment rate generally that's so high, So you have more experienced, older workers applying for the same entry level jobs perhaps that previously might have gotten

taken up by younger workers. I think that is a risk, But I'd also say the risk is that, you know, normally, if you worked at a restaurant and your restaurant closed, you'd probably get a job at another restaurant, or maybe you go get a job at the gap. Today, you know, the retailers are closed, and the restaurants are closing, and a lot of other local small businesses are closing. So I just think the natural next jobs, you know, aren't

as available as that would have otherwise been. And so I think that's a little bit more of the challenge, And that's why I'm focused on topics like how do we bridge this mismatch between the people who really do need employees and the employees who really need jobs. So far, that mismatch has yet to be bridged, and the addition of older, more qualified workers makes the situation more challenging for young job seekers. It also makes them prime candidates

to be hit by layoffs. According to former Labor Department Chief economist Betsy Stevenson, I am quite worried about, you know, sort of that mid twenties person who's finally sort of made some progress. It's not that they're in an industry necessarily that got particularly hammered, but that they may be seen as one of the most expendable people on a team that needs to cut costs rapidly, and that it is going to hurt young people and it's gonna be

that's exactly what takes them a long time to recover from. Well, when you talk about previous recessions and how the youngest cohort usually is the hardest hit, how long do they have until the scarring for their not being and not entering back into the workforce becomes more permanent or more pernicious. In other words, this idea that it sets back their wages, it sets back their household formation and then spending, and it trickles out to slower growth for a longer period

of time. So what really matters is how long the recession last. Um, you know, as they said, the young people do tend there's a lot more churn among young people high unemployment rates, but then they get hired into jobs. But this it's the stagnation that they get even once they're employed, not getting raises, not getting promotions, not getting to climb the career ladder. And so if you have a long, prolonged recession with a long recovery, then it can take a very long time for them to get

back to where they otherwise would have been. You know, you're sort of asking how long before we get permanent scarring? Look, I think there's already some damage to young people that's going to take them a decade to reverse. So I think of that already as some permanent scarring. You know, Can I get worse? Absolutely, And the longer it goes on, the worst it will get. For the youngest workers, having a college degree is proving to be little action from cutbacks.

It's also offering no leg up in the search for a job. That's according to data from the online job site and recruitment company Indeed. Jed Colco is the firm's chief economist. The increase in unemployment um on young people has been almost as high for those with college degrees as those without. Now, for older workers. It's very different. For older workers, having a college degree has provided much

more protection some immunity if you like UM. In this recession, UM not so for younger people or even the younger college grads of seeing UH being increased in their unemployment rates. And it's not just college grads, it's also students currently attending college. Jobs they once used to help pay their way through school are drawing up. Not only is that making it harder to pay tuition, it's depriving them of

the opportunity to learn other skills. According to Tom Barkin, there are lots of opportunities for people to get into the workforce to learn this off skills about how to show up, how to work with a group of people, how to have a boss, how to deliver day to day. These are starting places for people in our economy. In addition, there are a lot of people who are in school

who use these jobs to help pay for school. And so whether it's you're getting started or you're just trying to fund your future, these first jobs really do matter. Do you see a destruction of them or a transformation of them right now away from service sectors into a different kind of job that fits more with the cyber

world that we're apparently living in. I still have hopes that we're going to be beyond this virus eventually, whether it be a treatment for a vaccine, But it's not hard to imagine a scenario where a lot of these jobs do go away, where people decide to automate personal contact, or many of the small businesses and restaurants that have been threatened or closed. And in that case, we've got a whole population that's going to need a new set

of entry level jobs. And I don't think this is as easy as putting everyone into technology or putting everyone into construction. I think there's been some self selection of the people in these jobs, and so we're gonna have to be thinking about what are the careers that are going to be the substitutes for the entry level retail

job or travel job, hospitality job. As entry level positions become scarce, more students are staying in school looking to get their m b A. Or j D. Graduate school applications are surging as students put off entering the workforce. Stanford's Graduate School of Business just had the largest incoming class in its history. At the same time, though, entrepreneurship from the school's graduates is taking a hit. I spoke with Stanford business tean Jonathan Levin. We normally have about

of our class that launches new ventures. We had some had some amazing companies come out of the Stanford Business School, including in recent years, and including with just this last class. Think maybe a little more anxiety about starting off on your own at a time when there's so much uncertainty in the world, And that's something again we'll know we'll

be looking at very closely this year. We do everything we can to support students who who both want to go into existing organizations but also want to start something and and take a little of a risk as they as they leave business school and well, business school applications surge, it's a different story for undergraduates. They're staying home. Enrollment at Harvard University is down nearly twenty from a year ago. There are also other disruptions that are harder to quantify

twenty or thirty years from now. What's the one factor we should have paid more attention to at this very moment. I posed that question to former Labor Department Chief economist Betsy Stevenson. So for me, that's not the kids trying to enter the labor market right now. It's the kids trying to struggle through zoom school. You know, I think that we're not paying enough attention to the harm that is happening among those kids. It's not just their education

that's being disrupted. Their hard skills. Are they going to be able to do as much math? Are they gonna be able to read as well? Are they gonna, you know, have the science knowledge and the technology knowledge to thrive in the workplace. They also need the sort of social emotional skills that get developed in you know, your standard

K through twelve classroom, but even your college classroom. A lot of growing up in college is about those connections you make with your classmates late at night, debating issues, trying to figure out how you're gonna see the world.

All these things are interrupted for young people, and I don't think that we're paying enough attention to what it's gonna take to make it up to those young people so that when they hit their twenties in their thirties, they're as good to go as previous generations were at

maximizing their potential. The economic fallout from the pandemic is already hitting low income family's hardest, and now the shift of virtual learning is doing the same, with high speed internet, laptops and other technology out of reach for the less fortunate. Cell Con is founder of the free online education platform

con Academy. Of the population that really doesn't have sufficient internet access, school districts have been doing a heroic job getting laptops out, The local telecom carriers have been doing a great job getting them that Internet access. But even then, we're seeing five ten percent of the population isn't engaged for whatever reason. They might be young kids, maybe their parents are essential workers. They don't have enough devices at home,

not sufficient bandwidth, we don't know. And so that five or ten percent, you can imagine they were always the kids. They are already the kids who are probably just proportionately not engaging in school. And now if they're not even being reached for six months one year, not only will they not learn over that time period, they're going to atrophy and they might just lose the structures of school, and the worst thing is it's going to be really

bad for their mental health. Distance learning right now, ironically, is most kids lifeline to community and socialization and friendships. The prospect of virtual college has many students to laying education, but that hasn't been the case at Howard University. Admissions at the historically black university are up despite the drawbacks of virtual learning. Howard President Dr. Wayne AI. Frederick says the college is doing its best to adapt, but concedes

there's no substitute for in person learning. We have a significant number of low income students, and the primary thing they get from coming here is the installing of confidence, and that happens from their interaction with one another, from the interaction with their faculty members, from the socialization that

takes space outside of the classroom. Eighty percent of what they learn, in my opinion, takes space outside of the classroom, and so that has been compromised, there's no doubt about that. And we've been trying to fill that space with virtual connections around that, so not just didactic instruction, but programming that would still give them that opportunity to express themselves and to grow and to learn, uh, you know, how

to interact with one another. A number of students have just decided to delay their start of college instead of doing it all online. Do you think that that's the right tack to take. You know, that's interesting because he had Howard, we actually had plans of being in a class of about two thousand students. We ended up with an incoming class off so what we saw was very different. Our enrollment is of UH sixtent, primarily because our retention.

It also went up as well. So what we've seen is Howard students at least have made a decision that they want to pursue higher education in this downtime, um, even if it's in this environment, so that they keep moving along and they don't you know, kind of drop out for a year and have to catch back up.

Until it's been very different, and I think some of it again may have to do with having so many students coming from circumstances where they don't necessarily have their finances and also probably looking at what else am I going to do in the pandemic. It's not like if you take a year, oh if you can go, you know, travel to you up or do something else like that right now, and I think so quite a few of us and has decided to stay with us. The virtual

environment isn't just impacting the college experience. It's also a challenge for new employees. A virtual workplace offers none of the networking opportunities or water cooler talk that new workers used to form relationships with fellow employees or to get face time with their bosses. Stanford Business Dean Jonathan Levin is seeing this challenge show up with a lot of

graduates because we've shifted to online work. Keeping things going is easier than starting new things and onboarding people, bringing them into an organization, getting them up to speed, and so I think that's that's something that all organizations are working on. And any student who's now entering jobs has to go through the process of entering the workforce, entering organization, getting to know people, and doing that that virtually and you know, all in a relatively short amount of time.

Studies show generations that come of age during a downturn have lower long term earnings power. It has the potential to impact them and the economy for decades, and the courage shift to a stay at home economy is complicating the matter. There are some sectors hiring right now, but not the ones young workers traditionally pursue. Jet Colco is chief economist for Indeed, the sectors where hiring has been very strong are goods related sectors, construction, driving, retail, warehouse jobs.

And these are sectors that are doing well because they support the stay at home economy, um, But they tend to hire fewer college grads, and they don't tend to be the sectors that young college grads look at first, and the sectors that are hiring right now for the most part, our jobs that pay less. We've seen much slower recovery in job postings in higher wage sectors, partly because those higher wage sectors are on the one hand, slower to laid people off, um, but also in terms

of uncertainty, UM, they're slower to hire. There's also concern that some traditional jobs, the ones hit hardest by the pandemic, could go away for good. Richmond FED President Tom Barkin has been looking at the prospect of some positions disappearing entirely. So I think a lot of these jobs that have been threatened, I think actually there's a way to reimagine them that won't keep every one of the job, but

actually may retain more than we've got right now. I know that you have kids who fit within this cohort. What would your recommendation be to someone of in this age group who is looking to retrain themselves some capacity. What skills are most in demand right now that could give them the best chance to say, you have an interest in affinity for technology, those skills are very much in demand, and certainly everything looks like that will continue

to be in demand. I'd also say skilled trades, working around the house, fixing cars, any of those, if you have that kind of affinity, that's another place that for sure we have needs now and I think we will in the future. And then the third place I point to his healthcare. Certainly this pandemic has pointed that out home health is a great example of a place that's likely to grow as nursing homes have challenged, so getting

into those fields. They're seeing similar trends at the University of Massachusetts, along with a pickup and recruitment for internships. Cheryl Brooks runs career in professional development at the school. We're seeing a big boost that in just the last couple of weeks in internships and co ops what we call field experience, which makes sense for when these positions they're looking at um for the spring actually spring co

op positions or summer. Uh so you know employers do realize that they need to continue to look at future hiring and to keep creating that pool of invidence for the pipeline for the future. But even so, some parts of the workforce may need to retrain in an effort to move across industries, and that's where the government could play a bigger role. According to former Labor Department Chief

economist Betsy Stevenson, we will have sexual real realignments. We will have some industries that don't come back, and we'll have other industries that grow. And you can't think, well, the companies that, you know, companies are going to provide this training. I think this is really about getting people to move across industries. And when we're trying to get people to switch their skills from one industry to another, that's when we need government training. That's not about you know,

individual company offering some training. That's really about governments offering training programs that help people align the skills that they have with the skills that employers are currently seeking in the labor market. And on that front, younger workers may have a leg up. The prospect of retraining is much more palpable to someone in their early twenties than it is to those who have built up a decade or two of experience. Stevenson says that Generation Z may also

have another advantage. They are the least likely not immune, but the least likely to develop the worst parts of COVID or to develop a very severe case. And I am seeing some young people actually being able to step into opportunities that are being needed by older people stepping out of the labor force. So if you want to find the one tiny silver lining, it's that, But I

wouldn't say that's a pretty small silver lining. Some also point to remote and virtual work as a possible advantage for young workers, since they're likely more tech savvy than their older counterparts, but according to Jed coleco Had, indeed the drawbacks for college grads far outweigh the benefits. Remote work can often be very productive for people who already have relationships too, already UM, know how their organizations work, UM,

and who already have strong professional networks. I think WOTE work is much harder for younger people who may be newly hired or don't have the same professional networks as people who are later in their career, so I think

they shift to remote work UM. While it has lots of advantages opening up opportunities for people who might not live where certain kinds of jobs are UM, it can offer flexibility for people who have lots of responsibilities outside of work, but I do think it creates challenges UM for younger people who might not know their organizational culture or have the same kinds of networks as older workers have.

Hasn't just been the year of the pandemic. It's also been a year of intense social activism and racial unrest, and for some that's changing career decisions. Earlier, we told you how undergraduate enrollment was falling at most colleges, but it's gaining at Howard University, the historically black university benefits from a unique profile in a year that's notable for social activism, and President Wayne AI Frederick is seeing that show up in enrollment data. Political science has risen to

the top of the heap. Is one of the most sought after majors out our university, and and that is very telling. Biology was always was always one of our top major in terms of enrolment and premed interest. UM is also beginning to peak as we have seen the impact of the pandemic, and we talked so often about frontline workers. So all of that is definitely causing a

shift in what young people want to do. Etside of we just launched a b j D program UH this this fall UH will that will allow students to take a year less to get their B and to go on and enroll directly into a g D program. And that's going to be well over subscribe because of the interests of people wanting to become lawmakers and is as quickly as possible. Well, students at Howard are pushing ahead. Others are pushing pause the resetting timelines and education, their

careers and even adulthood. A few research survey finds a majority of eighteen to twenty nine year olds and how living with their parents. That's the highest level since the Great Depression. Betsy Stevenson says the pandemic didn't cause this trend, but it's sped up the process that was already in motion. We're definitely seeing people, you know, postponing having kids, they're postponing getting married, and we saw in the two thousand and eight recession, you know, lots of kids moving in

with their parents. I think there's a lot of debate about is that Is that a terrible thing? I think one of the things we're seeing as parents, the size of the American home has increased, so there's more space to bring your adult kids back, and kids have better relationships with adult kids have better relationships with their parents today. Um, those are all good things. The bad thing is that it's a expensive for them out there and so they

come home. Is this just the pandemic, No, it's absolutely not. This is like a trend we've been seeing as kids spend more time at home. They stay on their parents health insurance because they're not getting health insurance in their jobs, and when they're young, they stay in their parents house so that they can save up because housing is expensive, and they wait until they're in their late twenties or thirties, you know, to have a child. So that delay is

definitely a longer run pattern. The pandemic is exacerbating it because we know are interacting with people who are in our own little bubble, and so a lot of people are choosing to move back in with their parents and be in that bubble and have their parents, you know, sort of help them out. It's also the case that you know they've lost their job, um or you know,

they can't afford housing. So there, there's certainly, there's certainly problems there, and you are right to say that this is part of a younger run trend about people not quite growing up as fast. I don't know to the extent to which the pandemic will have sort of permanently switched those patterns. Other patterns will likely emerge from this pandemic to we could see books and papers written decades from now detailing broad shifts in the global economy and

long term changes in consumer habits. Crisis creates opportunity. Take it from Mark Cuban before you own the Dallas Mavericks. The tech entrepreneur turned a fresh idea into a billion dollar fortune. Now he's betting the others will do the same. So many small businesses are closing, so many, you know, retail stores are closing, malls are going bankrupt. Companies that are unable to transition to selling digitally or really taking

a full advantage of e commerce are struggling. That type of uncertainty creates a lot of opportunity, and combine that with people becoming far more comfortable with purchasing on line and living a digital lifestyle. I think there's a lot of unique opportunities that are available to people who who are creative, who have a vision for the future. You know, ten years will look back and they'll be ten world class companies that were created by people who we probably

think are thinking are crazy right about now. Only time will tell what fresh ideas will emerge from this pandemic. Every generation has its challenges, but the road ahead for this one looks especially difficult. How it rises to the occasion will define its legacy and its impact on the global economy for years to come. Thanks for joining me

on this Bloomberg Radio special, Generation Interrupted. If you joined us late, catch the full show on our Bloomberg Surveillance podcast feed, available on Apple, Stitcher, Spotify, and anywhere else you get your podcasts. This program was produced by Seth magdalen Er and Colin Tipton. I'm Lisa Abramo. It's and this is bloombergh m HM