Graduating in a Recession Can Be Rough

This relates to yesterday's post "The Class of 2020 Looks for Work." That post has links to other related posts.

By Alex Tabarrok of Marginal Revolution.

"Graduating in a recession can be rough. Wages start lower and advance more slowly. It’s hard to get hired at a top firm which means it takes longer to get on a rapid ascent career path. As Till von Wachter notes in a review of the long-term consequences of initial labor market conditions, failure to takeoff leads to choices which often makes things worse.

…initial labor market conditions persistently increases excessive alcohol consumption (Maclean 2015) and leads to higher obesity and more smoking and drinking in middle age (Cutler, Huang, and Lleras-Muney 2015)…College graduates entering during the 1980s recession experience higher incidence of heart attacks in middle age (Maclean 2013). Following all labor market entrants from these cohorts, Schwandt and von Wachter (2020) find that starting in their late 30s, unlucky entrants begin experiencing a gap in mortality compared to luckier peers that keeps increasing in their 40s, driven by higher rates of heart disease, liver disease, lung cancer, and drug overdoses.

…Marital patterns of unlucky cohorts are affected from the time they enter the labor market up into middle age, when these cohorts have fewer children (Currie and Schwandt 2014), are more likely to have experienced a divorce, and are more likely to live on their own (Schwandt and von Wachter 2020). Initial labor market conditions also have been found to have effects on attitudes towards economic success and the role of the government (Giuliano and Spilimbergo 2014) and to lead to increasingly lowering individuals’ self esteem (Maclean and Hill 2015).

Don Peck had a good popular survey of these effects in The Atlantic in 2010 that remains vital:

Andrew Oswald, an economist at the University of Warwick, in the U.K., and a pioneer in the field of happiness studies, says no other circumstance produces a larger decline in mental health and well-being than being involuntarily out of work for six months or more. It is the worst thing that can happen, he says, equivalent to the death of a spouse, and “a kind of bereavement” in its own right. Only a small fraction of the decline can be tied directly to losing a paycheck, Oswald says; most of it appears to be the result of a tarnished identity and a loss of self-worth. Unemployment leaves psychological scars that remain even after work is found again, and, because the happiness of husbands and the happiness of wives are usually closely related, the misery spreads throughout the home.

Especially in middle-aged men, long accustomed to the routine of the office or factory, unemployment seems to produce a crippling disorientation. At a series of workshops for the unemployed that I attended around Philadelphia last fall, the participants were overwhelmingly male, and the men in particular described the erosion of their identities, the isolation of being jobless, and the indignities of downward mobility.

Of course, most people who graduate during a recession do just fine in the grand scheme of things.You could have graduated in Sierra Leone. But if you want to be on a rapid ascent career path remember that your first job is not your last job, look for opportunity, and be prepared to take a risk and switch jobs early. Stay off drugs and alcohol."