When I enrolled in university in 1990, my prospects were good. At that time about 76% of all 20- to 24-year-olds had a job and nearly two-thirds of those in their early 20s were working full time.
By the time I graduated, the recession had happened and just 69% of those in their early 20s had a job and only 55% were employed full time. It was not until 2006 that as many people in their early 20s had a job as was the case in 1990.
There has never again been the same proportion of young people with a full-time job.
Recessions are awful for young people.
But the problem for those now in their 20s is that, unlike for my generation, things were not good even before the recession.
This week the Productivity Commission released two reports that might as well have been titled Young People are Screwed Parts I & II.
The first looked at work and has the title: Climbing the jobs ladder slower: Young people in a weak labour market.
If you have any joy left, prepare to discard it now, for the second report’s title was Why Did Young People’s Incomes Decline?
The commission, using data from the Melbourne Institute’s Household, Income and Labour Dynamics in Australia (Hilda) Survey found that since the global financial crisis the average labour income of those under 25 has fallen by 14% in real terms, and by 7% for those aged 25-34.
By contrast incomes have risen solidly for those over 35.
The reasons are actually pretty clear – less work and no increase in pay for that work.
The commission found that over the past decade “there was a decline in hours worked for people aged 15-34” but there was “no change in hours worked for people aged 35-54, and growth in hours worked for people aged 55 and over”.
Clearly when you work less you are going to receive less income. But the commission notes “there was also a divergence in wage rate growth”.
It found the wage growth for people aged 20-34 “was negligible” but rose “in the order of about 1.4 per cent per year” for those aged 35-64.
But hey, at least their job prospects are good right?
The other report found that “from 2008 to 2018, young people had more difficulty getting jobs in the occupations they aspired to. And if they started in a less attractive occupation, it was even harder than before 2008 to climb the occupation ladder.”
Oh joy. So go to uni, and all will be sweet though?
Err … no.
The commission found that “young people aged 25-34 with bachelor degrees are substantially worse off in 2018 than in 2001.”
This is because the competition for high-end, good-paying jobs is now tougher. More people are attending university so more people are competing for those high-paying jobs than in the past.
It means they end up in lower-level jobs, and the problem is they are staying there.
The commission found that young people looking for work after 2010 had to accept lower-level jobs because the economy was weak. But crucially “there is little sign that they were able to move” out of these jobs in the following years.
It concluded that there is no indication that employers have adjusted for the fact that lower-skilled and paying occupations “now include many promising but unlucky young workers” and as result are not “prepared to give them a chance”.
This research uses data before the Covid-19 hit but suggests that only highlights how bad things will be in the future.
The report notes that “many young people have experienced unemployment recently, and are likely to face a reduced set of job opportunities as a result of the recession. This scarring could last some time.”
When I left university, 55% of those in their early 20s worked full time; last month just 36% of them did. This is a generational tragedy at play.