Millennials Need a Mulligan

Golf is not my friend, as long-time readers know.

Sure, I love the tranquility of the setting… the long walk through the beautiful, manicured park… and even the tradition of the beer cart…

It’s the game itself I can’t stand.

Not because I get bored or there isn’t enough action, but for the age-old reason that I’m bad at it.

The one great aspect of a casual golf game is that, when I do something ridiculously terrible, I can call upon the others in my group to allow me a free do-over… the chance to take my shot again without incurring any stroke penalties. Golfers call this a Mulligan.

Right now, there are millions of Millennials, who joined the workforce in the last six years, who clearly want their own Mulligan.

Not in a game, but in life…

Recent employment statistics show that from November 2007 through December 2013, the employment rate for those under 30 has plummeted.

Not only has unemployment remained quite high, but also the number of people that aren’t in the labor force is also high. These are people who are neither working nor looking for work.

While the total population of 16 to 29 year olds has increased by just over 1.5 million, the number of kids in this age group available to work (employed or unemployed) has fallen by 3.3 million. That’s because record numbers of young people report being in school, even though graduation rates haven’t changed much.

It could be that people of this age are scared off by the fact that unemployment is still over 10% for this group, which means the job market is not a very nice place to be. And therein lies the problem.

Lisa Khan, a labor economist at Yale, studied the employment experience of men that left college in the recession of the early 1980s to find work.

Entering the job market during a time of high unemployment, these men unsurprisingly had lower earnings at the outset.

However, Ms. Khan followed the men through their working lives and found that 15 to 20 years later they were still experiencing lower compensation than others with the same work experience but who started during a time when finding a job was easier. So clearly where you start has a large effect on where you end up.

That means that as young people enter the work force today, the odds are stacked against them, in terms of surpassing their parents’ earnings and standard of living.

This problem is only made worse by the fact that those same parents will rely on their kids to make enough money to pay the taxes necessary to keep Social Security and Medicare solvent through their retirement years.

Hmm.

Looked at in this light, not only do the kids want an employment Mulligan, but it would be better for parents if they let their kids have one.

Unfortunately, there is no way to turn back the clock.

Rodney

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Categories: Unemployment

About Author

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.