Young workers hit hardest in global downturn. What’s the answer?

Boston, Mexico City, and Berlin

It seemed, at first, like a joke.

“It was like, ‘Ha ha, we all lost our jobs because of COVID; we’ll be back in two weeks,’” recalls Gina LoPresti, who lost her restaurant job in March.

Then reality sank in for the recent college graduate. She wasn’t asked to return to the restaurant. She moved back in with her parents in Holland, Pennsylvania. While she still has savings from her job and no student debt, her plans to work and save up before transitioning to the job she really wants – as a teaching assistant or at a nonprofit – have been put on a long and indefinite hold.

“The past month, I haven’t even applied to jobs,” she says, “mostly because a lot of places due to COVID either aren’t hiring at the moment or they’re looking for people that have … experience that I know I don’t have.”

Juliana Quiñones, a Colombian millennial, left her job in social work on Colombia’s northern coast in December, hoping to find something new in the field of environmental development in Bogotá. Then, in late March, after a surge of coronavirus cases, the entire country shut down. Businesses closed. And youth employment soared to nearly 30%, one of the highest rates among nations that the Organization for Economic Cooperation and Development (OECD) ranks as industrialized. Young women were especially hard hit: More than 1 in 3 are now jobless. 

“Let’s just say it was bad timing,” Ms. Quiñones says of her job search. Today she’s trying to launch an eco-fashion shoe line from her parent’s home.

Around the world, from Colombia to Sweden, China to the United States, high-income nations have seen unemployment rise as they’ve locked down their economies. Joblessness has hit workers age 15 to 24 especially hard. Depending on the country, youth unemployment is running double or even triple the jobless rate for the general population. And the effects may last long after the coronavirus is brought under control. If the pandemic-led recession mimics previous downturns, young workers now looking for their first job could see depressed earnings for as long as a decade and more frequent joblessness over a lifetime. And there are concerns about the mental impact joblessness can have on young people. 

“Each country will be in a slightly different context [but] it seems to be a global situation,” says Ronald McQuaid, professor of work and employment at the University of Stirling in Britain.

Time for tax incentives for hiring the young? 

Will this generation of young workers be any different than the millennials a decade ago, when they started their job search in the teeth of the Great Recession and endured reduced earnings and more unemployment, as a result?

Part of the answer lies with the pandemic itself. If a resurgence causes new lockdowns in nations, the economic damage could last beyond those entering the workforce in 2020 or 2021, says Jesse Rothstein, professor of public policy and economics at the University of California at Berkeley. His research shows that in the U.S., those who start looking for work during a downturn earn 2% less for up to a decade and experience longer bouts of joblessness than those who join the workforce during normal times. Some studies put the damage to incomes higher still.

Even if the past turns out to be prologue, “there will always be exceptions,” says Professor McQuaid. The trend “is a propensity, not a predestination.”

In fact, part of the answer also lies with what governments and private agencies decide to do to alleviate the situation. Most immediately, that involves fiscal stimulus to offset the effects of the downturn, economists say. Longer-term solutions involve everything from job training to tax cuts and even military recruitment. Some job-training directors are also aiming to boost the quality of jobs that organizations are offering youth.

Sweden addressed its high youth unemployment in 2007 with a payroll tax cut for companies that hired workers 26 years old or younger. For the eight years that it ran, the program not only boosted youth employment, its effect doubled near the end of the program and continued even after the tax cut was eliminated, according to one 2019 study.

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