Gen Y: No Jobs, Lots of Loans, a Grim Future

The Millennials, broadly defined as those born in the 1980s and '90s, are the first generation of American workers since World War II who have cloudier prospects than the generations that preceded them. Certainly the recession has hurt young workers badly. While the overall unemployment rate was 9.5 percent in June, it was 15.3 percent for those aged 20 to 24, compared with 7.8 percent for ages 35-44, 7.5 percent for ages 45-54 and 6.9 percent for those 55 and older.

The high unemployment rate among young Millennials can affect them financially and psychologically throughout their careers, according to a report by the Joint Economic Committee. The 'scarring effects' of prolonged unemployment can be devastating over a worker's career. Productivity, earnings and well-being can all suffer. In addition, unemployment can lead to a deterioration of skills and make securing future employment more difficult.

Many Millennials have sought refuge back at school from the worst job market since at least the early 1980s. Yet that strategy, too, can backfire as students incur staggering amounts of debt to pay for advanced degrees that might not help them out much in the job market.

Jordan Hueseman, 23, accrued roughly $100,000 in student loans at the University of Denver earning a bachelor's degree in international business and a master's in business administration. On the job hunt, he found his graduate degree sometimes hindered more than it helped. The 2008 average for college students was $23,000, according to the College Board.

They are competing for the jobs with their peers and with plenty of older jobless workers. Competing against older workers with years of experience has put many Millennials on the losing end of job interviews. And while that's typical of past recessions, the long-term unemployment characteristic of this cycle is forcing many older workers to seek jobs that would have gone to younger workers in the past.

About 15 million Americans are out of work, 45 percent of them for at least six months. "The average length of unemployment now is almost like six months, which is an all-time high, so the longer people are unemployed and the longer they go without being able to find a job, the more willing they are to accept a job that's lower paying or for which they're overqualified," said economist Marisa Di Natale of Moody's Economy.com.

Baby boomers also are delaying their retirement, adding to the competition. A quarter of workers postponed their retirement in the past year, with 33 percent of workers now expecting to retire after 65, according to a retirement survey by The Employment Benefit Research Institute.

If they get hired, younger employees are often the first to be fired in layoffs. And when Millennials do land a job, it probably won't be as lucrative due to intense competition for jobs. That means that this generation's potential earning power is likely to lag over the course of their careers.

Young workers who start off in a recession generally begin in lower-ranking positions and have difficulty shifting into better jobs the first 15 years of their careers, according to a study that looked at the experience of workers who launched their careers in the early 1980s.

Young workers on average will lose over $100,000 in earnings over the course of their careers due to the recession, concluded the study by Lisa B. Kahn of Yale University.

Source: MSNBC.com, Megan Thomas, 7/28/2010