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Will Generation Z save traditional businesses? (2019 video) 4:20
London (CNN Business) - Will Murrell had hoped to pass his higher education exams this summer at a London university. I was looking for a job in a retail store or supermarket to earn extra money while studying.
Then came the covid-19 pandemic. Now the 17-year-old is trapped at home with his parents. His exams were canceled and all his plans are on hold.
"I've been looking for a job and now we're locked up, so I can't," Murrell told CNN. "It seems like an unnecessary risk."
Murrell is part of Generation Z, those born after 1997, as defined by the Pew Research Center. The older members of the group are now graduating in a job market devastated by the global pandemic.
- The challenge of organizations to retain generation Z, young people who do not want to have bosses
As a disease, the coronavirus takes disproportionate use of the elderly. But Generation Z, at least in the short term, will have to enlist to bear the brunt of the resulting financial chaos.
Workers of this generation are more likely than older generations to work in industries closed by restrictions on social distancing, according to the Pew Research Center and the Resolution Foundation.
The future prospects for Generation Z also appear bleak; The Resolution Foundation's analysis suggests that layoffs linked to the pandemic could affect young people's salary and job prospects in the long term.
The world is still in the early stages of the most severe economic crisis since the 1930s, with confinement, social distancing, and lost production measures triggering a global recession. In the UK, the economy could shrink by 14% this year and unemployment is expected to hit 9%.
Moody's warns of possible global recession 2:00The impact of unemployment in a recession is particularly severe for those who have just left school. Fewer jobs and internships are available for younger job seekers, especially in sectors such as hospitality, travel, and retail, which provide a large number of entry-level roles and have been particularly affected by the effects of the pandemic and efforts to contain it.
In the UK, the unemployment rate for 18-24 year olds is projected to hit a staggering 27% this year, up from 10.5% in 2019, according to an analysis by the Resolution Foundation.
This means that an additional 640,000 people in the age group are likely to be out of work.
"The unique nature of the current crisis has damaged the first rung on the employment ladder for a substantial proportion of those who drop out of education, and until now it is unclear when and to what extent these sectors will recover," the report notes.
Young people bear the brunt of the crisis
The crisis could leave lasting scars. Thanks to rising unemployment in the UK, today's graduates are 13% less likely to be employed in three years compared to a scenario without the pandemic.
Those with mid-level qualifications are 27% less likely to be employed in three years, while the number rises to 37% for "less qualified" adults leaving school today, according to the report's projections.
- Half of low-income families in the US have lost jobs or wages amid the coronavirus crisis
It's a similar story in the United States, where workers under the age of 24 were disproportionately affected by the initial coronavirus-related layoffs, according to Richard Fry, principal investigator at the Pew Research Center.
The closure caused an increase in unemployment in the US. The US, with the county's economy losing 20.5 million jobs in April, the biggest decline since the government began tracking the data in 1939.
According to the Bureau of Labor Statistics, unemployment rates in April increased among all major groups of workers. The unemployment rate for adolescents between 16 and 19 years old was the highest of all the groups, with 31.9%.
The unemployment rate for adult men in April was 13%, while the same figure for adult women was 15.5%.
"Initially, at least, the layoffs were concentrated in a certain set of industries, which severely affected the 16-24 year age group," Fry told CNN. "That initial unemployment was very focused on ... Generation Z. [They] were badly beaten."
Those currently at greatest risk of layoffs work in stores, restaurants, hotels and daycare centers, sectors most affected by restrictions on social distancing. Overall, younger workers represent 24% of employees in industries at high risk of being closed in the pandemic, according to the Pew Research Center.
Despite early data, Fry said Generation Z has some reason to be optimistic. He said the younger group has time to recover from the impact of the virus, especially compared to 'millennials'.
"When it comes to creating wealth, you are ... able to better deal with a crisis if ... you have more years to adjust," Fry said.
While Fry is cautiously optimistic about the prospects for Generation Z, the Resolution Foundation's research suggests that those who drop out of school during recessions experience lower unemployment rates and low wages for years after the event.
“For several years after leaving education, employment rates in the cohorts who dropped out of education during the financial crisis [2008] were lower than those of those who dropped out of school after it, and undergraduates experienced the highest and longer healing effects ”, according to the notes of the report of the organization.
Fry added that early anecdotal data showed young adults resorting to family resources to survive the recession, often by continuing to live with their parents or return to the family home.
"During the 2008 recession, the 'millennials' struggled with the problem by moving in with mom and dad," he said. “We may be seeing Generation Z do the same here. And that's not such an open path for older 'millennials' now. They may have families of their own and may not be able to access those resources. But I don't think we know the long-term impact of this yet. We just don't know how long and deep this recession will be. ”
- Consumer prices are falling at an alarming rate in the United States amid the coronavirus crisis
Second setback for the 'millennials'
While the immediate crisis has disrupted Generation Z education and job prospects, it is the latest in a series of blows for millennials. The group, made up of people born between 1981 and 1996, has been shaped by the 2008 global financial crisis and the slow economic recovery that followed.
In 2014, it was discovered that 'millennial' household heads in the United States earned 10% less than their equivalents in the 1978 'baby boom' generation, according to a study by the US Federal Reserve Board. The 'millennial' women were slightly better than their postwar generation counterparts, but still earned 3% less than their Generation X equivalents in 1998.
The Pew Research Center defines Generation X members as those currently between the ages of 39 and 54, while baby boomers are those between the ages of 55 and 73.
"[The Millennium generation] is a particularly adult cohort of young adults," Reid Cramer, a nonresident member of the New America Foundation, told CNN. "Already in their great work and years of family formation they were significantly undermined by coming of age in the great recession."
"They have lower savings. They have a lower trajectory to [build] long-term wealth. And many do not live in individual homes, but are in communal arrangements or even with their parents. "
Millennials also have less cushion of savings to see them through the next crisis. Between 2014 and 2016, according to the Office for National Statistics, 52% of Britons between the ages of 22 and 29 had no money set aside in a savings account.
In the United States, 27% of the age group have no savings, according to a Bank of America report published in January. Despite this, almost a quarter of people ages 24-41 who saved had more than $ 100,000 in savings.
Unlike Generation Z, millennials did not graduate in the midst of what could be the worst global recession since the 1930s. But that is likely to be a cold consolation for a group that, in the United States, is on the way to being the first generation not to accumulate more wealth than their parents.
Search for solutions
Cramer believes that young people need more government help to recover from the financial impact of covid-19. He argues that public policy should be used to address "student debt over-indebtedness" that hinders 'millennials' in the United States.
A similar sentiment is growing in the UK regarding housing policy. Home ownership rates among youth have declined, and Britons in their 30s and 40s are three times more likely to rent today than they were 20 years ago.
"Millennials are enormously, enormously disadvantaged when it comes to housing," said Jim O'Neill, chairman of the Chatham House think tank and a member of Britain's House of Lords. "I hope there will be more [government] focus in the future on providing affordable [...] social housing."
Cramer told CNN that the post-2008 recession had affected millennials in another way: The group is reaching traditional markers of adulthood at later dates, or not at all.
"In the United States, 'millennials' have a significantly lower home ownership rate, but that only captures some of the challenges," he said. “Fewer of them are getting married [and] have children. These were traditional elements of the aspirational American dream. ”
That dream was perhaps best captured by baby boomers, who remain the wealthiest generation in both the United States and the United Kingdom. This does not appear to change anytime soon, as 'millennials' endure reduced social and economic progress and Generation Z now faces a similar fate.
Financial crisis Generation Z
