Gabe Ciuraru doesn’t see many good options for people his age.
At 23, he’s waited tables, driven tanks for the Israeli army, taken community college classes and taught Hebrew in St. Paul, Minn. Lately he’s been selling cosmetics from a kiosk at the Mall of America.
This fall he plans to pursue a degree in sports management at the University of Minnesota. But he’ll have to take on a lot of debt, and he’s not optimistic it will lead to a good-paying job.
“I have friends that still live at home because they’re paying off their student loans,” Ciuraru said. “You’re chained to your desk. And if you’re not, the debt gets bigger.”
People who finished high school or college in the past few years came into the job market at the wrong time. The economic downturn slashed pay for young workers and left more of them jobless, even after many went deep into debt to pay for college.
Economists believe they may never recover what they lost in wages and experience.
“If we look over people’s likely future lives, when you’re part of a generation that comes in with a tough job market and your wages are not so great, you don’t recover,” said Richard Freeman, a Harvard University labor economist. “They are going to be at a permanently lower standard of living than they would have been had we either avoided this catastrophe or had we had a successful jobs recovery.”
Demand for college-educated workers probably peaked around 2000, and the decline since then has affected all young workers, Canadian economists Paul Beaudry and Benjamin Sand say.
As the number of college diplomas in the job market keeps rising, high-skilled workers are forced to take lesser jobs, “pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force altogether,” Beaudry and Sand wrote in 2013.
The phenomenon was partly hidden by the housing bubble in the 2000s, but then laid bare by its bursting.
“This has been a terrible decade,” said Phil Gardner, director of the Collegiate Employment Research Institute at Michigan State University. “There’s only been three years where employers have aggressively hired in the last 12 years.”
Since 2008, first-time job seekers have faced a market more difficult than anything their older siblings or parents have seen.
Unemployment for people under 25 hit 21 percent in 2010 and still is well above its prerecession high at 15.6 percent, according to the Bureau of Labor Statistics. The situation is worse for workers under 25 with no college education, whose unemployment rate is 18.6 percent.
Young people who are working have fewer opportunities for advancement, in part because fewer older workers are voluntarily quitting their jobs.
“The longer this goes on, and the longer they’re not attached to something meaningful – and there’s a lot of young people who still aren’t – then they’re wasting their human resource investment, which is their education,” said Phil Gardner, director of the Collegiate Employment Research Institute at Michigan State University.
Repeated studies show that people who look for their first job during a recession take as much as a 9 percent wage cut. These losses can be permanent, and even when they’re not, may fade only after a decade.
The fault lines run through families.
Laura Franklin, 27, and her sister Emily, 32, both went to the College of St. Benedict in St. Joseph, Minn. Emily didn’t seriously consider her career until her senior year, yet got a good job four days after she graduated in 2004. Laura, with a 3.9 GPA and a semester as a full-time substitute teacher under her belt, couldn’t crack the teaching market in 2009 or 2010.
She wanted to teach third-graders, she said, because they like to learn and are old enough to work independently. She applied for more than 100 jobs in Minnesota and Colorado through the summer of 2009. She drove to job fairs where lines formed out the door for one opening. “You’d just hang your head when you walked in,” she said.
The first few weeks without a job offer turned into months, and then the summer passed, and her computer filled with folders of rejected cover letters.
“I was just so defeated,” she said. “My self-esteem was just blown. I said, ‘I give up. I’m going to take care of babies. This is my life. OK.’”
She worked at a day care called New Horizon Academy, and a year later, took a job as an early childhood teaching assistant for St. Paul public schools, hoping that might lead to full-time teaching. She worked both jobs – 12 hours a day – to cover her bills, including payments on $18,000 in student debt.
The teaching job never materialized, so she took a job at a UnitedHealth call center, which led to a better position at OptumHealth. She gave up hopes of teaching but believes those years made her stronger.