Credit Counsel: Attitudes of the Gen Y Work-Ethic

Young peo­ple are tak­ing their work mar­bles and going home (but they may need addi­tional credit coun­sel if they have more debt and less money as a result):

The mil­len­nial gen­er­a­tion — about 50 mil­lion peo­ple between ages 18 and 29 — is the only age group in the nation that doesn’t cite work ethic as one of its “prin­ci­pal claims to dis­tinc­tive­ness,” accord­ing to a new Pew Research Cen­ter study, “Mil­len­ni­als: Con­fi­dent. Con­nected. Open to Change.” The Washington-based non­profit orga­ni­za­tion found that young adults and their elders agree: Baby boomers and Gen­er­a­tion X-ers have bet­ter work ethic and moral val­ues than those in their 20s.

Really, is any­one sur­prised by this?

Gen Y Work

Peo­ple in my gen­er­a­tion — since I was born in 1980, I’m either at the end of Gen­er­a­tion X or the begin­ning of Gen­er­a­tion Y — and those younger have grown up see­ing one thing: Being respon­si­ble and work­ing hard got most of our elders nowhere, and this sub­con­scious atti­tude per­me­ates many of our minds.

1. Real wages have not kept up with infla­tion. Here is a chart from the Fed­eral Reserve Bank of Atlanta:

After adjust­ing for infla­tion, wages declined for twenty-one years from 1979 to 1998 and have been trend­ing down­ward again since 2004.

2. Increased pro­duc­tiv­ity brought lit­tle reward.

Accord­ing to the Eco­nomic Pol­icy Insti­tute, work­ers saw lit­tle or no increase in wages when they were more pro­duc­tive. So, what’s our motivation?

Gen Y Millennials

3. Real com­pen­sa­tion dis­ap­peared after the eco­nomic crisis.

The decline in real wages was off­set by an over­all increase in other forms of com­pen­sa­tion (see above) includ­ing “health care ben­e­fits, employ­ers’ share of social secu­rity con­tri­bu­tions,” and so on over the last sev­eral decades. How­ever, we all know what hap­pened. The retire­ment accounts of employ­ees at com­pa­nies like Enron dis­ap­peared, and the country’s col­lec­tive retire­ment funds halved in value when the stock mar­ket tanked in 2008. The chart’s data only goes to 2005, so I would be curi­ous to see the trends through today.

(I’m con­vinced that the mar­ket will col­lapse again because the fun­da­men­tal prob­lem of the U.S. econ­omy — unknown lev­els of bad debt that banks still pre­tend will be repaid — has not been addressed.)

More­over, busi­nesses have been cut­ting health insur­ance, retire­ment funds, and pen­sion ben­e­fits in recent years, ren­der­ing the gen­eral increase in real com­pen­sa­tion over the past cou­ple of decades moot. Not only have peo­ple been earn­ing less money, even when they are pro­duc­tive — they are now see­ing fewer and fewer com­pany ben­e­fits as well.

So, where do these three sta­tis­tics leave young peo­ple today? To para­phrase Peter Gib­bons from the cult-classic “Office Space” — it’s not that they’re lazy, it’s just that they don’t care, and they will work just hard enough not to get fired. Why should they care when they’ve grown up see­ing com­pa­nies treat their par­ents — and later them — poorly? (Here is a col­lec­tion of sto­ries from just my life. I’m sure my read­ers have more.)

Char­ac­ter­is­tics of Gen Y

Here is the quote that began the Wash­ing­ton Post story to which I linked at the top of the post:

Jared Rogalia, 25, a Hertz rental car manager-trainee in Alexan­dria, is as cranky as some­one twice his age when he com­plains about his generation’s work ethic. Here’s how Rogalia char­ac­ter­izes his age group: “The first is: really spoiled and lazy. The sec­ond is: We’re free-spirited. And the third is: They’d rather be poorer and have free time than have a lot of money.” (empha­sis added)

I sus­pect that young peo­ple are decid­ing to remain poorer rather than work their butts off partly as a sub­con­scious defense mech­a­nism against the real­iza­tion that they will be the first gen­er­a­tion since the Great Depres­sion to be worse-off finan­cially than the prior one. As I noted in a post that quoted this Atlantic Monthly article:

In this reces­sion, the term funem­ploy­ment has gained some cur­rency among sin­gle 20-somethings, prompt­ing a small raft of youth-culture sto­ries in the Los Ange­les Times and San Fran­cisco Weekly, on Gawker, and in other venues.

Most of the peo­ple inter­viewed in these sto­ries seem merely to be try­ing to stay pos­i­tive and make the best of a bad sit­u­a­tion. They note that it’s a good time to reeval­u­ate career choices; that since job­less­ness is now so com­mon among their peers, it has lost much of its stigma; and that since they don’t have mort­gages or kids, they have flex­i­bil­ity, and in this respect, they are lucky. All of this sounds sen­si­ble enough—it is intu­itive to think that youth will be spared the worst of the recession’s scars.

But in fact a whole gen­er­a­tion of young adults is likely to see its life chances per­ma­nently dimin­ished by this recession…

Five, 10, 15 years after grad­u­a­tion, after untold pro­mo­tions and career changes span­ning booms and busts, the unlucky grad­u­ates [dur­ing past reces­sions] never closed the gap.

As a result of insur­mount­able debt bur­dens from stu­dent loans and credit cards (see here and here), most young peo­ple will have a neg­a­tive net-worth through­out their lives. And the older gen­er­a­tion won­ders why they are jaded, cyn­i­cal peo­ple who do not have a “work ethic.”

Related: The Upcom­ing Gen­er­a­tional War and Why My Gen­er­a­tion is So Pissed Off.