Boomerang Generation: Is Generation Y Hurting the Economy?
On the March 28, 2012 episode of Marketplace, economist and commentator Todd Buchholz boldly suggested that the phenomenon known as the "Boomerang Generation", or where Generation Y young adults have to move back home owing to harsh job market conditions, is hurting the economy. Buchholz discussed that whereas "young people today are 40 percent less likely to leave their home state than prior generations, ... an increasing number don't even bother to get drivers licenses."
One of the premises of Buchholz's argument is that "geographic mobility creates economic mobility." That being said, in a time period where more and more young adults find themselves living at home unemployed owing to a weak job market, young adults are not contributing to economic growth. Buchholz cited an example where he advised a Florida engineer to tell "her stay-at-home, unemployed college grad" to "grab a cheap flight to Fargo, North Dakota" because "the unemployment rate is 3.9 percent ... [and he] will nab a job as soon as the captain turns off the fasten seat belt sign."
Buchholz suggested that "an aversion to risk has crept into the psyches of our young people" thereby limiting young adults' opportunities. According to Buchholz, perhaps this aversion to risk is "from overprotective parents who drive their Little Leaguers to first base in the minivan. Or maybe it's a lingering cloud of hopelessness despite the 'hope and change' bumper stickers. But it's not healthy."
Aside from criticizing young adults in their unwillingness to move, Buchholz took the discussion in a different direction in that "governments make matters worse by setting up roadblocks." Buchholz: "Almost one in four jobs requires a permit from a state agency. And most are not brain surgery! Heck, they're not even tree surgery. Say you want to move to Alabama to become a manicurist, you'll first need 750 hours of training." According to Buchholz, "we need to encourage economic mobility among our young people, not stagnation."
To say the least, the comments to Buchholz's piece were interesting. One person commenting wrote, "It's amazing this Todd Buchholz character has a job himself. It would be nice to see other economists speak out against him and defend their field of practice..." Another commenter wrote, "Instead of discussing the real problems in this country and economy [Buchholz] finds it convenient to parcel out blame to young Americans -- as if this segment of America is solely to blame." Another interesting comment read, "Perhaps Mr. Buchholz would be better off focusing on the broken economics of the Baby Boomers, instead of projecting those problems on a younger generation."
Whereas Buchholz's perspective is an interesting take on the economic problems facing the nation, with all due to respect to Mr. Buchholz, in order to appreciate the gravity of the dismal economic and political quagmire in the US, we have to acknowledge the fact that the Great Recession is a multi-dimensional problem. In terms of younger Americans, in many ways Generation Y is a product of the society in which Generation Y was raised.
I noticed that Buchholz made no mention of the student loan bubble. As I have written previously, the student loan bubble is a major part of the economic conundrum that grips the younger generation. That being said, per my previous analysis, student loans remain only one piece of a much bigger socio-economic puzzle. The current malaise in the US owing to changing societal and economic attitudes is probably quite overwhelming and intimidating for many young adults.
Buchholz's contention that young adults should just pick up and move to North Dakota is outlandish. Though I understand his sentiments, the idea that North Dakota has jobs for every unemployed young American seems quite unrealistic. Even further, there are certain values to be weighed with respect to a move across the country to unknown territory. It's very easy to say, "Just pick up and move to North Dakota", but reality is not that simple. I find it hard to believe that an unemployed young adult would be able to "nab a job as soon as the captain turns off the fasten seat belt sign." That being the case, I cannot say that I disagree with Buchholz's advice to the engineer. Perhaps we do need more geographic mobility for young adults, but is that an economic issue or is that a socio-cultural issue?
I do think that it is a bit unfair to impose on young Americans the idea that they ought to move away from their families, friends, and familiar territory for the sake of a job. Perhaps many parents do not want their young adult children to move away. And for young adults who may have significant others or children themselves, a move across the country may be impractical.
In a time period where for a married couple both individuals may have to work to support the household, the issue of geographical location becomes a problem. And even then, we can see a vicious cycle where individuals are unable to get married owing to not having a job, but they want to get married, and yet the search for a job and financial problems are drawing couples apart. This situation may lead to less people getting married, less people having children, less people purchasing homes, etc. And so, yes, geographic mobility may lead to economic mobility, but the situation regarding young people and unemployment in America is deeper and much more complex than just buying a Greyhound ticket to Fargo or Bismarck. As I have learned in my own life, the idea that "the grass is greener" somewhere else does not always make for the best economic plan.
To be fair, I can agree with Buchholz's commentary regarding governments "setting up roadblocks" to job growth. That being the case, one cannot blame Generation Y for the excessive bureaucracy in American society. Maybe we do have too much licensure in society, but if that is the case, state governments should take the lead in reducing bureaucracy, reducing regulations, and promoting productive job growth.
In a sense, I can see Buchholz's point regarding the "boomerang generation" and economic stagnation. However, I do think Buchholz's commentary illustrates serious issues with respect to not only academic economics (as espoused by American higher education) but also cultural and generational differences regarding finance. As I've written previously, whereas economics is at a crossroads, it may be time to have a serious national discussion regarding the discipline of economics going forward. Buchholz's commentary may also reflect a disconnect between generational expectations regarding education, labor, and life's rites of passage. For me personally, to posit the idea that the "boomerang generation" hurts the US economy while not even subtly addressing excessive student loan debt, the higher education bubble, or the host of other debilitating socio-economic issues in the US raises some questions -- but maybe that's just me.
Attempting to find viable solutions can be difficult in a society that is intellectually, politically, and financially divided. As I have written previously, "there appear to be no easy answers to the dilemma." That being said, whereas the current state of Generation Y may be viewed as hurting the economy, I do not think that we can place all the blame on Generation Y. It almost sounds like blaming the impoverished for the existence of poverty; "well, were there no poor people, poverty would not exist." I think many of the issues regarding Generation Y reflect deeper problems within our economic system -- and in many ways, Generation Y's behavior may be simply a response to those deeper problems. In the midst of this global financial crisis, we ought not to fool ourselves into thinking that the symptoms of the disease are the underlying causes of the disease.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.