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What Millennials Can Do to Overcome the Recession

America is now five years on from the great economic recession of 2008. At the time, many young people were the worst victims of the downturn. Older workers who saw their retirement accounts decimated held on to jobs longer, hindering the upward progression of younger workers in the process. Many retirees went back to working part-time jobs traditionally filled by younger workers. And many companies eliminated positions they could no longer afford to pay. After the recessions of the late 1970s and early 1990s, the economy bounced back relatively quickly. But where is the country today? Sadly, many young people today are still languishing. The Wall St. Journal recently reported that the official unemployment rate for Americans under the age of 25 would be more than 20 percent if it took into account those going to college, enrolling in training programs or those who have given up looking for work. Many of the young people profiled in the article were appropriately grim:

“I hear a lot of stuff that people in my generation aren’t buying cars or houses, and I’m a step beyond that—I can’t even pay rent on time.”

“I think a lot about whether I’m ahead or behind…I really hope I’m not ahead.”

“You don’t dream big…You’re always checking yourself, or you don’t even think about doing other things anymore.”

Of course, many graduates who do have jobs are burdened with student loan debt. Even if one isn’t carrying $80,000 in loans for a psychology degree, a $30,000 batch of loans still equates to at least $200 a month—not a small sum if you’re working an entry level job in a city like New York, D.C., or San Francisco. [pullquote]     What sort of economic ideas…appeal to the Millennial ethos, but also comport with notions of classical liberalism?[/pullquote] The goal of reviving the economy to its 1980s zenith remains elusive. And as Millennials ascend to positions of economic influence and authority, they will insert their own generational proclivities into policy. So, what sort of economic ideas can be encouraged that not only appeal to the Millennial ethos, but also comport with notions of classical liberalism? Let’s focus on three areas that deserve attention: 1. Entrepreneurship: Americans under 35 are much more into working for themselves than their parents were. 54 percent of Millennials want to start a business in the next five years, and 8 percent have already started one, according to one Kauffman Foundation survey. Although Millennials voted for Obama in droves, and are characterized by a high degree of social liberalism, they have proved to be incredibly entrepreneurial. Take a look at the rows of artisans at Brooklyn Flea in New York or Union Market in Washington, or how younger people are reclaiming downtown Detroit, driven by the low cost of living and numerous government and private sector initiatives, like the city’s 15 by 15 program. Young people with political views that are, in other respects, colored by social liberalism still cherish economic freedom and personal industry. We need to let a culture of entrepreneurship flourish nationally. 2. Encourage High-Tech Innovation: The computer age is the only one Millennials have ever known. We are distinguished from other generations by our technology usage, as we ourselves will tell you. And there are enormous economic benefits to high-tech innovation. Global GDP growth over the past 30 years is tightly correlated to the growth of the semiconductor industry (big tech companies like Intel, Samsung, Qualcomm, etc. that make the tiny parts of our gadgets). Professor Enrico Moretti, writing in The Wall St. Journal, noticed just how valuable high-tech jobs can be on job growth in other areas:

Using data on nine million workers in 320 U.S. metropolitan areas, I found that for each new innovation-job in a city, five additional jobs are created—not only in professional occupations (lawyers, teachers, nurses) but also nonprofessional occupations (waiters, hairdressers, carpenters). For each new software designer hired at Twitter in San Francisco, there are five new job openings for baristas, personal trainers, therapists and taxi drivers. The most important effect of high-tech companies on the local economy is outside high-tech.

High-tech jobs are vitally important. To produce more of them, we need more STEM (science, technology, engineering and mathematics) education. We need the importation of skilled immigrants with tech backgrounds. And we need low taxes on capital investments. 3. Disruption of Higher Education: As I have written elsewhere, higher education is enormously inefficient, leaving hundreds of thousands of graduates each year too deep in debt. Students learn very little; the average time spent studying, according to the study Academically Adrift, is only 12 hours per week. And even the cheapest four-year schools cost thousands of dollars each year. With emerging online alternatives like Coursera, Udacity, and Viridis offering the delivery of educational content at a much lower cost, sooner or later students are going to realize what a no-brainer online college can be. What matters to employers is skills and talent, not a piece of paper. Fourteen percent of Google’s workforce is without a college degree. Why? Because they’ve demonstrated they’ve got the chops to work for the biggest and most exclusive tech juggernaut in the world. As Millenials, oh-so-opposed to credentialization, become hiring managers, skills-based competency will supplant a piece of paper as a qualification for a job. Let’s be ready for it.