A new study highlights how our age might affect our well-being during and after a recession.
When a recession occurs, which age group of consumers is most affected both during and after it? Does it affect the well-being of every age group similarly or are some affected more severely? These are the questions a study by the Bureau of Labor Statistics aims to address.
The study looked at three age groups between the years of 2004 and 2015: under 25 years old, 25 to 74 years old, and 75 and older. You might remember that during this time period there was a housing bubble, followed by a recession that took place from December 2007 through June 2009.
What is a recession?
The National Bureau of Economic Research defines a recession as, “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real Gross Domestic Product (GDP), real income, employment, industrial production, and wholesale-retail sales.”
Takeaways from the Study
The BLS study lists many different categories where the well-being of people during a recession might be most affected, including: Unemployment, Income, Home and Vehicle Ownership, Prices, Food, Entertainment, and others.
Below are a few snapshots of unemployment and income trends between 2004 and 2015 for the three age groups.
Which age group proved to experience the highest unemployment rates between 2004 and 2015? The under 25-year-olds. This group consistently had at least a 10% unemployment rate, peaking to 18.4% in 2010.
75-year-olds and older experienced unemployment rates anywhere from 2.5% to 5.7%.
25 to 74-year-olds had anywhere from 3.6% to 8.3% unemployment rates.
While each group had varying unemployment rates, the groups had simliar trends: Each had its lowest unemployment rate in 2006, a general increase by 2008, and unemployment rates reaching their highest by 2010.
The study points out how young adults (25 and under) might have a more difficult time during a recession trying to find (and keep) a job. The study also adds, “And young adults today may be even harder hit than in previous generations because they carry more student loan debt, on average, than previous generations of young adults.”
This is a category where individuals aged 25 to 74 on average had the highest and most consistent incomes, ranging from $71,000 to $79,000.
The remaining two age groups (75+ and under 25) actually had very similar incomes during these years. Individuals under 25 had income from $28,000 to $38,000. The 75 and older group had anywhere from $34,000 to $37,000 in income. However, the 75+ group had a fairly stable income trend, whereas the under 25 group had much more volatility.
*the income in the study is based on real income.
The under 25 and over 75 groups have a tendency to be the most vulnerable during a recession and after, with one of the primary reasons being limited assets. The study mentions, “Older adults, especially retirees, often rely on accumulated assets, such as savings or stocks, the values of which are usually negatively affected. They also have trouble entering or reentering the workforce to supplement diminished assets, even if they do not suffer poor health or face mobility or other constraints that limit or preclude their ability to work.”
You can read the full study here.
Geoffrey D. Paulin, “Not fun for young and old alike: how the youngest and oldest consumers have fared in recession and recovery,” Monthly Labor Review, U.S. Bureau of Labor Statistics, June 2019, https://doi.org/10.21916/mlr.2019.14.