Welcome to the New Normal, Generation Y: Get Used to It
Hello, Generation Y! I've got good news and bad news for you. The good news is ...
Warren Buffett was right. We dodged the bullet (for now), and avoided a repeat of the Great Recession. The American economy is growing again, albeit at a speed far slower than we'd like -- somewhere between 1% and 3% a year.
Now the bad news: Unemployment in America today stands at around 9%. Unfortunately, that number can still go up because our population is growing at roughly 1% per year. This means we need to add about 125,000 new jobs every month just to hold unemployment steady. To actually reduce unemployment, we need to add at least 200,000 jobs monthly.
We're not doing that. In fact, last month we added less than half that. But even if we were, it would take eight years of 200,000-a-month jobs growth to return the U.S. to historically "normal" levels of unemployment. Simply put, that's not going to happen. Not anytime soon.
It Could Be Worse
The numbers look bad. You're right to feel discouraged. But things aren't always as bad as they seem, and it might help to add a little perspective here.
Unemployment today is nowhere near as bad as it was back at the peak of the Great Depression, to which our current crisis is often compared. Believe it or not, there was a time in America when one out of four Americans couldn't find a job.
We're not there yet. We're not even where we were at as recently as during the bad old days of the first Reagan administration:
That's not to say things can't get worse. And it's not to say things aren't tough already.
According to the Bureau of Labor and Statistics, some 15% of Americans aged 18 to 24 are out of work today. A lot of you are struggling, and wondering how you're going to make a living here in the New Normal. Fortunately, I've survived a couple of recessions already, and I've learned a thing or two from them. So pull up a chair and let Grandpappy Gen-X give you a few words of advice on how to make it through this.
A Job Is a Job -- Even If It's Not Your Dream Job
According to a recent report in The Wall Street Journal, the most popular places to work in America today are Google (GOOG), Apple (AAPL), Facebook, the State Department and Walt Disney (DIS). Rounding out the top 10, we find young workers also sending resumes to Amazon.com (AMZN), Microsoft (MSFT), and Sony (SNE), as well as the FBI and CIA.
At some point, you're going to need to adjust your expectations in the interests of putting food on the table. To give just one recent example, down in Georgia and Alabama there are jobs for the asking, replacing immigrants in the tomato fields. The work's hard. The pay's lousy. It's not something you want to do forever -- but it's a job.
Farm work -- and similar low-wage, low-prestige jobs in groundskeeping, janitorial, food service and retail -- are just steps on an economic ladder. They pay enough to keep a body alive, and they can't be outsourced to China. There's something to be said for that in an economy like today's.
Living on a low-wage salary, however, does require sacrifices.
Needs vs. Wants vs. Luxuries
Difficult as it may be to imagine, there was a time in America when not everybody had a smartphone, or cable TV, a McMansion, or even their own car. These may all seem "normal" to you, but your parents didn't grow up with these things. In fact, they had to work 20 or 30 years to acquire them, and to outfit the homes into which you were born.
When I was growing up, we had a saying around the Smith household: "Use it up, wear it out. Make it do or do without." Times are tough, but tough times pass. The trick is to survive until the economy turns around -- and this means sacrifice.
- It means buying a patch for your jeans when you wear a hole in the knee, rather than shopping for a whole new outfit.
- It means buying a $10 Mr. Coffee coffeemaker for the kitchen today, to avoid spending $10 at Starbucks every day of the week.
- It means clipping coupons, shopping on sale, and buying generic.
- Until things get better out there, you're going to want to live with what you've got, or do without it until you can afford something better.
To me, growing up in the recessionary 1970s, this all comes almost instinctively. But if you were born in the go-go 1990s, it may require some adjustment.
Lastly, a word about saving for the future. Let me just remind you that recessions eventually end. Once they do, the stock market tends to go up. Sure, the Dow Jones Industrial Average has been stuck in neutral for most of this year. But when we eventually get through this -- and we will -- any money you've been able to tuck away after providing for the bare needs of surviving the economy, if invested in the stock market, is going to pay off handsomely.
Have you lived through a recession (or three)? What advice would you give Generation Y, and its successors, if you could get their headphones out of theirs ear long enough to catch their attention? Tell us below.
Motley Fool contributor Rich Smith owns shares of Google, but he's never worked there. The Motley Fool owns shares of Google, Apple, and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft, Apple, Google, Amazon.com, and Walt Disney, as well as creating bull call spread positions in Microsoft and Apple.