Speaking of college aged kids and the burden this recession puts on them: Obama Economic advisor Austin Goolsbee reviews the labor economics literature surrounding those who graduate college in the middle of a recession – this is from 2006, pre-collapse:
…Lost in the argument over whether young people today know how to work, however, is the mounting evidence produced by labor economists of just how important it is for current graduates to ignore the old-school advice of trying to get ahead by working one’s way up the ladder. Instead, it seems, graduates should try to do exactly the thing the older generation bemoans — aim for the top.
The recent evidence shows quite clearly that in today’s economy starting at the bottom is a recipe for being underpaid for a long time to come. Graduates’ first jobs have an inordinate impact on their career path and their “future income stream,” as economists refer to a person’s earnings over a lifetime.
The importance of that first job for future success also means that graduates remain highly dependent on the random fluctuations of the economy, which can play a crucial role in the quality of jobs available when they get out of school. That is good news for this year’s graduates, who are entering the work force with the economy growing, but rather disturbing for recent graduates who were driven by recession into taking less-than-ideal first jobs and are now aiming to work their way up….
A recent study, by the economists Philip Oreopoulos, Till Von Wachter and Andrew Heisz, “The Short- and Long-Term Career Effects of Graduating in a Recession” (National Bureau of Economic Research Working Paper 12159, April 2006., finds that the setback in earnings for college students who graduate in a recession stays with them for the next 10 years.
Kids graduating college now will not only be in a hostile job market, but the best evidence is they’ll be making less than they would have otherwise for an additional 8 to 10 years. And, as yglesias points out, that’s with a mild recession. The effects of this are going to burn for a long time. Taking a hammer to the private student loan shark industry would be a nice play.