Timing is everything: How the fallout from covid-19 will affect the young

The immediate impact of the corona virus on the young is only now playing out: schools and universities have closed, many of their parents will have lost their jobs or face uncertainty about future income, and for the first time in their lives will have faced shortages for basic goods like pasta, rice and toilet rolls.

The second order effects are still anyone’s guess but some things have increased in probability over recent weeks. We are in a deep recession, if not an outright depression. As supply chains have broken down and governments have flooded the economy with money, inflation looks increasingly likely. Finally, there is the prospect of some profound changes in both society and political environment over the next few years — positive or negative is still very much unknown.

The formative years between age 16 and 25 tend to have a lasting influence. Their income growth, how successful their marriage turns out, the number of children they have and their investment decisions. Lets look at each in turn.

Income and employment

Whereas older workers can (assuming they keep their job) weather the storm that a weak labour market presents by staying in their job. Young workers do not have that luxury. Job opportunities dry up during a recession and so opportunities for early career advancement go missing at a crucial stage in their development — both professionally but also personally (e.g. family formation).