It will likely take decades to completely understand all of the social, financial, economic, and professional impacts the COVID-19 pandemic had on every generation. However, if history repeats itself, the global pandemic will have the most significant impact on the newest generations in the workforce, both Gen Y and Gen Z.
It is easy, in hindsight, to see how the Great Depression impacted Traditionalists, and how the end of the social contract impacted Generation X. Moving forward, it will be important for leaders to be thinking about the lasting impact the COVID-19 pandemic will have on their followers. The full impact will not be known for quite some time. What is known is that there will be an impact.
Ana Hernandez Kent, a policy analyst at the Federal Reserve Board of St. Louis, believes that Millennials will be especially hard hit by this crisis. “Millennials as a whole were more vulnerable going into this. Especially for those who have lost jobs, lost their income, and then have no wealth safety net to fall back on, they could really, really suffer from this and be hard-pressed to recover.”
There are many things for leaders to consider as they grapple with how the economic crisis brought on by COVID-19 will impact their followers. One of the first things to consider is that this was a “recession by choice” and not caused by underlying economic or financial issues. This situation is not like the 1929 crash of Wall Street, the dot-com bubble, or the sub-prime lending that caused the Great Recession. Nor is this like the financial hardships experienced after September 11, caused by terrorist attacks. This recession was caused by government shutdown orders that aimed to reduce deaths in the COVID-19 pandemic, not by underlying weaknesses in the global financial systems or an outside enemy.
Gen Y and Z Challenges
In addition to the cause of the economic challenges in 2020 being different than other historical recessions/depressions, there are also other issues that face the newest generations, Y and Z, that were never faced before. One key financial issue to consider is the burden of student loan debt. Many of the newest college graduates entering the work world will experience a challenging economy AND significant college debt at the same time. Every other generation who graduated into difficult economic times only had the challenge of navigating one major issue—the economic situation at that time.
As of January 15, 2020, Americans owed over $1.64 trillion in student loan debt, spread out among about 45 million borrowers. That’s about $587 billion more than the total US credit card debt, according to studentloanhero.com. Among the class of 2019, 69% of college students took out student loans, and the average debt was $29,900.
For the 2018–2019 academic year, students borrowed $259 billion. These years are significant when looking at the generations. This represents the youngest Millennials leaving college and the oldest Generation Z entering college.
From a strategic planning standpoint, as it relates to talent acquisition, this is significant data for all leaders to consider. The next several years may see a decrease in college enrollment if people begin to see post-secondary education as a financial burden. There’s no denying that the confluence of an economic recession and a heavy debt load would add significant pressure to the newest members of the workforce.
The COVID-19 pandemic also changed the delivery of post-secondary education. Colleges around the world closed their campuses to prevent the spread of the virus among students and staff and began to deliver more content online. Graduations, sporting events, and all social activities were canceled. The “college experience” was dramatically different for these affected generations than ever before in history.
When colleges opened again, some students decided against traditional post-secondary education because of a lack of “the college experience” combined with a heavy financial burden. The future employee base will come to view distance learning as normal. Will employers need to plan for assuming more of the educational burden for their new talent? Will the workforce demand more and better professional development practices from the employer? These are just a sample of questions visionary leaders should be asking of themselves and their teams.
All the ways in which this will affect the talent market moving forward will not be known for quite some time. One thing that is certain, however, is that it will affect the shortfall of college-educated talent. In Europe and North America alone, McKinsey estimates a shortfall of 16 to 18 million college-educated workers.
There is a good chance that by 2030, businesses will have experienced the full impact of the COVID-19 global pandemic on talent acquisition strategies. It is likely that top talent will become even more scarce. All of this points to the need for businesses to set themselves apart as employers of choice.
For the newest generations, leadership will be the strategic differentiator. Organizations with strong leaders will attract top talent. Organizations with leaders who continually improve upon their understanding of their followers will have a significant advantage. Finally, organizations that invest in the continued leadership development of their employees will attract the best talent available.
Adapted from our best-selling book, The Leadership Decade: A Playbook for an Extraordinary Era. If you’d like to purchase a copy, please visit s21.us/tldbook for a hardback book or s21.us/tldebook for an ebook. For even more information, check out theleadershipdecade.com.