COVID-19 will cast a long shadow over future generations

Fred McMahon is a resident fellow at the Fraser Institute.

In the current uncertainty and tumult, it’s easy to lose sight of the long view. Indeed, few are talking about what COVID-19’s current devastation will mean for future generations. But the devastation will not magically disappear after a vaccine is implemented successfully. On the contrary. It will cast a long, dark shadow over today’s young people and children. Many, perhaps most, will earn less, learn less and experience increased rates of unemployment and reduced health outcomes over their lifetimes.

With unemployment high and most companies in at least partial shutdown, many high-school, college and university graduates of the COVID-19 era will be unable to find career-oriented jobs; even those who do will miss out on socialization and mentorship. Again, the damage will be long-term. Post-pandemic, even more employers will likely favour fresh-out-of-college grads over someone who has been unemployed or delivering packages for a couple years.

For evidence, let’s look at recent history. A landmark 2010 study of the U.S. labour market found that for each percentage point increase in unemployment, college grads earned 7 per cent to 8 per cent less in their first year, and 4 per cent to 5 per cent less 12 years out. That suggests that a December, 1982, graduate (when U.S. unemployment was 10.8 per cent) would earn 23 per cent less (on average) than a May, 1981, graduate, when unemployment was 7.5 per cent.

A 2006 study of Canada’s labour market finds an initial 9 per cent drop in earnings for students graduating into a typical recession, alongside a five-percentage point increase in unemployment. A study after the Great Recession (2007 to 2009) found similar negative – albeit weaker – effects.

In 2020, unemployment in Canada soared from 5.6 per cent in February to 13.7 per cent in May as graduates were coming into the job market. By November, unemployment fell to 8.5 per cent, a good sign but much uncertainty remains and governments across the country are drowning in debt.

Typical recessions point the sharp tip of the spear at grads. Graduate a year or two earlier or later and the job market is healthy; graduate into a recession, and the penalties will be significant. The COVID-19 recession – with its deeper and broader consequences – will make things even worse. The job collapse has been greater than in other recessions and has hammered the service industry, which students rely on to finance their education. This means the pandemic is hurting current students, too.

And it’s not just the weak job market that hangs over today’s young Canadians. Graduates’ final year of school and examinations – key measures for potential employers – have been thrown into chaos. The long-term learning consequences are unknown. Many education institutes were able to shift to online learning, but that’s only after damaging interruptions.

Some pre-pandemic studies have shown good results for remote learning, but these involved students who chose remote learning from institutions equipped to provide it. Outcomes will likely be much worse for students and institutions that were unequipped for remote learning during COVID-19.

Already, school districts across North America report decreased learning and increased failure. For example, a poll of Quebec school administrators showed that marks are down and failures are up. An OECD study released in September suggests a 3 per cent pandemic-related lifetime loss in income – not just of recent grads, but of all students in school now.

Finally, COVID-19 is increasing stress on up to 50 per cent of Canadian families. Prolonged stress can produce lingering problems and at worst lead to a family breakup, abuse or even suicide. Some families are having a difficult time putting food on the table. Stress, isolation and for some, hunger, will cause long-term psychological and health damage.

Of course, the losses will be distributed unevenly. Who will suffer the most? The poor, the technologically ill-equipped and/or poorly connected, and those young people in homes with little tradition of higher education – in other words, those most in need of a good break.

For many of us, the vaccines are the light at the end of the tunnel. For others, the tunnel stretches out far ahead in the dark.

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