I vividly remember the sense of angst and unease in the world back in 2008. At the time, my 15-year-old self couldn’t fathom how within a matter of days, life could change so quickly. People were losing their jobs, faith in the banking system had faltered, and most importantly—or so it felt at the time—my parents had stopped buying me Gobstoppers candy when we’d go to the grocery store. While I was too young to understand why my weekly fix of Wonka candy had suddenly become a luxury, I was undoubtedly experiencing the pain of it.
Twelve years later, here we are, all the wiser, entering another global recession. Courtesy of what can be categorized as a Black Swan event, the pain of what’s happening in the world isn’t the same as I experienced back in ’08—it’s significantly amplified. There seems to be a never ending stream of negative news, mongering a sense of chaos that’s reverberating throughout the world right now. Whole countries are being shut down, small businesses are going under, and unemployment rates are skyrocketing.
Despite all this, as difficult as it may be, it’s important to remember that the best way to tackle adversity is through grit, perseverance, and optimism. For those of us early on in our careers, we have a unique opportunity ahead of us. Economies follow cyclical patterns of expansion and contraction, which on the upswing can herald a few unexpected, yet positive opportunities.
Higher Job Satisfaction
As a generation, Millennials don’t have the best reputation. We’re often referred to as entitled, narcissistic, and lazy. Unfortunately, we’re also a group of individuals who, for the most part, are unsatisfied with our jobs. A study conducted by Gallup found that 71% of Millennials are not engaged at work and 60% of us are open to new opportunities.
During times of prosperity, it’s almost too easy to develop a propensity for being unsatisfied since the job market seems to constantly be sprouting new, more exciting opportunities; it’s literally a breeding ground for career FOMO. On the other hand, an economic downturn is a powerful external stimulus that can help us come to terms with our gripes, reset our sense of fulfillment, and provide us with a new, surprisingly positive perspective.
Emily Bianchi, a professor at Emory University, has conducted research looking at the relationship between job satisfaction and the economic conditions in which people entered the workforce. The results were conclusive: people who started their careers during a recession, reported higher levels of job satisfaction compared to their peers. This was true not only in the short term, but decades into the future.
Key Takeaway: Launching your career during a time of scarcity actually predicts higher levels of job satisfaction.
Take Control of Your Finances
Personal finance quickly became topical for many households. In the past few months, nearly two million Canadians lost their jobs, pushing unemployment rates to an all-time high of 13%. The loss of income is even more concerning when you take into consideration that household financial habits are quite poor. For example, data from the Government of Canada’s website, shows that only 47% of Canadians follow a monthly budget, despite the fact that over 50% of us live paycheck to paycheck.
Managing cash flow is a part of the equation, but financial literacy is critical to the long term financial health of individuals and families. Sadly, when it comes to financial literacy, we experience a Dunning-Kruger like effect and grossly overestimate our knowledge. In a recent study conducted by Lowestrate.ca, participants were surveyed on their perceived financial literacy, closely followed by a short questionnaire to test their knowledge.
The results: 78% of participants felt they were financially literate but only 43% passed the skill test. (*Side note, if you’re interested in testing your own knowledge, try the quiz at the bottom of this page.) Digging into the demographic data, Millennials were the least financially literate of the bunch, with only 21% passing the quiz compared to 45% of Gen X’ers and 52% of Baby Boomers. So we hate our jobs and also think the colour of our car determines our insurance premiums—great!
Contrary to Mike Tyson’s adage, I’d argue, nobody’s got a plan until they get punched in the face. And the pandemic, quite literally sucker-punched the finance out of millions around the world. However, that’s exactly why now is a great opportunity to learn, plan, and adjust your habits moving forward. Whether it’s simple activities like putting in place a monthly budget for managing expenses or taking advantage of low stock prices for future savings, there is no better time to take control of your finances.
Key Takeaway: Economic downturns can be leveraged to improve your long term financial wellness.
Sparks of Innovation
Some of the most influential companies in the world were founded during recessionary times. In 1929, Walt and Roy Disney introduced the world to Mickey Mouse and incorporated their company, just as the world was entering the Great Depression. Off the back of the oil crisis in 1975, Microsoft was created by co-founders Bill Gates and Paul Allen. More recently, the dubbed email killer, Slack, was founded during the Great Recession in 2009. These three companies are not isolated examples. EA, IBM, GE, HP, Venmo, WhatsApp, Square, and Uber all belong to cohorts of businesses that were founded during tough economic periods.
Though counterintuitive, economic contractions actually provide combustible environments that foster innovation. At the macro level, there’s a never-ending list of problems in the world to solve, each of which represent opportunities for value creation. Simply put, entrepreneurs are spoiled for choice during a recession. At the financial level, money becomes incredibly cheap. Many institutions drop interest rates significantly to promote lending in the hope that it will inject life back into the economy and enable commerce to continue. Finally, on a personal level, the impetus to take action is higher since recessions are associated with job loss. On one end of the spectrum, employees may be frustrated at the perpetual feeling of being ‘just another number’ on the company balance sheet, encouraging them to delve into the fearless world of entrepreneurship. Or, that same mindset may push current employees to put forth their most innovative ideas to stand out.
No matter how you slice it, these periods of Capitalistic Natural Selection prove to be breeding grounds for companies that shape the future economy—and this time is no different. Just like those formed in the 1930s, 1970s, and the early 2000s, businesses born out of this Pandemic will serve as catalysts for creation, pioneering new innovations, and act as bulwarks, supporting the future of our economy.