NEW YORK – An economic boom or bust during our childhood years can shape how we approach work and determine our professional motivations and job preferences as adults. According to new research from Columbia Business School, job preferences vary based on the economic conditions experienced during youth -- with recessions creating cohorts of workers who place higher priority on income for the rest of their careers, whereas economic booms produce cohorts who predominately care more about job meaning and fulfillment. COVID-19’s impact on our nation’s workforce will have longer-lasting consequences beyond the current, hard-felt economic struggles.
In the study, "Macroeconomic Conditions When Young Shape Job Preferences for Life" Stephan Meier, the James P. Gorman Professor of Business at Columbia Business School, and his co-authors Maria Cotofan and Robert Dur of Erasmus University Rotterdam and Lea Cassar of the University of Regensburg, suggest that macroeconomic shocks – such as the IT boom, the Great Recession or the COVID-19 pandemic – have long-lasting effects on what people value in their professions. They find that these temporary economic conditions create shared experiences among generations and may be the key to understanding persistent generational differences – not some hard-to-explain, deeply ingrained personality factors. Using data from the General Social Survey and the US Bureau of Economic Analysis, the researchers examined variation in income-per-capita across US regions and over time since the 1920s, constructing a measure of macroeconomic conditions during one’s impressionable years.
"Employees take many motivating factors into account when answering 'why?' they choose certain jobs. For some, income is most important, but for others, what they are doing, who they are working for, and how they are doing it are just as important," said Columbia Business School Professor Stephan Meier. "Having a career mindset of 'working hard for the money' versus 'leading a purpose driven life' could be the difference of you growing up in the boom years of the late 1990s or the economic downturn that followed after 9/11 and into the financial crisis. And now we can add coming of age or entering the workforce amidst the COVID-19 pandemic to that list."
In fact, many of the generational groups currently recognized – such as Millennials, Gen X, and Baby Boomers – may be too broad, spanning too large a period and overlooking substantial variation in shared macroeconomic conditions among group members. Following an alternative approach, where individuals form preferences based on shared macroeconomic experiences, Meier and his co-authors find that each generation has both 'lucky' and 'unlucky' individuals, who will value different attributes in their job depending on the macroeconomic experiences during their impressionable years. They further indicate that overlooking these intra-generational differences in member preferences for work can have important consequences for the organization and efficiency of labor markets.
In addition to the systematic effects of macroeconomic conditions on job preferences, the research points to the effects value of work has on business cycle dynamics. For instance, as economic booms influence workers to care more about meaning and less about income, economic growth may slow as a result. Similarly, economies may rebound quicker from a recession as they produce cohorts of workers who place a priority on earning high incomes. Understanding these findings can be helpful for various sectors including mission-driven organizations such as public-sector organizations and not-for-profits who may be better prepared to suffer less from labor market tightness during booms than typically thought.
"Understanding where job differences stem from sheds light not just on individual working relationships but across job sectors," said Meier. "It is important for industry leaders and managers to better understand and appreciate how these differences are shaped to inform organizational, personnel, and recruitment decisions."
The study, "Macroeconomic Conditions When Young Shape Job Preferences for Life," is available online here.
To learn more about the cutting-edge research being conducted at Columbia Business School, please visit www.gsb.columbia.edu.
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