It was a pleasure to take part in a recent debate with future guru Patrick Dixon and ‘Queen of Shops’ Mary Portas, hosted by JLA.
We were invited to discuss what the ‘new normal’ post-coronavirus might look like, so I offered my perspective on how the crisis and its aftermath might affect young people (particularly those leaving education this year).
Here I expand on the insights I offered for a fuller thought-piece. It’s a meaty read – but one I hope you will enjoy.
New normal: sinister or serendipitous?
Firstly, let’s discuss the term ‘new normal’. I’ll admit: I’m not a huge fan. It implies change being quickly imposed on, rather than gradually agreed by, society. It suggests there is no way back to our “BC” lives, even the aspects we cherished.
It also raises questions of whether we are overreacting to some painful but essentially short-term disruption. Understandably, many are now saying: “C’mon, we’ve all done our bit. Surely we need to to go back to the way things were ASAP?”
Man, there is so much I miss about BC. Little did I know the early days of 2020 would seem like a halcyon era. So much freedom, opportunity and decadence (and to think I was doing Dry January). Little did we know that within the space of a few months, we would be attempting to conduct our entire social life through Zoom. Who’d have thought that we’d be consuming ALL our culture, not just 90% of it, through Netflix and YouTube? That we’d even be dealing with a bonking ban? Who wants any of THAT to continue longer than necessary?
Far more seriously, the lockdown has been devastating for the economy. Last week, we heard the news that there was a whopping 20.4% fall in GDP in April. I have already discussed how the youngest workers in the labour market are disproportionately affected by the economic fallout from this crisis. We would see as many as 600,000 young people becoming unemployed this year, according to the Resolution Foundation. Already, a quarter of 18-25 year olds have been made unemployed or had their hours/income reduced as a result of lockdown.
These are the hardest of times for young people. They are far less capable of switching seamlessly to ‘WFH’ and teleconferencing in a lovely back-garden compared to older folks. How can we make a ‘socially-distanced’ economy permanent when it ignores massive industries that rely on physical gatherings and personal proximity? The IFS reckons some 30% of those employed in industries hit hardest by lockdown are 18 – 25, higher than any other age group.
Even if your job doesn’t depend on it, I completely understand why some people hate the idea of a future that limits physical contact with others. If the ‘new normal’ doesn’t allow for group singing, the collective experience of art and spontaneous trips to the pub, I don’t want any part of it.
Things will never be the same again
But does anyone want to go back *exactly* to the status quo ante? I don’t think so. When I speak to readers and do my research, I realise that people aren’t just reluctant to end lockdown for public health reasons. Most of us have had a buying break – and we quite like it. Spending on credit cards went down £5bn in April, the biggest drop on record. People are falling out of love with shopping.
This is one reason why I have very mixed feelings about this period. What’s good for the economy is “shopping with confidence”, as Boris Johnson described it. But what’s better for the individual is saving more and spending less. Lots of people are finally grasping this – great on a personal and even spiritual level, but pretty disastrous for the existing economy we have built.
The economist Joseph Schumpeter once talked about “creative destruction”, with only the best and most useful businesses coming back from a crisis. Take department stores. Major names like Debenhams and House of Fraser were already in trouble – and perhaps with good reason.
Personally, I don’t share journalist Madeline Grant’s same desire to rush back to department stores. I was watching an old episode of Endeavour the other night (yes, I have officially run out of Netflix boxsets) which featured an old-fashioned emporium in Oxford’s city centre. It reminded me of the glory days of old-fashioned department stores when the shopping experience was a treat, the goods were high-quality and customer service was everything. It’s just not like that anymore.
Most modern department stores are impersonal chains flogging tat made by multi-national companies with far-flung, precarious supply chains. And while I don’t want to slight the hardworking folks employed by Britain’s high street shops, it’s clear to me that caring customer service isn’t valued by Big Retail anymore. Their business model is no longer about helping customers find the right products for them. It’s about forcing us to buy products in a way that suits the shops and their cheapo suppliers – first and foremost.
I dread running the gauntlet of beauty halls in order to buy the one high-end beauty product I definitely can’t live without (NARS radiant creamy concealer, if you must know). Okay, so most staff have moved beyond the Pretty Women school of customer service (though I do still get the feeling in some places that I’m just stuck on someone’s shoe).
But there are far too many staff trying to sell far too items, all there to offer the mere illusion of choice and customer service. If 20 different brands are selling 50 different types of foundation, but only 1 in the entire store is made in a colour that doesn’t make fair-skinned women look like Oompa Loompas, you know something has gone wrong. And however lovely the woman on the concession is, no make-up application skill on her part will negate this basic fact. Trust me: I know!
When real choice is available online, the high street has to offer something a bit different. But it doesn’t. Something needs to change. But that may only happen now because a COVID recession has forced the retailers’ hand.
That’s just one example of where our consumer economy has gone wrong. But we’ve had time to reflect. We’re starting to recognise that many aspects of our consumer economy are broken. What’s more, they never got properly fixed after the last financial crash. The housing crisis, the dysfunctional student funding system, our reliance on personal debt, the denigration of savings – all of that continued, and in some ways got worse, after 2008.
A millennial perspective
I can seriously relate to the disruption and sense of chaos surrounding the ‘corronnial’ generation leaving education at the moment. I graduated just after the financial crash in 2008. While I worked hard and overcame many obstacles to get a good degree, it counted for surprisingly little in a post-Lehman Brothers world of austerity, unpaid internships and mega graduate competition. That probably helps to explain why I spent a good chunk of my early twenties unemployed, anxious and living at home with my family. Though the fact I was trying to be a pop musician in an economic downturn might also have had something to do with it!
In any event, I quickly realised I would need to become way savvier and more entrepreneurial than I ever had been before. I realised I would need to create my own opportunities and learn more about how money and the economy really worked. And the same is true for this next generation. They’ll have to dig deep and be even more resilient, adaptable and courageous than they ever expected to be.
I started Young Money Blog in 2011 and as I wrote about my generation’s financial problems over next 9 years, several things became clear. Firstly, it takes a lonnnnnggggg time to recover from an economic crash. We now know the wages and disposable income of the Lehman Bros generation took nearly a decade to get back to the level they should have been.
Secondly, it’s amazing how much millennials have achieved, considering. They have saved and invested beyond what was expected of them. They have punched above their weight in corporate life, shifting many big companies away from complacent and often badly-managed hierarchies towards something more egalitarian, open and socially-minded. But those gains were hard-won. The battle for security and dignity was tougher than it needed to be.
Yes, life is tough. Success isn’t handed to you on a plate – you have to graft for it. But at the same time, young people are the future. They need investment, not punishment, if we are to unlock the growth and innovation our economy desperately needs in the years to come. This will be crucial if we want to avoid more years of austerity, the cost of government borrowing getting out of hand and inflation spiraling.
A roadmap for the future
First of all, we need to start recognising that young people are vulnerable by default. Psychologists argue they remain so right up until the age of 25: only then does the adult brain reach full maturity. The treatment of young people through the tax and benefits system, as well as the design of products and how they’re regulated, must assume that while not all of them will be in a weaker position as a result of this crisis, most will.
Companies have to get away from seeing younger employees as the most dispensable when the chips are down. If anything, they’re indispensable – because they’re the ones who are going to drive your organisation forward in the future.
And if that’s the case, we can forget about a full transition to remote working anytime soon. Putting aside the long-overdue practical apprenticeships now needed, even young white-collar workers need to get back to the watercooler. They can’t continue working from poky bedrooms with flatmates that drive them up the wall or from their childhood bedroom with posters of Blue still on the wall.
Young people need hands-on mentoring, training and support to bring out the best in them. At the beginning, they need to be in a physical workplace to do that. I’m mentoring a few young people in the pensions industry and all of them tell me that it’s so much harder to cultivate their interpersonal skills solely through their laptop. Of course! It’s hard enough holding a functional quiz night on Zoom, let alone relying on it to foster relationships and develop a sophisticated professional personality.
But once we get those young people on their feet, we must question whether to make young employees live in expensive areas for work that could be done anywhere. A sensible compromise I think would be to allow people to work from home some of the time but to travel in for key meetings, for appraisals, for bonding with colleagues – surely that’s achievable?
The online revolution has been a long time coming in the university sector but surely this will be one of the main sectors unable to go back to how things were. I was writing about MOOCs – massive online open courses – nearly ten years ago but we’ve become wedded to the notion that the educational experience must be entirely campus-based. We have seen a real, widespread decline in value for money offered to students in the past two decades and we are all paying the price as a society, not least through the no-platforming, loss of free speech and other bits of immature ‘safeteyism’ that students increasingly want in return for their cold, hard cash.
We have lost sight of the real value of a university degree. It’s becoming a meaningless exchange of money for intellectual safety, the promise not to be challenged, questioned or disturbed. I think we get back to the true meaning of higher education by getting off campus and away from the insular goldfish bowl mentality it triggers and moving more of the experience online. The two main challenges are resources and debating: there will probably never be a substitute for libraries, laboratories and robust face-to-face discussions. But so much of the university experience is smoke and mirrors, stunting young people’s mental growth and draining their finances for years afterwards. A physical and online hybrid would surely help to mitigate the runaway living costs we’ve seen in most university towns in recent years.
Finally, we need to harness a new generation of accidental savers & investors. This crisis has caused a profound change in the pysche of young people. We know the very worst can happen, and it could indeed happen again. We won’t ever be caught out again by the loss of a job or a sudden drop in our income. The absence of a safety net for many parts of society has taught us that the government can’t, as Rishi Sunak put it, ultimately save every job and business. But we can save our own bacon through clever saving, spending and investing. This time around, we need to be rewarded for canny behaviour, perhaps for example with the creation of special COVID-19 bonds that give us returns for our investment back into the economy.
How can we avoid repeating the mistakes of the past? By understanding that the ‘corronnial’ generation need to be prioritised in a way young people haven’t been in recent times.
That’s the only way we are going to make the new normal not just bearable, but – dare I say – better than before.
