People Who Graduate During Recessions Earn Less Money — but They’re Happier

When the graduating classes of 2009, 2010, and 2011 hit the job market, their employment prospects were depressingly bleak. Unemployment rates were at historic highs and job openings were scarce. Nine months after graduation, only 56% of the class of 2010 had found a job. Many of those who did find work held jobs that were temporary, lacked benefits, or did not require a college degree.

These early career experiences appear to have lasting negative consequences for later career success. For instance, people who graduate in recessions earn less money than their counterparts who graduated in more-favorable economic times, even decades later. They also tend to work for smaller, less-prestigious, and lower-paying firms. Similar patterns emerge among people who reach the pinnacle of corporate life: CEOs. Recession graduates who become CEOs often run smaller, less-prestigious companies than their counterparts who started in more-prosperous economic times.

While there is little doubt that recessions have lasting negative effects on salaries and occupational prestige, they appear to have some surprisingly positive implications for other aspects of people’s working lives.

For one, people who enter the workforce in a recession tend to be happier with their jobs, compared with people who graduate in better economic times. For instance, in one paper I examined the job attitudes of 1,638 people over a 15-year period. Even though they earned less money than people who started their careers in better economic times, recession graduates were significantly happier with their jobs both early in their careers and years later. These effects could not be explained by different industry or occupational choices. Instead, recession graduates tended to think about their jobs in more-positive and ultimately satisfying ways. Rather than ruminating over unfollowed paths or wondering what might have been, they focused on what was good about their jobs and were more grateful for the jobs they held. People who began their careers in prosperous times, on the other hand, were more likely to be plagued by regret, second-guessing, and what-ifs.

Entering the workforce in a recession appears to affect not only how people think about their jobs but also how they think about themselves. One metric of self-focus is narcissism: the belief that one is special, unique, and entitled to good outcomes. This way of being can be costly at work. Narcissists tend focus on their own interests even if doing so is harmful to others. They are also particularly likely to become angry or aggressive and to steal from their employers or shareholders.

One reason that recession graduates might be less likely to develop a grandiose sense of self is that narcissism seems to be tempered by adversity and setbacks. People who begin their careers during economic downturns often have a more difficult time finding work and establishing their careers. Many are forced to move back home, work in jobs that do not require a college degree, or cobble together part-time gigs. While these challenges can make it difficult to establish independence and build a career, they also appear to hamper the development of an overinflated ego.

I tested whether graduating in a recession did in fact temper narcissism, using data from a representative sample of over 30,000 Americans. I found that people who entered adulthood during worse economic times were less narcissistic than those who came of age in more-prosperous times. Similar effects even emerged among CEOs. Company leaders who began their careers in challenging economic times were less narcissistic than CEOs who began their careers in more-prosperous times.

If entering the workforce during a recession affects people’s sense of grandiosity and entitlement, could it also affect their willingness to engage in unethical business practices? Some evidence suggests it could. Past work has shown that narcissists are more likely to behave unethically, sabotage their coworkers, and be convicted of white-collar crime. Given that recession graduates are less likely to be narcissistic, could they also be less likely to be traverse moral and ethical lines? Consistent with this idea, my colleague Aharon Mohliver and I found that CEOs who first began their careers in worse economic times were less likely to backdate their stock options, an unethical, illegal, and common practice in the late 1990s and early 2000s. So not only were recession graduates less likely to regard themselves as supremely important and deserving of outsize attention and praise, but they were also less likely to engage in behavior that enriched themselves at the expense of their organizations.

Many people who started their careers during the Great Recession still bear the scars of entering the workforce during that tumultuous and uncertain time. They may have gaps in their résumés and fewer zeros in their salaries. But these tough experiences may have helped shape them into happier, less-self-absorbed, and more-ethical employees.