Top 4 economic obstacles for young people – and ways to cope

2. Wage compression

Butch Dill/AP/File
Students in August attend graduation ceremonies at the University of Alabama in Tuscaloosa, Ala. A study of college graduates in Canada found that those who start their careers in a recession take a decade to catch up to the incomes of those who graduate during good times.

Millennials should get used to budgeting because the recession's lingering impact on their income could last years. "There's a misperception out there that once the economy recovers, it will take two or three years and everything will be back to normal, but for a lot of people, these impacts will last years," says John Irons, research and policy director at the Economic Policy Institute in Washington. "People who graduate into a recession can be on a permanently different career track than someone just like them who had the fortune of graduating in a boom."

It can take a decade to recover, according to Mr. von Wachter's longitudinal study of college graduates in Canada. Persistent damage to income was pronounced for those leaving small schools with less career-oriented degrees. More important, the students who did recover the initial income gap actively worked to improve their job and income prospects. But some workers never caught up.

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