The 2020 election will be the first one in which members of Generation Z are casting their vote for president, with candidates sure to be flocking to college campuses soliciting their votes. For now, polling suggests Gen Z, like slightly older millennials, is more receptive to socialistic ideas and branding than older generations, but don't be so sure those views will last. Unlike millennials, Gen Z are entering their working years with a robust labor market. Should that persist, we may see the pendulum for young people start to swing back in the direction of capitalism.
The idea here is that people's political views are largely formed in their youth, with events occurring between ages 14 and 24 having three times as much impact as those occurring after age 40. Those experiences of youth can then shape behaviors and voting habits as people age. People who came of age during the Great Depression would carry those financial scars for the rest of their lives; Americans raised in the postwar economic boom would have a very different outlook. This also explains how economic policymakers around the world whose formative years were in the inflationary 1970s can remain inflation hawks to this day, despite weak inflationary pressures over the past decade.
And it explains how some young people can be so infatuated with politicians like Bernie Sanders and Alexandria Ocasio-Cortez. Few people under age 35 remember the roaring economy of the late 1990s. What they've experienced has largely been one or two of the recessions we've had over the past 20 years, the housing boom and bust, high levels of income and wealth inequality, and relatively meager wage growth.
But while the political views of current 20- and 30-somethings may be starting to harden, those of Gen Z are just starting to be formed. And to the extent we continue on the labor market trajectory we're on, it might mean Gen Z ends up with more centrist attitudes on the economy.
Consider the different experiences of a college senior in 2016 versus a student who will be a college freshman in the fall of 2020. That 21-year-old senior in 2016 was 13 when the financial crisis hit in 2008. Maybe one or both of their parents lost their jobs. Maybe they or one of their friends experienced home foreclosure. The slow recovery from that crisis likely shaped their views of the world and the economy throughout their high school and college years. It would be natural for those experiences to make someone much more progressive in their attitudes about government.
But 18-year-old freshmen in 2020 were born in 2002. By the time they were teenagers it was 2015, at which point the national unemployment rate had come back down to around 5 percent. They've spent their final two years of high school seeing "now hiring" signs in the windows of retailers, coffee shops and restaurants, and thanks to higher minimum wage laws in many places being paid up to $15 an hour to flip burgers or stock shelves. (Just this week, Bank of America announced a new minimum wage of $20 an hour.) Businesses and investors are already becoming attuned to the growing buying power of Gen Z, and in the aggregate they don't have the economic scars that older generations do. Their political views should follow.
Should this come to pass, this should be considered a policy success. Extreme economic policy views when held en masse are typically a result of extreme hardship, whether that be the inflation-scarred baby boomer generation that came to distrust government, or the unemployment-scarred millennial generation interested in hearing more about a jobs guarantee or big spending programs.
This doesn't mean in the aggregate that the economic preferences of young people are likely to shift to the right overnight. Voters in their 20s and 30s are just beginning to vote in large numbers, and we're most likely going to see more legislators elected over the next few years embracing labels like socialist or democratic socialist. But to the extent that policymakers can continue to keep the labor market in a good place for several more years, enthusiasm for progressive economic policies may start to wane, and when members of Gen Z are old enough to start running for office, maybe they'll push back against what they perceive to be the extremism of millennial politicians.