Considerations

The Orga­ni­za­tion for Eco­nomic Co-Operation and Devel­op­ment sees the pro­found prob­lems fac­ing young Amer­i­cans:

The cur­rent major eco­nomic down­turn has brought about a sig­nif­i­cant wors­en­ing in the labour mar­ket per­for­mance of US youth. In the two years to Sep­tem­ber 2009, the employ­ment rate of youth aged 16–24 fell by 7 per­cent­age points to 46% and their unem­ploy­ment rate rose by 7 per­cent­age points to 18%. Despite talk that the worst of the reces­sion may be over, there is lit­tle doubt that its labour mar­ket con­se­quences will per­sist over the com­ing quarters.

Evi­dence from the after­math of the early 2000s slow­down in the United States casts doubts on how quickly the youth labour mar­ket is likely to recover from the cur­rent deep reces­sion. Indeed, in 2007, the labour mar­ket per­for­mance of youth still stood sig­nif­i­cantly below its 2000 level. The youth employ­ment rate was 53% in 2007 com­pared with 60% in 2000; the youth unem­ploy­ment rate, at 11%, was about 1 per­cent­age point higher than its 2000 level…

In 2008, the inci­dence of long-term unem­ploy­ment among youth in the United States was 7.1% ver­sus an OECD aver­age of 18.5% (Fig­ure 1.7). This inci­dence increased over the past decade from 4.9% in 1998 whereas it declined for the OECD aver­age. In par­tic­u­lar, the inci­dence of long-term unem­ploy­ment rose by 0.6 per­cent­age points between 2007 and 2008 as a result of the ongo­ing eco­nomic crisis.

Any young per­son out of col­lege and in his twen­ties — and per­haps even in his thir­ties — can tell you plenty of sto­ries. The entire gen­er­a­tion is gen­er­ally upset, and rightly so. Here is what the OECD rec­om­mends that the U.S. gov­ern­ment do:

• Tem­porar­ily relax unem­ploy­ment ben­e­fit eli­gi­bil­ity cri­te­ria for youths with some work expe­ri­ence, but apply strict job-search requirements;
• Expand exist­ing early-childhood edu­ca­tion pro­grammes and pro­vide more sup­port for par­ents and chil­dren when they go to pri­mary school;
• Extend voca­tional train­ing by rolling out nation­wide Career Acad­e­mies, small learn­ing estab­lish­ments within high schools com­bin­ing aca­d­e­mic and tech­ni­cal education;
• Broaden the role of the Office of Appren­tice­ships to include fund­ing respon­si­bil­i­ties and intro­duce sub­si­dies and sub min­i­mum wages for appren­tices in order to pro­mote the use of appren­tice­ships in SMEs and for teenagers and at risk youths;
• Favour sum­mer jobs pro­grammes for at risk youths who are still at school;
• Expand the Job Corps pro­gramme for young adults and encour­age teenagers to stay on the pro­gramme longer and do more voca­tional training.

I espe­cially like the rec­om­men­da­tion to increase the level of voca­tional train­ing in the United States. The days when a per­son can earn a com­fort­able salary with ben­e­fits and a pen­sion by being a cubicle-dweller are over. Those jobs can be out­sourced — a plumber or auto mechanic can­not. A liberal-arts edu­ca­tion is won­der­ful for a brain, but it no longer guar­an­tees a good job. (See here, here, and here.)

The Economist’s Free Exchange blog is sym­pa­thetic, but it pre­scribes the wrong solu­tion:

The broader point [of the data], I think, is that sus­tained, high lev­els of youth unem­ploy­ment can lead to seri­ous prob­lems, includ­ing ris­ing lev­els of crime, nation­al­ism and eco­nomic pop­ulism, and lower growth poten­tial as a gen­er­a­tion of under­em­ployed work­ers makes its way through the work­force. The cost-benefit analy­sis for gen­er­ous assis­tance to young work­ers would seem to be pretty favourable, par­tic­u­larly if that assis­tance includes incen­tives to obtain more education.

The solu­tion is not to send even more peo­ple to col­lege — it is to help those who did go to col­lege, took out tens of thou­sands of dol­lars in stu­dent loans, and are now close to poverty. Can­cel­ing or pay­ing off the country’s student-loan debt would cost the gov­ern­ment less than the var­i­ous bailouts, and it would help the econ­omy imme­di­ately by free­ing up mil­lions or bil­lions of dol­lars to be spent on items like, well, homes. Two-thirds of America’s GDP is con­sumer spend­ing, after all.

As Vox Day notes in a post on recent unem­ploy­ment statistics:

This is also the result of the higher edu­ca­tion bub­ble. I don’t remem­ber who said it, but he was cor­rect in point­ing out that expand­ing higher edu­ca­tion to the masses doesn’t mean that you won’t have sales clerks any more, it sim­ply means that you’ll have sales clerks with PhDs.

Sup­ply and demand. Economies of scale. I could enter any Eco­nom­ics 101 buzz­word of choice to state what every­one should already know.

If some­thing is not done to help younger peo­ple, the Baby Boomers will be fac­ing inter­gen­er­a­tional war­fare. And with each pass­ing year, their num­bers dwin­dle even more.

Now Avail­able: E-Book down­load: “Let­ters from Israel: An Amer­i­can journalist’s adven­tures in the Holy Land.”

Related posts:

1. Sav­ing the Next Generation
2. Read­ing List
3. Mater­nity Leave
4. Japan­ese Culture
5. Life Under Rocket Fire