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.
