Recent Graduates, Teens Hit Hard In Miserable Jobs Market
Courtesy of Mish
The downturn in jobs is miserable nearly everywhere you look but things are especially hard on teens and recent college graduate.
Please consider In a Tough Job Market, Teens Are Suffering Most.
"The numbers are incredible," says Andrew Sum, head of the Center for Labor Market Studies at Northeastern University and a nationally recognized expert on teen employment. "Proportionally, more kids have lost jobs in the past few years than the entire country lost in the Great Depression."
The retail and construction sectors, which are usually key employers of young workers, have been among the hardest hit. Manufacturing, another typical job source for those lacking a higher education or even a high school degree, is not the force in the economy it once was. The result: the teen unemployment rate neared 28% in October before falling slightly the next month. That’s the highest ever recorded since the Federal Government began tracking it, and it’s almost triple the 10% rate for all workers.
For much of the past 60 years, the proportion of 16-to-19-year-olds who held jobs — either part or full time — was around 40%. In fact, in 2000 it was a relatively high 45%. In all, nearly 7.3 million teens were getting a regular paycheck.
Then something changed. Suddenly teens were being expelled from the workforce. It started during the pullback that followed the bursting of the tech bubble, but it never really stopped, not even during the housing- and finance-fueled expansion of the mid-2000s. From 2000 to early 2008, overall employment rose by about 10 million jobs. Teen employment headed in the other direction. By early 2008, teen employment had dropped by more than 1.5 million.
Generation Gap
The problem is that older workers are crowding out kids. An economic expansion that at its height produced 11 million jobs, as was the case in the 2000s, isn’t bad. But it is nowhere near as robust as the economic growth of the 1990s — which upped employment by 17 million jobs — or the increase of 20 million jobs in the expansion of the 1980s. What’s more, 12 million people joined the workforce in the 2000s — a million more new workers than the number of jobs created in that period. With fewer jobs to go around, older workers are settling for jobs that used to go to teens. Baby boomers, hurt by recent stock-market downturns, are hanging around longer. From 2000 to 2007, for instance, the number of 55-to-64-year-olds working in the retail industry rose by 553,000. At the same time, the number of teens who were able to snag jobs at stores fell 419,000, from nearly 2 million.
A Silver Lining?
The Time magazine article is 4 pages long detailing many aspects of the teen job crisis. It even talks about the "silver lining" of kids staying in school longer.
While education is a good thing, the cost of education certainly is not. Kids are graduating college hundreds of thousands of dollars in debt, with no job and no way to pay it back. Moreover, student debt is a never ending albatross in that student debt cannot be discharged in bankruptcy.
I do not advise students going hundreds of thousands of dollars in debt to get an education. Most will be trapped for decades attempting to pay that back.
The cost of education is too high, and it starts with student loan programs and ends with bloated salaries and pension benefits of professors.
Those salaries and benefits are balanced on the backs of students who unfairly bear the brunt of piss poor economic decisions supposedly designed to help students, but do nothing but saddle students with with massive debt for the benefit of banks and overpaid professors.
Student Aid and Fiscal Responsibility Act
Inquiring minds are reading Obama to Nationalize Student Lending with Pending Budget Bill.
A bill currently before the Senate would empower the Obama administration to nationalize the student lending industry, eliminating the federally subsidized private loans millions of university students rely on to finance their educations.
The Student Aid and Fiscal Responsibility Act – currently being considered by the Senate Health, Education, Labor, and Pensions (HELP) Committee – would eliminate the Federal Family Education Loan (FFEL) program. FFEL loans are federally subsidized and make up approximately 80 percent of the student lending industry.
According to the Department of Education, 14.3 million of the 17.5 million student loans were federally subsidized for the 2009-2010 fiscal year. Under Obama’s plan, the government would consume the entirety of this industry – a total of $103 billion in 2009-2010.
Under the current system, the federal government subsidizes private financial institutions in order to entice those institutions to provide low-interest loans to students.
Under the system proposed by Obama, the government would cut private lenders out of the picture entirely, setting the interest rates and collecting payments directly for all student lending.
Nationalization Nightmare
You can tell how bad a Congressional bill will be simply from the name of it. The name "Student Aid and Fiscal Responsibility Act" should send shivers down the spine of every student.
The bill is virtually guaranteed to harm students and there will be no fiscal responsibility in it.
Indeed students have been screwed by "student aid". So called "aid" to nearly anyone, helped drive up the cost of college education. Students are now reaping the "benefits" of that aid: no job but hundreds of thousands of dollars of debt.
Government needs to get out of the aid business. It screwed up housing with "affordable housing" programs and it screwed up education with student "aid".
The best thing for future generations would be to scrap these programs entirely. Unfortunately, most of the current crop of graduates, at least those horrendously in debt, is permanently screwed.
We simply need a better way, and that means a lower cost of education and fewer benefits for professors, not more "aid" for students.
Demographics Flashback
The idea for this post comes from "Frank" who writes …
Hi Mish
I’ve been reading your blog for a while now. I noticed this article in Time magazine called In a Tough Job Market, Teens Are Suffering Most.
Does it Ring a bell?
It did for me. From your blog:
"Boomers will be competing with their children and grandchildren for jobs that in many cases do not pay living wages."
Thanks very much for your news. It gives me a great, different perspective on the times we’re facing.
-Frank, San Francisco
Frank is referring to Pink Slips Hit Older Workers where I wrote …
Thursday, May 22, 2008
Structural demographic effects imply that prospects in the full-time labor market will be poor for those over age 50-55 and workers under age 30. Teen and college-age employment could suffer a great deal from (1) a dramatic slowdown in discretionary spending and (2) part-time Boomer reentrants into the low-paying service sector; workers who will be competing with younger workers.
Ironically, older part-time workers (pensioners) remaining in or reentering the labor force will be cheaper to hire in many cases than younger workers. The reason is Boomers 65 and older will be covered by Medicare (as long as it lasts) and will not require as many benefits as will younger workers, especially those with families.
In effect, Boomers will be competing with their children and grandchildren for jobs that in many cases do not pay living wages.
For more on boomer demographics, please see US and Canada Demographic Time Bomb.
And so here we are, with kids competing with their grandparents for jobs.
