Wednesday, August 22, 2012

Kids Today Really Do Have It Tough

Why Kids Today Have It Worse That Their Parents compares the prospects for young people today with the prior generation. It points out the difficulty in getting started in today's economy, even for college graduates:

"To understand why today’s young people have it so hard, take a look at their parents.

Today’s 20-somethings are, broadly speaking, the children of the last of the Baby Boomers, those born in the late 1950s and early 1960s. That generation, like this one, came of age in the midst of a brutal recession: The unemployment rate for 18-24 year-olds topped 17% at the end of 1982. (In 2010, it briefly crossed 18%.)
But for that generation, unlike for this one, the situation quickly improved. By the end of 1983, the unemployment rate for 18-24 year-olds had dropped below 14%, and it didn’t get back above that mark until the latest recession. This time around, joblessness among young people remains over 15% three years after the recovery began.

The slow recovery hits people of all ages, of course. But it’s likely to be especially hard on the young, as a new report from the Bureau of Labor Statistics makes clear. The report looks at data from the National Longitudinal Survey of Youth, which in 1979 began tracking nearly 10,000 Americans born between 1957 and 1964.

The report reveals just how important the years of early adulthood are to lifetime earnings and career prospects. Hourly earnings, adjusted for inflation, grew 6.1% per year on average between the ages of 18 and 24, and 4.1% per year from ages 25 to 29. By their 30s, the group’s earnings were growing by just over 3% per year, and by their early 40s, annual wage growth had fallen below 1%. Put another way: Nearly half of all earnings gains between 18 and 46 came before age 30.

It’s no surprise that earnings growth is front-loaded. . . .

In other words, when the latest recession hit, most of the Baby Boomers’ peak career-building years were already behind them. That doesn’t mean they were immune from the economic shock; millions of middle-aged workers lost their jobs in the recession, and they’ve had a particularly hard time getting back into the workforce.

But young people are facing far higher levels of unemployment and under-employment. The official jobless rate for 18-24 year olds is more than double that for those between 35 and 54, and the rate of underemployment is even higher. By some estimates, more than half of all college grads under age 25 are either looking for work or stuck in jobs that don’t require a bachelor’s degree.

Many of today’s 20-somethings, therefore, are stuck on the sidelines for what should be — and what was for their parents — their most important years for wage growth and career development. The effects are likely to be long-lasting. A study by Yale economist Lisa Kahn found that “the labor market consequences of graduating from college in a bad economy are large, negative and persistent.” Other studies have reached similar conclusions."

Summing Up

It really is tough today for young people to get started down a solid career path.

What's needed is strong economic growth and not cheap or even free student loans from the government.

Many of our finest young people still need to find suitable long term employment, and solid economic growth will necessarily precede their ability to find it.

Government can't answer that need for economic growth, regardless of what the politicians say. Only the private sector can fill that hole.

If we as a nation fail to take the necessary steps in order for our economy to resume solid private sector growth, we'll have done a great disservice to our young.

And that would be a most unfortunate, needless and shameful result.

Thanks. Bob.

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