Sunday, April 7, 2013

Youth Unemployment and Underemployment Is a Tragedy ... We're Starting to Look Like Europe

Youth unemployment is a huge problem in America today. That said, youth underemployment may be an even bigger one.

And then there's the problem with too much debt associated with student loans and the likelihood that lost employment opportunities early in adulthood will translate into a lifetime of low earnings. All in all, it's not a pretty picture. It's downright ugly, in fact.

And lest the oldsters think that it's not a problem for them, consider this. It's the workers who pay for the entitlements received by the retired among us. But let's not dwell on the oldsters herein. Let's instead stay with the developing tragic story about todays' young Americans.

Far too many of our young people have received too little education, incurred too much student debt and as a result of the weak economy, are now enjoying too few good job prospects. And when they are able to land jobs, they're often low paying jobs for which they're 'overqualified.' And unfortunately, that may turn out to be a structural and not a cyclical problem. If so, even a recovering economy won't solve the unemployment and underemployment issues of our nation's youth.

So while our 'don't-have-a-clue' politicians debate what to do about raising taxes, making government 'investments,' and saving Medicare and Social Security, our youngsters who will become tomorrow's leaders are struggling to get a foothold on the future. Really struggling, as a matter of fact.

Youth Unemployment at 22.9% reviews the employment numbers and reveals the alarming amount of youth unemployment and underemployment that exists today:

"22.9%: The unemployment rate for Americans under age 25, adjusting for the decline in the labor force since the start of the recession.

Perhaps no group has been hit harder by the recession and grinding recovery than the young. The official unemployment rate for those under age 25 is 16.2%, more than double the rate for the population as a whole. In percentage terms, unemployment has fallen far more slowly for young people than for the wider population.

Those figures actually understate the severity of the problem, however. The government only considers people “unemployed” if they’re actively looking for work. People who stop looking—whether they’re retired, in school, raising a family or living on friends’ couches — are instead considered “not in the labor force,” even if they would prefer to work given the opportunity.

When the recession began in December, 2007, 59.2% of the under-25 population was in the labor force, meaning they were either working or looking for work. Today, that figure has fallen to 54.5%. That may not sound like a big drop, but it makes a huge difference. If the so-called participation rate had remained unchanged, there would be 1.8 million more young people in the labor force today than there actually are. Counting those people as unemployed, rather than out of the labor force, would push the unemployment rate up to 22.9%. That’s only a hair better than the 23.9% youth unemployment rate in the euro zone, and has shown only very modest improvement during the recovery.

The decline in the participation rate among the young can’t all be attributed to the recession. Labor force participation among young people peaked at just under 70% in 1989, and has trended downward ever since, primarily due to rising rates of college attendance.

The decline accelerated during the recession, as many young people sought refuge in college or other forms of education or training. In a normal cycle, that might have worked out well, leaving a generation of highly educated workers ready to re-enter the job market when the economy recovered. Instead, they have been graduating into a labor market that remains deeply challenged, especially for those without much work experience. To make matters worse, many graduates are carrying hefty debt burdens, and those who can find work are often being forced to low-skill jobs.

The youth participation rate has largely flattened out over the past three years, but it fell again in March."

Summing Up

Unemployment is a big problem among the young. However, underemployment may be an even bigger one. It's estimated that nearly 50% of employed college graduates are working in jobs that tradtionally don't require a college degree.

As a nation, we need to pay close attention to the plight of the young. The U.S. is beginning to resemble Europe in many ways, and that's not good. In fact, it's very bad.

In our own country, too many experience inferior educational opportunities, beginning in K-12 and continuing through college. And college costs too much too.

And too many incur burdensome student loans along the way which become unaffordable as either the kids drop out of school, graduate without a job or have to take jobs which don't require a college education and therefore don't pay enough for the students to properly service their loans.

The economy is struggling, and we all have a stake in the outcome. If our kids don't get a decent start in life, we're heading in the wrong direction as a nation.

And this much I know. More government spending by the government knows best gang is not the answer.

In fact, the bigger the role of government becomes (look at public education and health care, for examples), the worse our problems will become.

That's my take.

Thanks. Bob.

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