Youth unemployment: The outsiders

http://www.economist.com/blogs/dailychart/2011/07/youth-unemployment?fsrc=scn/tw/te/dc/theoutsiders

by shrikant • 15 years ago

66 77 15 years ago

groby_b5• 15 years ago

Time to once more point out that we are simply running out of unskilled/low-skilled labor. And even in the high-skills environment, there's only so much.

That is not the only problem, for sure - the economy certainly is bad. But at some point, we will need to acknowledge that there is simply not enough work to keep everybody gainfully employed 40+ hours a week. And the lower the skill level, the less work there is that can't be automated.

This is a problem that's looming for a long time - at least since Drucker talked about the Knowledge Economy (in 1966!) the writing has been on the wall.

We've been failing to acknowledge that ever since, since it's considered classist/elitist to point out the problem.

yummyfajitas11• 15 years ago

There is no shortage of work for people with low skill levels. There are simply structural impediments to employing people in low skill jobs.

One of the biggest impediments is competition from government benefits. To induce a person to work, an employer needs to offer them enough to compete with their next best alternative. At low wage levels (i.e., low skill labor), this is extremely difficult. Consumption as a function of earned income is actually flat up to about $20k/year.

Thus, it is economically rational for low skilled individuals to choose not to work, even if others are willing to pay for their labor.

http://crazybear.posterous.com/why-the-poor-dont-work

bandushrew3• 15 years ago

which is exactly as it should be. Expecting workers to work for lower-than-survival rates is a Bad Thing.

The question we should be asking isn't "how can we make low skill workers work for less money?". That is a race to the bottom that results in bigger societal problems and overall, bigger societal costs as those dispossessed people who are expected to work longer hours for less money than they can survive on realise that its easier and more profitable (and therefore more economically rational) to mug people in their homes, strip copper from empty houses and bridges and generally turn to crime.

Joakal• 15 years ago

I can see the sad result, employees relying on tips.

To paraphrase a republican, if the minimum wage was abolished, everyone would have jobs.

rjbond3rd4• 15 years ago

> There is no shortage of work for people with low skill levels.

yummyfajitas, are you somehow unaware that there are millions of people who desperately want to work, but can't find jobs? And that they would happily say goodbye to unemployment benefits in order to get back into a job?

Or do you simply not believe them?

kamagmar2• 15 years ago

I took a look at the data you cite in your blog post. You seem to imply people earning < $5k/yr receive on average ~$20k in welfare. However, in the BLS Expenditure Survey you used to create the figure, under the section marked "Sources of income and personal taxes", the real number is only $467.[0]

This cohort doesn't appear to be very poor at all, in fact -- they report negative self-employment income. I wonder if you've confused low income with poverty. Or perhaps i'm confused, and haven't grasped your argument.

[0] I'm taking welfare to be the sum of "Unemployment and workers' compensation, veterans' benefits" and "Public assistance, supplemental security income, food stamps".

wazoox• 15 years ago

This is the rationale behind the RSA in France : basically when you're living on state aid and get a job, you continue getting the state aid, decreasing gradually as the work income goes up. The goal is to give an incentive to these people to actually look for a job. That sort of worked, apparently.

escanda• 15 years ago

Indeed. A problem could be once knowledge becomes commoditized there won't be much left to walk the gap between middle class and upper class.

pg2• 15 years ago

at some point, we will need to acknowledge that there is simply not enough work to keep everybody gainfully employed 40+ hours a week.

Seems unlikely. We've been eliminating jobs with labor-saving devices for centuries. In the past they've always created as many jobs as they destroyed. What are the odds that this moment is the point when that finally stops happening?

Alex39172• 15 years ago

"What are the odds that this moment is the point when that finally stops happening?"

The problem is that the amount of value that could hypothetically be created isn't the limiting factor. Rather, there are at least a dozen different structural forces that are all aligning to prevent people who want to work from connecting with companies that want to create jobs. And while these problems could theoretically be removed with the stroke of a pen, they probably won't be for another few decades, at least in the U.S.

paulcedars2• 15 years ago

Yes, but these new jobs are often a long-term thing, and the economy must undergo enormous structural changes for them to form. The US underwent enormous economic and societal changes in its move from an agriculture-based economy to a manufacturing-based one.

neutronicus2• 15 years ago

Perhaps we're butting up against limits on the amount of energy per unit time available to the economy in a way that we haven't in the past couple centuries?

cameldrv2• 15 years ago

The problem now is this: If you are a low skilled worker at this point in the U.S., you're likely to be either not conscientious, or dumb.

For very low skilled jobs, automation can do the job better than a poor quality worker, because it is predictable and consistent. For jobs that still can't be automated, many of them can be done remotely, and are now done in lower labor cost countries by ambitious, conscientious workers. Jobs that can't be done remotely are being filled by illegal immigrants who are also ambitious, conscientious workers.

If you are at the bottom of the American labor heap, you have never faced competition from machines, globalization, and immigration like you have now. The problem is not just that the alternatives to low-end domestic labor are cheaper, but that they are higher quality, and therefore push the price of low quality domestic labor to near zero.

In the long-term, as machines become able to do more jobs better than humans, people will simply not be willing to pay any price for an error-prone human to do a worse job than a cheap machine. Then, low skilled humans will only be employed in jobs that can only be performed by humans, such as prostitution.

bbq• 15 years ago

Perhaps we're moving too fast now.

quandrum• 15 years ago

>We've been eliminating jobs with labor-saving devices for centuries. In the past they've always created as many jobs as they destroyed

This seems dubious. The avg. work week has been decreasing for a long time. It was only a century ago that significant amounts of <10 year olds were working, and the average work week was twice as long. Now it's slipping towards 30 hours a week.

This seems to just to continue that trend. It's becoming less likely that <20 year olds will have ever held a job.

I can't see it getting any better as boomers get older and refuse to give up their jobs.

rjprins• 15 years ago

It is save to say that in no point in time have so many people worked so little while being so rich. That contradicts that automation creates as many jobs as it destroys.

We are not talking about a 'point' where the 40 hour week stops. It is a gradual decline in the amount of human labor, which has been going on for centuries. Automation means just that.

Thinking that work can forever shift towards other areas is stated on the assumptions that: 1. Not everything can be automated. 2. Human need will always grow to accommodate supply.

Now more than ever, you should question nr. 1. And in the areas that prove difficult to automate (e.g. education, law, healthcare, design..) there really is only so much work. (Except for law, maybe.)

Regarding the second assumption, when I look at highly educated people (which in my eyes, represent what in the future modal educated people will be like), they recognize desire as something that should be limited. They know that more money does not make you happier. Some even find a lot of joy in living simple and frugal.

groby_b5• 15 years ago

This argument, IMHO, does not hold water.

If it's happening at all, it's bound to happen at some point. We're just the people who live at that point in time. So what you're asking is, "what are the odds we're living now". Since we're (presumably ;) alive, they're 100%.

Duff5• 15 years ago

I couldn't disagree more. I do think that what we do today is set a price floor on both labor and family that makes things worse for people on the lower end of the income spectrum. I'll give you two examples.

The first is housing and social services. In the US, social services, especially housing vouchers for hard-to-find apartments are only available to single mothers -- a household with an able-bodied male will almost never qualify. The result? Two-parent households are priced out of the market, as demands for the best low-income is driven by single mothers with housing vouchers. (A poor tenant with a voucher is preferable, because the government always pays the rent.) So we incentivize single-parent households, which are more likely to remain in poverty.

The second is the nature low-wage employment. We expect wage-earners to pay for alot of stuff that is really expensive for a low-wage person to afford. That $20 week health insurance premium with $20 co-pay is expensive when you make $30k/year -- and the coverage usually sucks. In the US, low-wage workers tend to get minimal vacation time as well, so you're basically one illness away from being indigent.

Costs for events that tend to happen are out of hand. My wife found a cache of old bills and vouchers in her office. One was a reimbursement for worker who fell into a hole and broke his arm in 1950, resulting in an overnight hospital stay. The bill? $25. ($135 in 2010 money) In 2011, you'd be hard-pressed to find a motel for that price, and an ER visit for a broken arm would easily cost $10,000.

dstorrs• 15 years ago

>A poor tenant with a voucher is preferable, because the >government always pays the rent.) So we incentivize single- >parent households, which are more likely to remain in >poverty.

Yes, there's an incentive here, but it seems unlikely to me that this is going to be enough to make people get divorced or probably even fail to get married if they meet the right person. More likely they would just fail to mention it to the government.

I definitely agree on the rest of what you're saying, though.

thret• 15 years ago

Could this problem be solved with a global one-child policy?

pstack2• 15 years ago

That seems a little insane. How about a "we stop subsidizing breeders" policy? The rest of society no longer subsidizes and cares for your mistakes and desperate need to hump without a rubber and if you want to have a kid (just like if you want to own a car or a boat or a home or a pool table), you have to be able to afford it.

I'm not for government involvement in things, so I'm hesitant to suggest they be taxed additionally for having children, but it's certainly reasonable to stop encouraging them to breed when they can't even afford rent as it is.

paganel• 15 years ago

> We've been failing to acknowledge that ever since, since it's considered classist/elitist to point out the problem.

That's what Marx was actually wishing for, i.e. more intensive work done by the machines equaling more free time for the laborers, who would use it to improve themselves etc.

Of course, he was aware of the fact that were the machines to be owned by a select few (the "capitalists") then the profits would go mostly their way, this is why he said that the "means of production" should be owned by the workers.

anamax• 15 years ago

> Time to once more point out that we are simply running out of unskilled/low-skilled labor.

It must be nice to live someplace where all of the parks and streets are clean. (There are plenty of other examples.)

In my area, we "pay" folks far more than minimum wage to clean parks, which means that we have dirty parks AND pay people to do nothing.

killerswan• 15 years ago

This age range, 15-24, is really diverse, but here we have college graduates, college students, high school graduates, high school students, and younger dropouts, all mixed into the same statistic.

What percentage of college grads are unemployed? What percentage of high school dropouts are unemployed? Several decades ago, when the 55+ crowd was under 24, what were their employment rates? What are these trends across gender?

Given how few sectors feature competition between 55- and 15-year-olds for the same work, the given comparison is far less interesting...

T-R• 15 years ago

There was a somewhat related discussion a while back; you might find it interesting if you missed it. Granted, it's for a different demographic (25+ US citizens), and doesn't cover the gender aspect, just education level.

http://news.ycombinator.com/item?id=2525621

There was also another discussion earlier today on youth unemployment in the US:

http://news.ycombinator.com/item?id=2730268

which argued that youth unemployment is related to the 55+ demographic retiring later (as opposed to minimum wage laws).

latch• 15 years ago

I wonder how big a part looking down at trade workers is playing in this.

delackner• 15 years ago

Odd outlier in that graph is that Turkey appears completely unchanged. Possible but not at all likely.

jpr• 15 years ago

I think part of the problem is that most industrialized nations have pushed for high percentage of the population to have a college/university degree, while not considering whether the degrees are needed for the jobs that are going to be available. This means that there is a discrepancy between the supply and demand of workers and jobs and their education levels. People go to college to study something for which there is absolutely no demand, and end up unemployed, having used years of their life for something that didn't do them much good, and wasted a load of their own or tax payers' money.

aristidb2• 15 years ago

Unemployment is much higher among the degreeless, AFAIK.

natnat• 15 years ago

In the US, the unemployment rate for people with at least a bachelor's degree is only a little above 4%. This includes journalism, history, and interpretive dance majors.

Would unemployment be lower if these people got healthcare and engineering degrees instead? Of course. But I really don't think people with less practical degrees are nearly as big of a problem as people with no education at all are/

etaty• 15 years ago

Please read this : http://en.wikipedia.org/wiki/Basic_income_guarantee

This is the only way to change the world economy and stop the race to the bottom.

aristidb2• 15 years ago

Germany is not affected, interesting. Maybe the fact that there is no minimum wage, and the labor market liberalizations of ~2000 help.

mstoehr• 15 years ago

Employers are probably unconvinced that younger applicants will be able to make them more profits. This is caused in part by the uselessness (for businesses) of the work students do in high-school and college--this is a group of people whose life has primarily consisted in consuming profits. Employers are also probably more risk-averse because the recession means that profit margins are tighter (if existent at all).

Youth unemployment: The outsiders

Related Stories