Wednesday, September 14, 2011

All Unemployment is Not Equal – Youth Unemployment is High and Incredibly Destructive


A World Wide, Not U. S. Phenomena

That the unemployment rate in Europe and the United State is high is not a secret and most people are only too painfully aware of just how high unemployment is.  What many people may not be aware of is the concentration of unemployment amount young people.  The Economist reports the very unpleasant facts.




In the past five years youth unemployment has risen in most countries in the OECD, a rich-country club (see chart 1). One in five under-25s in the European Union labour force is unemployed, with the figures particularly dire in the south. In America just over 18% of under-25s are jobless; young blacks, who make up 15% of the cohort, suffer a rate of 31%, rising to 44% among those without a high-school diploma (the figure for whites is 24%). Other countries, such as Switzerland, the Netherlands and Mexico, have youth unemployment rates below 10%: but they are rising.

How bad is it?  Very bad

Not only is the number of underemployed 15- to 24-year-olds in the OECD higher than at any time since the organisation began collecting data in 1976. The number of young people in the rich world who have given up looking for work is at a record high too. Poor growth, widespread austerity programmes and the winding up of job-creating stimulus measures threaten further unemployment overall

The cost to society is staggering.  In Europe young people are leaving, and leaving behind an even more aged population than would otherwise exist. Increased crime may also be an unpleasant result of unemployment among young men.



Young men are already more likely to break the law than most; having more free time, more motive and less to lose hardly discourages them. Some researchers claim to have identified a causal link between increased youth unemployment and increases in crime, specifically property crime (robbery, burglary, car theft and damage) and drug offences. No such link is seen for overall unemployment

What about education as a solution?

Having a university degree still increases the chances of employment, but joblessness among college graduates in America is the highest it has been since 1970.

Once again Germany seems to have at least a partial solution.

In Germany, . . . a quarter of employers provide formal apprenticeship schemes and nearly two-thirds of schoolchildren undertake apprenticeships. . . . The cost is shared by the company and the government, and it is common for apprenticeships to turn into jobs at the end of the training. The youth-unemployment rate in Germany, at 9.5%, is one of the lowest in the EU. Apprentice-style approaches practised in the Netherlands and Austria have had similar results


Back here in the U. S., in the editorial pages of the Wall Street Journal the aptly named Arthur Laffer has a solution for young African American unemployment,

Federal and state minimum wages must be suspended in the enterprise zone. If not for all employees, then at least for employees under 30. These young people need on-the-job training, and at the present minimum wage many of them aren't worth hiring. That is why they are unemployed.

Looking past this insulting comment one wonders what Mr. Laffer thinks men and women under 30 in his enterprise zones should be paid.  May $1.00 an hour would be fair, or if he wants to be generous, $2.00 an hour.  Yep, that sounds right.  And no Mr. Laffer, the minimum wage is not why they are unemployed and  your saying so does not make it so.


Not So Fast Mon and Dad
Kids May Be Coming Back

The worrisome thing is that the high unemployment rate among young people will be a permanent fixture in western economies. 

According to the Census report, 5.9 million Americans between 25 and 34, or 14.2% of that group, lived with their parents in spring 2011, compared with 4.7 million before the recession, or 11.8%

 Since neither the Congerss nor the Obama Administration are addressing this problem, the message here is clear.  Parents, don’t rent out the kid’s bedrooms just yet.

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