How Are the Kids? Unemployed, Underwater, and Sinking
Friday 26 November 2010
by: Mark Paul and Anastasia Wilson | The Baseline Scenario | News Analysis

(Image: Lance Page / t r u t h o u t; Adapted: alessiodisalvo, Kevin N. Murphy)
In some cultures asking how the kids are doing is a colloquial way of asking how the individual is faring, acknowledging that the vitality of the younger generation is a good metric for the well-being of society as a whole. In the United States, the state of the kids should be an important indicator. Young workers bear the significant burden of funding intergenerational transfer programs and maintaining the structure of payments that flow in the economy. Today, the kids' outlook is almost as bleak as the housing market; they are unemployed, underwater on student debt, and out of luck from a reluctant political system.
Currently, even after a slight boost in jobs growth, unemployment for 18-24 year olds stands at 24.7%. For 20-24 year olds, it hovers at 15.2%. These conservative estimates, using the Bureau of Labor Statistics U3 measure, do not reflect the number of marginally attached or discouraged young workers feeling the lag from a nearly moribund job market.
The U3 measure also does not count underemployment, yet with only 50% of B.A. holders able to find jobs requiring such a degree, underemployment rates are a telling index of the squeezing of the 18-30 year old Millennial generation. While it appears everyone is hurting since the financial collapse, young adults bear a disproportionate burden, constituting just 13.5% of the workforce while accounting for 26.4% of those unemployed. Even with good credentials, it is difficult for young people to find work and keep themselves afloat.
If companies are unwilling to hire bright young college graduates even at a relatively low salary and minimal benefits, will they ever be willing to hire anybody at all?
Jobs aren't the whole story. Recent college graduates, those in the labor force with the freshest batch of knowledge and skills, are currently underwater and sinking fast with unprecedented student loan and personal debt. Average student debt for the class of 2008 was $23,200, an increase over four years of about 25%, meaning that students are knee deep in negative equity between their educational investment and actual earnings.
Between inflated student debt and the lack of available jobs for qualified graduates, students are defaulting at an all time high level of 7.2%. From 2008 to 2009, student debt defaults jumped about 30% to $50.8 billion. This earning-to-debt gap not only hurts lending institutions, but also may affect students' future abilities to borrow – a significant hurdle in our credit driven economy.
If student debt and job stagnation continue, younger workers will face real structural unemployment (as opposed to the fake kind that had been suspected by some economists, but was recently debunked by the San Francisco Fed). The more time these young workers spend unemployed and underemployed, the greater chance for future structural unemployment due to deteriorating human capital.
High debt, high defaults, and low family earnings will prevent many students from finishing college at all. High unemployment for those who do manage to graduate with a degree will create barriers for those unable to start their careers. As economists have shown, most current deficits can actually be attributed to the decrease in tax revenues - a debilitating trend that will continue without well-targeted action.
In order to combat such structural problems, the need for investment in education and jobs is clear. This investment will act as an insurance policy against persisting future structural unemployment and subsequent government revenue declines. This investment can take the form of direct funding for public higher education, increased financial aid to students, and expanded federally guaranteed loan and grant programs. As many states have slashed and burned public higher education budgets, as in Massachusetts, federal attention should be directed towards this crisis. The 2009 stimulus funding provided only two years' worth of support to sustain public higher education in the Commonwealth, where universities have historically been a top priority. The need for a long-term restructured investment plan in public higher education is obvious, not just in Massachusetts, but the other forty-nine states as well.
At the same time, insurance against the impending doom of climate change could be taken out in the form of a green jobs bill, providing work and an outlet for innovation for recent college graduates. As Robert Pollin and Dean Baker have suggested, long-term investments in rebuilding a green energy industrial base, complete with manufacturing and R&D, could revitalize the entire economy if funded as part of a 10-year plan to the tune of $50-100 billion. Such investment could create 660,000-1.3 million jobs per year – the kind of growth that seems to have escaped our collective memory.
Green collar industry would naturally target the young workers who are up to date on the high-tech nature of green jobs, and much research and development would, as with most budding industries, take place at academic research institutions like public universities – a two-for-one stimulus in both jobs and education.
In order to solve future structural problems in the United States and ensure a future for the sandwich generation, fiscal policy focused on educational and job growth is crucial. While deficit hawks may squawk about the costs, the burden of repayment is on younger people Without adequate education and careers for students, we will never be able to balance the budget. In the long run, it makes more fiscal sense to create jobs and collect tax revenue than to rely on a model that merely waits for the private sector to invest.
While the political feasibility of such a measure is questionable, the incentives are there no matter on what side of the aisle you may sit. Jobs investment will improve employment. Education will increase productivity (and profits too), increasing tax revenues from businesses and personal incomes and helping balance the budget. Crisis is not the time for austerity, and these types of investments in the viability of the U.S. economy should be done when money is at its cheapest.
In a dire job market, facing imminent climate change, and lagging aggregate demand, keeping the younger generation afloat will inevitably be a decision to sink, swim, or at least throw out some life jackets.
Mark Paul and Anastasia Wilson are members of the class of 2011 at the University of Massachusetts-Amherst.
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Comments
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Here we have an article
Fri, 11/26/2010 - 14:35 — Anonymous (not verified)Here we have an article dated Nov 26, 2010, that is precisely what Democrats were expecting from our president in 2009 from the get go! It is appalling, if not criminal, that during this lame duck congress, that this perfectly centrist policy initiative isn't even being discussed, let alone has been buried under the capital's very expensive, highly-decorated carpet!
Sorry, kids, the whole
Fri, 11/26/2010 - 14:38 — Anonymous (not verified)Sorry, kids, the whole capitalism game is a fraud and a sham, a cruel joke perpetuated by imperialism and enslavement and environmental devastation. You really want to buy into that? Go for it, and have fun stocking shelves at Mall-Wart.
The only sense to make of the economic travesty -- the global crimes of commission now being waged against everyone without an MBA or not employed by the banking or defense industry -- is to create a new paradigm that refutes capitalism and western civilization. Save money now by not buying into useless consumer trash, and start investing in your future by developing service skills and community-oriented, socialistic local economies. Believe me, the government and its corporate minions are not coming to your rescue. Oh, one other thing - don't bother reproducing, unless you're a sadist and don't care to make your lives even more difficult.
I do not think your
Fri, 11/26/2010 - 15:59 — Auntie Imperial (not verified)I do not think your automated spam filter is working correctly. I posted a comment, with ONE link a while back and it seems to have been trash-canned. Is it really possible that there are only TWO comments that passed muster?
Further why should ONE LINK from a world-known site, archive.org, cause a comment to be flagged as spam?
"I should say, really I’m
Fri, 11/26/2010 - 16:21 — remo (not verified)"I should say, really I’m talking about- more broadly speaking- what I would call the destruction of American childhood, because ADD is the template, or just an example of what’s going on. In fact, according to a recent study published in the States, nearly half of American adolescents now meet some criteria for mental-health disorders. So we’re talking about a massive impact on our children of something in our culture not been recognized."
Dr Gabor Mate:Democracynow.Nov 24.
Dr. Gabor Maté,
Fri, 11/26/2010 - 16:43 — remo (not verified)Dr. Gabor Maté, Democracynow.Nov.24
I know that Canadians statistics just last week showed that within last five years, 43% increase in the rate of dispensing stimulant prescriptions for ADD or ADHD, and most are going to boys. In other words, what we are seeing is an unprecedented burgeoning of the diagnosis. I should say, really I’m talking about- more broadly speaking- what I would call the destruction of American childhood, because ADD is the template, or just an example of what’s going on. In fact, according to a recent study published in the States, nearly half of American adolescents now meet some criteria for mental-health disorders. So we’re talking about a massive impact on our children of something in our culture not been recognized.
Got it... NO
Fri, 11/26/2010 - 16:46 — Auntie Imperial (not verified)Got it... NO LINKS.
Bogus.
Sorry but I'm MUCH TO BUSY to rehash OLD topics like this. Just go to: archive org details Tth_080623 (That's June 2008, insert the necessary "/"s)
...to listen to: [June 23 2008] Travus T. Hipp Morning News & Commentary: "Welfare Music" - A Teenage Pregnancy Conspiracy... If There's No Work And No Future At Least One Can Watch The Baby Dance
It's about a conspiracy among a group of teen girls on the East Coast to have babies just so they could get welfare and live communally.
Because the kids already know they're F*CKED, and NOT in a way that feels good
Again... this is OLD NEWS.
Some of US Eternal Flamers
Fri, 11/26/2010 - 16:57 — Vic Anderson (not verified)Some of US Eternal Flamers have endeavored to throw "the kids" a lifeline opening jobs by retiring, college savings and reserves; And ALL are insuring Social Security trust fund/solvency. Don't let the Obamanible Catfood Commissar and his FatCAT commissioners, the PU$ILLANIMOU$ PU$$YFOODER$, like Simpson prevail!
As a recent grad, I can
Fri, 11/26/2010 - 19:08 — Anonymous (not verified)As a recent grad, I can attest to this horrendous situation.
Not only did it take 1.5 years to find a decent job with a double major from a top 20, but the loans required to attend said school were private, thanks to the bush administration's funneling away of federal loan funds.
Thanks, again, to the bush administration, those private loans were also re-classified under the same bankruptcy terms as federal loans, but with none of the regulations. This means we're stuck with them. We can't consolidate them at all now, let alone at a fixed rate.
They show up on credit reports as "installment loans" and drag down your score, putting you in a catch 22. Your credit is too awful to get a home, but you need a home to consolidate and repair your credit.
We are, for all intents and purposes, indentured servants
Again, the 32 hour work week
Fri, 11/26/2010 - 20:55 — Anonymous (not verified)Again, the 32 hour work week would be a life line. Kids could gain skills and a resume, other could maintain skills and earn a living
Yes corporate profits will have to take a hit – just like the rest of us
If you're a young American
Fri, 11/26/2010 - 21:14 — Rick Levy (not verified)If you're a young American adult, consider getting your college education abroad and emigrating. You are the first generation in the U.S. who will likely have it worse than your parents. So now is the time to strike out for greener pastures. Good luck.
As much as I would love for
Sat, 11/27/2010 - 03:15 — Anonymous (not verified)As much as I would love for a green economy to work it simply doesn't or at-least didn't work in the case of Spain who had a Green economy that lost two jobs for everyone it created.
As much as I would love for
Sat, 11/27/2010 - 03:44 — Anonymous (not verified)As much as I would love for a green economy to work it simply doesn't or at-least didn't work in the case of Spain who had a Green economy that lost two jobs for everyone it created.
I applaud the data in this
Sat, 11/27/2010 - 09:40 — Deadondres (not verified)I applaud the data in this article, but am disappointed that the best recommendation is for Congress to do something.
I agree that the Government needs to devote more of its resources to the above, but if a solution is contained within the framework of the logic that enables the problem, the can is only kicked down the road.
We need big ideas and reform. The projects may be slow going, but the time to hatch them is now. Creativity is key!
We need to design new business structures which are more equitable and create stabililty for both company and worker. We need to find new forms of organization and ways to apply political pressure.
Most importantly, we need to celebrate values that favor permanence over instability. Let's get building!
I was standing in line at
Sat, 11/27/2010 - 10:28 — heavyrunner (not verified)I was standing in line at the supermarket the other day and when I paid for my groceries with my EBT card, the printer on the check-out went crazy and started printing out a long strip of something or other, so I joked that I had "won the jackpot." Well, of course, that was not true, but it got me to thinking. "How many $10,000 jackpots could we distribute if the Fed printed $1 trillion to give away to American families instead of multinational banks?"
The answer is 100 million. We could give ten thousand dollars to 100 million American families. Give at least that much to everyone who is behind on their mortgages and it would solve the economic depression overnight, and the money would still be in the hands of the bankers by the end of the week when everyone brought their mortgages current.
I don't think the politicians in Washington actually want to solve the economic problems.
The numbers are too small in this article relating to investing in green economy. They should be at least ten times as big.
Sorry kids. Your
Sat, 11/27/2010 - 11:48 — Anony Mouse (not verified)Sorry kids. Your grandparents and great-grandparents have spent every penny you'll ever earn. It's called Social Security and MediCare. Now, be good little children and go eat out of the dumpster.
08:15 — Anonymous--"As
Sat, 11/27/2010 - 15:26 — Anonymous (not verified)08:15 — Anonymous--"As much as I would love for a green economy to work it simply doesn't or at-least didn't work in the case of Spain who had a Green economy that lost two jobs for everyone it created."
Now I know why Spain was targeted for the second worst terror incidents (train system) after the US's 911 and anthrax terror attacks.
15:28 — heavyrunner--"I
Sat, 11/27/2010 - 15:36 — Anonymous (not verified)15:28 — heavyrunner--"I don't think the politicians in Washington actually want to solve the economic problems."
Bingo! Even Bushie advocated that giving taxpayers money in their pockets immediately (vis a vis tax rebates) was good for the whole of the economy (google one of his speeches when the rebates happened.) He was promoting Keynesian economics, albeit through the neocon orthodoxy of reduced taxes.
We are watching the entire worldwide elite bankers dictate strict austerity measures to key g20 constituencies, on purpose, and most certainly in contrary opinion to restoring worldwide economic stability. The question is: why?
I appeal to the younger
Sat, 11/27/2010 - 15:54 — Woody (not verified)I appeal to the younger generation to see that government is still the problem. By providing cheap loans for education, they create an oversupply of college students that the economy cannot absorb.just as in housing, this easy money has created a higher education bubble that makes it even harder for a college student to get a return on their education investment. Your diplomas are underwater, just like the houses are. I am a person who struggled through this economic crisis, but I want the government out of the private sector, including college loans. I am also a person that believes that college should not be a mandatory part of any career path! Please consider these ideas when you think about how you want to shape the future!
Woody: The private sector
Sat, 11/27/2010 - 23:30 — Anonymous (not verified)Woody:
The private sector never offered student loans until the bush administration funneled money from the federal loan project to private banks.
The moment obama cut off the subsidy, the banks ceased the vast majority of offerings. Keep in mind they would ALL be gone if they were to stop giving them special treatment with bankruptcy laws. The lack of a threat of bankruptcy is what allows them to continue to put the screws to their indentured servants with as much power as a loan shark.
Either way, federal student loans have regulations to prevent you succumbing financially to them, it's the fact that a significant amount of the federal loan system was privatized which led to kids being "underwater". The privatized versions have all the benefits for the lenders, but none for students. Lenders request payments upwards of 300% of what is required for similar federal loans, and the lack of protections for students seen in federal loans means this will come at the expense of housing and food in cases of financial distress.
"I want the government out
Sat, 11/27/2010 - 23:47 — Anonymous (not verified)"I want the government out of the private sector"
This philosophy has been implemented since reagan hit office. It has resulted in increasing financial instability from the erosion of the regulations put into place after the depression in 1929 to prevent another one.
It has also resulted in the destruction of those organizations which help maintain the balance between centralized corporate power and labor, the destruction of the nuclear family as more and more people were compelled to spend late nights at work uncompensated, mass offshoring due to lacking protective measures against leeching by nations without adequate human and labor rights standards.
In short: the crippling of necessary government intervention against natural forces of consolidation of wealth and market power that harm capitalist markets has resulted in the destruction of our middle class and as further consequence the economy as a whole.
"08:15 — Anonymous--"As
Sun, 11/28/2010 - 11:03 — Anonymous (not verified)"08:15 — Anonymous--"As much as I would love for a green economy to work it simply doesn't or at-least didn't work in the case of Spain who had a Green economy that lost two jobs for everyone it created."
It doesn't work according to a global economic system that can't even bear it's own goddamn weight and has to collapse every decade or so. It (or some version of it) might work if we only chose to look at it from the point of view of, you know, reality.
This economic system is unaware of its own material foundations *by design*. It has no clue about its the actual material outcomes. It's simply not aware of the destruction it's causing because it *presupposes* that it can do no harm (in the forms of indicators like GDP). And lastly, it can not look very long into the future ("very long" meaning anything more than a year hehe), again, by its very design.
Of course nothing rational and logical appears to work in it, because it is in itself irrational and illogical and based on wishful thinking instead of material knowledge.
But maybe that kind of belief is the only kind of belief that can drive people. Maybe reductionist materialism and understanding of the world as it is, as something lacking meaning and principles and morality, is not enough for people. Maybe that's why Marxism was so successful, because - despite its scientific pretensions (and achievements) - it was mainly a millenarian religion that promised material salvation for all.
Oh and this: "Sat,
Sun, 11/28/2010 - 12:08 — Anonymous (not verified)Oh and this:
"Sat, 11/27/2010 - 16:48 — Anony Mouse (not verified) "
"Sorry kids. Your grandparents and great-grandparents have spent every penny you'll ever earn. It's called Social Security and MediCare. Now, be good little children and go eat out of the dumpster."
Bullshit. And super idiotic bullshit too. It's cars, air travel, wars, chemical based agriculture, multi-layered destruction of the biosphere and that kind of stuff, not Social Security or Medicare, that is the real spending of our children's wealth. Unless you prefer to believe the people who are actually profiting from this bullshit, on your account of course.
You might want to understand first that it is not human work that produces our current wealth, but overexploitation of natural resources; and no human work will be able to recreate those natural resources - because human technology at this moment is purely wasteful.
I guess the main point of this rant is that there will be no dumpsters. What we're wasting is wasted forever.
The other thing not
Sun, 11/28/2010 - 13:40 — Anonymous (not verified)The other thing not mentioned is that student loans are a burden that stay with you forever - not even bankruptcy relieves you of them, and interest rates for those who took *government* loans from 2008+ are 8.5% (vs. the variable tied-to-prime prior loans that currently sit at under 4%.)
I'll never understand why the government keeps making concessions to bankers and Wall Streeters who aren't helping anything trickle down to the rest of us; but is trying to make fat interest earnings off of the destitute likes of me (an older student who went to a top 15 business school to become a small-business entrepreneur and is currently sinking under $100K of debt) and 20-30 year olds who've never had a job because there are none for them.
I'm a left-of-liberal progressive, and am deeply disappointed in this administration. But I guess when you live in a plutocracy, this is what happens.