Young people need jobs

With under 100 days to go until the November election in the US, we can expect to hear a lot more about jobs and employment. Both candidates claim they will “create jobs” but neither will go beyond anodyne discussions of how to get the economy growing faster.. They’re both devotees of the trickle down approach to employment – trying to expand production as rapidly as possible and hoping that the jobs appear.

For those of us who care about the degradation of the planet’s ecosystems, and climate especially, this brand of indiscriminate macroeconomic management is unacceptable. By failing to ask what’s being produced, we remain tethered to unsustainable patterns of production and consumption. We’re constructing a larger and larger hole to dig ourselves out of.

If we decide to look in more detail at the jobs shortage, an obvious place to start is with our youth. Young people are facing much higher rates of joblessness than other age groups. The International Labour Organisation reports that 75 million young people are now unemployed. Rates of nearly 50% in Spain and above 30% in other troubled economies are well known, but the labour market outlook in other countries is also grim.

In the US since 2008, the fraction of the workforce that is under age 25 has dropped by 13% while the 55 and over section has risen by 7.6%. A recent Pew Study found that among 18-24 year olds, only 54% were employed, a lower rate than at any time since the government began keeping statistics in 1948.

For young people who only have high school degrees, rather than college educations, the situation is dire. According to a study by Rutgers University, before the 2008 collapse, 37% of young high school graduates had full time work. Since then only 16% do, with 37% unemployed.

And even among college graduates, whose official unemployment rates are in the single digits, earnings have declined substantially over the last decade (11% for men and 7.6% for women). It is not surprising to learn that last year’s class suffered the highest level of stress on record, according to an annual survey of college freshmen taken over the past quarter century.

One reason the situation is so bad in the US is that nearly all the burden of adjustment since 2008 has been to lay people off, rather than share hours, as was done in Europe. The comparison is especially stark with Germany and the Netherlands, countries that did adjust hours, and who now have lower youth unemployment than they did in 2008.

If the US got serious about youth unemployment, employers could start hiring new graduates on 80% schedules, rather than at full-time. That would lead to many more new jobs, likely somewhere between 10% and 20% additional positions.

By concentrating on reducing schedules for young people as they start their first full-time jobs, it’s possible to get around a finding from behaviour economics that has bedeviled some kinds of work-sharing schemes: the endowment effect.

The endowment effect refers to the fact that people are very attached to things, money, or privileges that they already have. It’s hard to take them away. But when it’s a first job, the schedules and incomes that go with them are novel. Going from no paycheck to 80% of a hypothetical full-time salary isn’t experienced as a deprivation. Instead it’s a lucky break in a labour market that is unforgiving.

In the early 1980s, the government of the Netherlands initiated such a policy for its own hiring, which then spread to other sectors. Obama should announce something similar, showing his rhetoric about jobs is sincere.

It would be an innovative step that breaks through the gridlock of macroeconomic policy in the last few years.

This post first appeared on the Guardian Sustainable Business page on August 8 2012.

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10 Responses to “Young people need jobs”

  1. Michael says:

    I just saw you on “UP with Chris Hayes,” and hope you decide to continue this blog. You bring a great perspective to the conversation.

  2. Juliet Schor says:

    Thanks Michael. It has been hard to publish blogs recently–that’ll have to be one of my New Year’s Resolutions.
    Happy new year to you. Juliet

  3. Shawn S Fahrer says:

    You may get your wish– thanks to Obamacare and its perverse incentives to hire “part time workers” (those who work less than 20 hours per week). Such workers do NOT have to be given employer paid health insurance coverage (thus it would be MUCH LESS EXPENSIVE to hire 3 people at 15 hours per week than to hire one person at 40 hours with 5 hours of “mandatory overtime”). Unfortunately, part time workers don’t work enough hours to master the job that they are working at — even the 80% option that you propose may lead in the end to faltering worker skills and constant retraining. Thus your idea FAILS MISERABLY IN THE END (since our economy will become EVEN LESS EFFICIENT than it already is).

  4. Juliet Schor says:

    I wrote a book which addresses these issues many years ago–The Overworked American. In fact our economy is remarkably efficient at the firm level–I suggest you look at the statistics on productivity in the US and other countries. I haven’t heard complaints about workers being unable to “master” jobs from business. The big inefficiency comes from unemployment! Macro-efficiency. In dollar terms it swamps micro-inefficiency.

  5. John B says:

    Hi Juliet – just heard about your book via New Economic Institute and I will be reading it soon; I’ve already picked up Sacred Economics by Eisenstein, which was eye opening. I like the post and it makes sense to me, my brother is a proud recipient of just under ‘full time’ hours, which prevents him from receiving benefits, but he is glad he has a job, so its just a balancing act – it would help is the commons was better appreciated as Obamacare will make a step towards.

    My thought on the blog relates not to jobs but the sense that there is opportunity. Jobs are a part of it, but if I had a better sense of my community that might help me make inroads or networks to share info and help out on projects; also, if I had access to certain forms of capital, that might also spur new business opportunity but not necessarily jobs; lastly, if there was land that could be worked in some way, that might also be another form of opportunity – so more efficient use of urban land (see CA newest legislation supporting vacant lot use and incentives to property owners not to build) as well programs that our FARM BILL could support. The one area of the Farm Bill that is quite effective is the environmental protection/conservation/restoration program. If land was set aside for sustainable agriculture which rebuilt the soils – similar to rangeland management / pastoralist systems – this might also be another way to engage our youth; not necessarily in jobs, but with opportunities to engage in some life experience where they learn and find ways of earning revenues.

    Food for thought :)

  6. Juliet Schor says:

    Yes, these are great ideas. Very much along the lines of where I go in True Wealth (my most recent book), although there I don’t talk much about the policy side of all of a new economy. I’ve got a new piece in the NY Times–ran this Tuesday–will link to it on my home page. Best, Juliet

  7. Zjob4u says:

    Hi,

    To try to help young people find a job we created a jobboard that is focusing on a career instead of a job description. Hope that will help!

  8. Monika says:

    Nice article. I wanted to share some thoughts and join the discussion.

    I actually believe that people who’re good and know how to present themselves online will get jobs. It seems like it’s harder for the other 90% who don’t necessarily use Social Media in the right way.
    On the other hand, companies seem to be having a hard time connecting to GenY. So it’s hard for both sides really.

    I think it’s because talented people will always apply for jobs with companies that have certain status. Certain benefits. That are known and respected. That’s a struggle for all the other companies that are not as known; Not as transparent.

    I believe it’s the issue how companies present themselves online. The ones who know how to do it, will get millions of applications and the HR team will most probably suffer because a stack of CVs is just a stack of CVs and it doesn’t really say anything about the cultural fit of the applicants.

    What might need some change is the way people apply for jobs. There for sure are enough HR managers who’re desperate to find the right fit.

  9. Juliet Schor says:

    Well you may be right Monika. If so we have to figure out how to design a system that works for the other 90!
    If only 10% can make it, that’s a problem.
    Happy holidays. Juliet

  10. Monika says:

    I’m currently doing research on what people think of what the future of work looks like. Together with the team at Somewhere.com we’re trying to build a system that might break out of how it’s done these days.

    Just think of the scenario: You as an individual need a job. You as a company urgently need someone to do the job. Both parties might “slightly adapt” their story to make the other feel they’re the right match for the team. All based on a piece of paper (CV) that literally says what you’ve done in the past, but doesn’t say much about who you are as a person and what’s important to you.

    We’re still very much beta here at Somewhere.com but we’re trying to change the world of work. Ok, now that’s a statement.

    What’s your opinion? Do you think it might work out better when both parties share all these things before they bother to meet up personally?

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