There will be no Work's New Age blog post this week.
Be here Thursday morning, for June's jobs data and American Job Shortage Number (AJSN).
Have a great weekend!
Wednesday, June 18, 2014
Last week, I outlined the severe problems of young adults completing bachelor’s degrees. They included high unemployment, a 25% rate of working in positions requiring their education, skyrocketing tuition, massive related debt, and the detrimental effects of starting good jobs later. The solutions most have implemented so far, such as living with parents, working part-time when possible, going off the grid, or doing other things instead, have achieved inadequate results for most. So what would help?
First, along with nebulous college rankings, we need to create a measure of career-job placement. For a given university, what share of traditionally-aged bachelor’s degree recipients are working in a position requiring that credential within one year? This metric could be adjusted, but not much – it should not, for example, exclude those in graduate school or taking time off, choices often influenced by perception of low hiring chances. Schools that refuse to publish this statistic, or will not share data used for it, should have that held against them by possible applicants.
Second, students in about the bottom 60% of their high school classes should generally not go to four-year schools right away. At this level, many go to college but don’t finish it. The routine track for average high school students with university aspirations should be to first go to a community college, live at home, and work part-time if they can find it. If they complete their two-year degrees, they should go on to a regular college or university, where, if they graduate, their diplomas will be the same as if they spent all four years there.
Third, everyone in a degree program at a four-year school should commit to getting it. That should be the specific, barely negotiable goal for everyone at that level. Nobody in doubt as to whether they can, or will, do that should be there.
Fourth, we need to reduce some expectations about college. The options above will hurt many students’ social lives, but with tuition and jobs being what they are, much of that is a luxury far fewer can afford. Those in college as well as the rest of us need to spend less, save money when it is available, and, if they have the time and need the income, work when possible.
Fifth, attending a high-tuition private university instead of a lower-cost state one should generally be, except for those in the top 10% of their high school classes or with similar family wealth, out of the question.
Sixth, young single people having trouble finding a good job should consider moving to a relatively cheap area, at least temporarily. There are great cost-of-living differences across the nation, with pay rates generally not making up for the highest ones. Plans of being in, say, New York City, Hawaii, or San Francisco sometimes just need to wait.
Seventh, but how about South Korea? That is one of the few places in the world where young Americans with four-year degrees are almost assured of being hired. Almost any can be an English teacher, paid enough to save significant money, with an apartment and health care part of the deal. The same goes, to a lesser extent, for China, Japan, and Hong Kong.
Eighth, we cannot wait for external change. The chances are far greater for another recession than for jobs for young college graduates suddenly getting much better or more plentiful.
Ninth, we all need to realize the employment crisis is permanent. Last week I saw yet another prime columnist – Robert Samuelson of The Washington Post, this time – express mystification on what is happening with work, labor and wages in this country. Automation, globalization, efficiency, and a string of smaller factors explain it well enough. When we understand that, we can at least partially unite to deal with it, and that will benefit young college graduates more than anything else listed here.
Friday, June 13, 2014
In the past six years, during which the Great Recession came and went and our perception that the economy is doing well has vanished, people in some categories have been more likely to suffer than others.
People in their 50s have often found themselves out of their careers, with poor or no working options. A variety of Americans have seen their incomes plunge, as their good jobs were lost and replaced by lower-paying ones most commonly now created, or none at all. Parents of younger college graduates have seen their offspring, instead of being monetary assets able to contribute some income to them, turning into liabilities. Yet it is the graduates themselves who have taken it the worst.
Even those who don’t know the statistics can at least sense that. Official unemployment for college graduates aged 21 to 24 has improved, but only to 8.5%. Another 8.3% want to be working but don’t qualify as technically jobless, or are working part-time but wanting full-time. Another 44% are in positions not requiring their degrees, which, as a New York Times editorial on Sunday put it, are less and less likely to be “well-paid professions” such as electricians or dental hygienists, but are instead “waiters, bartenders, or cashiers.” After subtracting out people unemployed in spirit but not among the 60% above, such as those off the grid, many getting more schooling, and others following their essentially second-choice paths, we get only about one-quarter of recent, young bachelor’s degree recipients working in paid jobs where that education is needed.
At the same time, college tuition costs average a staggering 13 times what they were in 1984. The total amount of education-related debt reached $1 trillion last year (over $3,000 per American), amazingly passing the amount owed on credit cards. As would logically be the case when combined with the poor jobs situation, loan default rates, now 15% in the first three years alone, are ever higher. High school seniors, who have heard for decades that college graduates average double the income of others, often do whatever it takes to attend, which, in times of lower income across the board and university financial aid leaving large gaps, usually means borrowing the money. In the meantime, 46% of people starting college in 2006 failed to get a degree by 2012, meaning that, while they benefited in other ways, they did not even qualify to try to join that 25%.
As time passes, many graduates do get good jobs. I have written for years about how typical working years start closer to age 30 than to 22, so that’s nothing new. However, the effect of the delay is devastating. Financial advisors say that, when careers start at 22, savings plan contributions made at a given percentage of income made in a worker’s 20s rate to be worth more at retirement than those from ages 30 through 65. Careers dependent on time of service, still most of them, do less well, meaning lower income, with later starts. As an indication of younger peoples’ lower prosperity, fewer are buying houses; according to one pre-recession 2008 study, the average age of first-time buyers was 33, with a mean family income just over $64,000. As the second number has become more challenging, the first is almost certainly higher now. Since home equity is a major form of household wealth, that means younger graduates are falling behind in that way as well.
How have those finishing bachelor’s degrees coped with the employment situation? As above, many are doing what they can, with part-time positions or more humble full-time ones. Many others live with their parents, extending their times of “premature affluence” or having richer lifestyles than their own incomes can support. Fewer than ever are relocating for work, often a wise decision as more and more good jobs turn out to be temporary. They have used often-free electronic media frequently and comprehensively, helping them spend less and leave home less, as shown by the share of 18-year-olds with driver’s licenses dropping from 80% to 61% from 1983 to 2010.
Progress on the jobs crisis, never strong, has stalled almost completely. The Obama administration has moved from even talking about needing more positions to concentrating on raising the minimum wage, sure to achieve the opposite. Republicans in Washington have offered nothing, other than weak and vague references to taxing the real or imagined job providers less and cutting unspecified federal employment-reducing regulations. College tuition continues going up.
The problems of new graduates cannot be allowed to stand as they are. So what can they, and the rest of us, do? That will be the subject of next week’s post.
Friday, June 6, 2014
This morning’s federal employment report was like an old movie set.
The front-view numbers were decent, even good. The economy added 217,000 jobs last month, about 85,000 more than population increase soaked up. Seasonally adjusted unemployment held last month’s large improvement to stay at 6.3 percent. The numbers of people jobless for 27 weeks or longer and those working part-time for economic reasons (no full-time opportunities they can find) stayed about the same at 3.4 million and 7.3 million respectively. Labor force participation and the employment to population ratio did not get worse or set any new 35-year lows, coming in at 62.8% and 58.9%. Those saying they did not want a job at all plunged 1.7 million, and the number of non-civilian, institutionalized, and unaccounted-for fell almost 1 million, both probably due to publicity about last month’s unemployment rate drop. The count of officially discouraged workers, though hardly including all truly in that category, fell from 783,000 to 697,000.
So what’s the problem? Well, everything else.
Seasonally unadjusted unemployment rose 364,000 to 9,443,000, bringing the corresponding rate from 5.9% to 6.1%. The number of people reporting they hadn’t looked for the past year, a statistic that should not fluctuate much month-to-month, shot up over 25% and is now almost four million. That group could absorb almost 3.2 million jobs by itself, so it deserves more attention than it usually gets. Overall, the American Job Shortage Number, showing how many more positions could be quickly filled, came in at just short of 19.5 million as follows:
These outcomes mean the AJSN gave up over three-fourths of its April improvement. It has, though, substantially improved over the past year, down 1.3 million from May 2013’s 20.8 million. That progress is all – actually more than all, since other numbers managed a net worsening – due to lower official joblessness.
Overall, the new employment report simply underscores the problems we have had for years. People returning to the workforce on good labor-market news usually find out it can’t accommodate them, and go back to their “discouraged,” “did not search,” “do not want a job,” or “unaccounted for” statuses. Labor force participation ratchets slowly but fairly consistently down. The shares of workers out for half a year or longer, and in positions with fewer hours than they want, improve little or not enough from excessively high levels. There is nothing happening, or even on the horizon, either publicly or privately to fundamentally improve the jobs crisis, and we certainly can’t look to Europe, rife with Great Depression-level unemployment rates, for guidance.
So here we sit. The turtle has almost stopped crawling. It is true that slow and steady can win a race, but stationary won’t.