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Date: 2024-03-03 Page is: DBtxt003.php txt00004479

Youth Unemployment

A Demos paper ... STUCK: YOUNG AMERICA'S PERSISTENT JOBS CRISIS ... by Catherine Ruetschlin and Tamara Draut

Open the pdf Demos_STUCK_YoungAdultEmployment

This pdf describes the situation for youth in the United States. Really nothing new about that.

The recommendations made are the following


A policy agenda that gives young people a fair shot in the economy requires investment in labor force opportunities for those populations that the market has failed. Accordingly, a direct public sector jobs program would put millions to work immediately, instead of waiting another decade for the labor market to recover. But while improved opportunities are important for all unemployed Americans, the specific experience of young people demands a program tailored to their needs, especially for those most likely to be passed-over for opportunities: African Americans, Hispanics, and people without a college degree. A youth jobs corps targeted toward these populations should be part of a large-scale direct employment program.

A targeted jobs program would address the needs of those populations with the highest unemployment rates by creating employment opportunities in the communities where they live. This design has the potential to provide for essential services in areas where unmet needs are greatest, contributing to lasting improvements in the quality of life. Projects would include a range of construction, maintenance, and service work, including: construction on abandoned or sub-standard housing, conservation measures, the construction of new affordable housing units, the improvement of existing public parks, the construction of new parks, and the beautification and maintenance of indoor and outdoor public spaces. The program also could expand and improve the quality of public services in areas such as health care, child care, education, recreation, elder care, and cultural enrichment.

A public jobs program also produces the most bang for the buck, generating more jobs per public dollar than alternative types of public spending.7 As workers go out and spend their new incomes, the effects of the public investment multiply, becoming new income to businesses and generating private sector job growth for a sustained recovery. As income circulates through the economy, public savings on other programs like unemployment insurance, Medicaid, and CHIP, combine with new revenues to offset the initial costs.

According to a 2011 Dēmos analysis, a $47 billion initial investment directly creates 1 million new jobs and indirectly introduces more than 414,000 more.8 About $18 billion in savings counterbalance that first-round price tag, leading to a net cost of $29.2 billion for every 1.4 million new jobs. At that rate, filling the four million job deficit for young adults will require a net investment of $85 billion in direct and indirect job creation during the first year


The sectors where young people are most likely to find employment are also those most likely to pay the minimum wage. In 2012 accommodation and food services, retail, and health care and social assistance employed the greatest shares of young people and the greatest shares of minimum wage workers. Projections for employment growth dominated by low-wage occupations reveal that these jobs are not merely way stations for workers on the road to a better career, but rather compose a significant portion of the U.S. economy. Meanwhile, conditions of widespread joblessness put downward pressure on earnings and result in even college-educated workers taking on low-pay positions just to get by. With the high and rising costs of living, minimum wage jobs are not enough to allow young people to strive for a better life. Low wages keep young adults from making the critical investments in their futures that promote long-term stability and economic success.

After a decade of stagnation, federal legislation raised the minimum wage to $7.25 in 2009—still well below its historical peak. Today, that is worth just over two-thirds of the real value of the minimum paid in 1968. Every year that passes without an adjustment allows the purchasing power of the minimum wage to diminish, leading to greater income inequality and eroding standards of living for workers at the bottom. The Fair Minimum Wage Act of 2013, proposed in the House and Senate in March, would incrementally increase the minimum to $10.10 over three years, and then index the value to increase with the cost of living thereafter.9 Passing the Act would raise income for the lowest-paid workers by as much as $5,000 per year, putting money in the pockets of those who are most likely to spend, giving a much-needed boost to consumer demand, and generating new economic growth. It would also raise the standard of living for the 2.5 million minimum wage workers under 35 today, and provide a foothold as they plan for their futures.10


Declining wages, reduced benefits, and job insecurity are trends that began long before the Great Recession. They are the legacy of a generation of policies that undermined the ability of workers to advocate for improved conditions and fair compensation and led to declining standards of living for the working class. As a result, young adults have inherited a labor market where unforeseeable shocks can disrupt their livelihood for years into the future. Restoring the rights of workers for unionization and collective bargaining has the potential to reverse that trend. Union workers are much more likely than non-union workers to have access to health plans, retirement benefits, and paid sick leave.11 These protections provide stability in the face of economic slumps and family emergencies, and make it possible for young workers to plan for their futures even in times of uncertainty. Incorporating the voice of labor in critical workplace decisions can prevent another generation from enduring backsliding standards of living. This safeguard is especially important for young adults today, since the mere timing of labor market entry during a recession can lead to decades of diminished earnings and missed opportunities.

I cannot pretend to be impressed by these recommendations.

The report itself describes the state of employment ... or unemployment for the youth (of the United States) but in reality it is similar for youth around the world. This description is quite sound, but the whole question of systemic analysis is missing. What is it that has caused the unemployment, and if we know the cause, then maybe something can be fixed.

Because there is no system analysis, the recommendations are really nothing more than a repeat of things that have been tried in the past with more of less success. This report could have been written in the 1930s and it would not have been out of place ... but it is now the 21st century and the world is very different.

I see the problem as being the way the modern economy works. Philosophers have predicted this in the past, and it has come to pass. Every major decisions is about what I refer to as the terrible trio the dominant metrics:

  1. money profit for business companies;
  2. stock prices for investors and C-level executives; and
  3. GDP growth for macroeconomic analysts/policy makers.
A system analysis of the modern economy suggests that these metrics are going to be bad for works because science and technology has enabled labor productivity in ways that are quite amazing on top of dangerous energy profligacy. In the modern economy we don't need much labor but we do need a lot of energy. At the same time the planet becomes a constraining factor ... there is a limited amount of resource and not enough room for waste (air pollution, water pollution, land pollution). The banking and money system does nothing for 'valuadd' but merely serves to corrall the world's wealth in the interest of a class of money traders and oligarchs.

The recommendation to create a jobs program begs the question of where does the funding come from, and assumes that the 'government' can come up with the money. But government cannot do this unless the government is allowed to be a bank or credit creator ... not something that is particularly desirable There are big possibilities. We could:

  1. Implement complementary currencies on a big scale ... that is many complementary currencies in many locations;
  2. Bring back local banking ... community banking ... that puts community progress ahead of corporate progress, and facilitates the creation of credit at the local level, together with the building of a robust network of organizations committed to building up the local economy and enhancing quality of life in the community;
  3. Develop and deploy meaningful metrics using 21st century technology that account for the impact of economic activity of all sorts of the progress and performance of the organization, the progress and performance of the community and the impact on resources and the environment. These metrics would take into consideration the quality of life more than merely the quantity of goods and services.
An economist friend of mine from South Korea has observed to me recently that economic productivity in the modern age means that the marginal price of labor is trending to zero. This remark haunts me, because the market arguments of Adam Smith assume that equilibrium balance results in the best possible outcome for all the parties concerned. I therefore argue that a society with endemic surplus production and endemic surplus labor has to fail.

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