US Underemployment 28.4% for young people, 18.4% in all Age Groups | Hacker News Reader

US Underemployment 28.4% for young people, 18.4% in all Age Groups

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53 pointsstartuprules47 comments

I've been wondering how many of these jobs are just gone for good due to higher efficiency and permanently increased productivity? We assume most of the unemployment & underemployment is caused directly by the recession but I'm not so sure about that. It seems possible to me we had sort of a jobs bubble where companies were overstaffing and the recession just exposed this. If you lay off 20% of your staff and magically the other 80% pickup the slack what incentive is there to re-expand by 20%?

My theory is modern technology and communications have just made certain positions inherently more productive. I can think of a time not that long ago where I may have lost an hour a day driving back to my office just to check my e-mail. Now I do that throughout the day on my SmartPhone while working on other projects. For a less skilled job I look at how grocery stores now scan products by UPC. There goes the job of the 19 year old tagging every can of corn with a little price tag sticker. When you run out of corn your computer inventory (tracked by UPC) knows about it. You spend 30 seconds re-ordering more through a computer instead of 15 unproductive minutes on the telephone waiting for the supplier to take your order. If these scenarios are being repeated in different ways all over the economy I think we need to consider that the rise in worker productivity is permanent and these jobs are gone for good.

Their is always more work than that which can be accomplished. Unfortunately right now, we don't know what that work is and what its value will be. This makes it extremely risky for people to jump careers since they don't know where to go, and it makes it hard to invest capital/start a business because the future payments are unknown.

If the housing market was at the correct value - not insanely overpriced as it is now people could be employed building bigger/new houses. If certain resources are limited (high price) then investments can be made to harvest them more cheaply. It takes time for people to experiment and for knowledge/price information to make its way around the market. Unfortunately, we also have some government policies that are actively distorting market signals and also increasing uncertainty of the future.

So while jobs disappear for good, new ones will be created -- unfortunately it is not quick or painless. I believe Ned Ludd's town took ~50 years to achieve the same level of success after the introduction of the automatic loom.

See here for an economist's take on that: http://www.marginalrevolution.com/marginalrevolution/2010/07...

He notes that there's been "[a] recovery in output, but not in employment. That means a smaller number of laborers are working, but we are producing as much as before. As a simple first cut, how should we measure the marginal product of those now laid-off workers? I would start with the number zero. "

Also here (linked in the above article): http://econlog.econlib.org/archives/2010/07/the_zmp_hypothe....

Kling's pet theory is "recalculation," in that recessions are frequently the result of lots of people being employed doing the wrong thing (in this instance, building and selling houses), and it takes a while for those workers to be "reassigned" by the market to productive jobs. Money quote here:

" Let us talk about the marginal product of worker i in occupation j. In most cases, this is indeed zero. My marginal product would be zero in fishing, medicine, and many other fields. In a complex economy, if you were to randomly assign workers to jobs, ZMP would be the norm, not the exception. The more complex the economy, the more carefully workers must be assigned in order to avoid ZMP."

This.

I find it absolutely amazing this hasn't been talked about more. I have no idea what the majority of the population is going to do in the near-future. These jobs are not coming back. I posit that a large percentage of the currently unemployed will never be employed in their sector again. We will never reach pre-2007 employment levels because the majority of jobs weren't and aren't necessary.

I up-voted you, but what's up with the reddit-speak? It's unnecessary.

How would you have liked me to phrase it?

Just without the "This"

That's a relatively common thing to see on HN.

What part is the reddit-speak? "This."?

I saw that on MetaFilter long before I saw it on Reddit.

Invest in some online colleges?

Those who lost their jobs due to efficiency and technology improvements are going to become the target customers of many of those online schools in hopes to switch to a new sector. They will take on a large amount debt as a result and might never actually be able to find jobs -- but the colleges need now worry about that -- they'll get payed by the government...

I think you could be right, long term.

In the short to medium term I don't think it is clear. To grow employment, the US needs to grow its manufacturing sector. Many people think that is impossible because of lower costs in China.

However, Chinese manufacturing costs are under increasing wages pressure (see http://www.chinadaily.com.cn/business/2010-07/19/content_101...). For some thing that isn't going to matter - the cost of labor is the main cost in manufacture, so China will be cheaper.

For some industries, though, there are significant capital costs up front. China doesn't necessarily have such a big advantage there, and it's the kind of thing that properly targeted government stimulus (direct or in the form of tax concessions etc) can make a big difference.

Unfortunately it seems that a large part of the political dialog in the US revolves around how bad any form of government intervention in the market is.

The US's competitors don't have that weakness, though.

I definitely agree that growing manufacturing is a short-to-medium term solution to unemployment.

However, I think it's only a partial-solution going forward in that a) employers won't need to (and therefore won't) employ as many workers per plant and b) the skill-sets required for those positions will be more demanding[1] than those in the past.

As for the long term, I think it's safe to say that robotics and automation will eventually remove entirely the need for human factory workers and (nearly) all manual labor. I'm intensely interested the type of society that this will give rise to and I don't know if it's possible (I suspect not) for this type of market to sustain our current population.

[1. I could probably find you an article saying this, but I heard this on PBS Newshour about a week ago.]

As for the long term, I think it's safe to say that robotics and automation will eventually remove entirely the need for human factory workers and (nearly) all manual labor.

Maybe. People are surprisingly cheap in some parts of the world, and robotics are pretty expensive. Even in the future, the raw materials in machinery won't magically get cheaper.

For some industries the upfront costs associated with automation won't be worth it for a long, long time.

Even in the future, the raw materials in machinery won't magically get cheaper.

True, and raw materials will probably get more expensive. Another thing to consider, however, is that newer industrial techniques might not even be employable without the use of machines. For instance, humans can't make processors regardless of how cheaply their willing to be payed.

For some industries the upfront costs associated with automation won't be worth it for a long, long time

Right. It's always going to be a cost benefit analysis and I think that's a fair assessment.

I have no idea what the majority of the population is going to do in the near-future.

Some part of marketing and advertising? That seems to have been the trend for the last century or so...

Century? Hell, no - up until 1970s the USA was distinctly industrial powerhouse. As were nearly all other developed economies.

This is obviously a very, very small data point but just the other night on the PBS Newshour they had a piece about the 99-weekers (people who have been out of a job for 99+ weeks) and the central interviewee of the story was formerly in marketing.

I was just wondering how much something like this has affected the programming world. Business shrinks, loses some of its less productive programmers, and possibly gives their better ones more control, or hires more carefully and gets a better one. I think just about everyone here is aware of the massive productivity difference between a low-tier code-monkey and a guru - gurus are cheap for what they do, they're just hard to find.

That might happen at some places, but often the opposite happens: companies go into maintenance mode where they hire the cheapest possible "just keep the thing from falling over" programmers and sysadmins, and get rid of the expensive programmers, who are often seen as an "R&D" luxury that can be dumped in a recession.

The economy is not a zero sum game. After all, the population of the United States was 92 million people in 1910, with vastly inferior technology and productivity. And yet, there are still jobs to go around, and things will improve.

B.S. there's lots of things that we as a country need to get done. From our crumbling infrastructure to global warming to preparing for the retirement boom we need to be investing massively, not scaling back. We have too few resources to get everything done that needs to get done, not too little. It is a failure of our markets and our government that so many resources sit idly by.

...preparing for the retirement boom...

Actually, there are very few investments we can make which will prevent retirements from destroying/severely harming the US.

Social security is directly indexed to wages, and medical spending tends to be proportional to the higher wage brackets as well (most medical spending is labor costs).

Virtually any productive investments we make would increase wages, and social security/medicare costs will rise commensurately. The only thing we can do to prepare for the retirement boom is either cut benefits, or massively increase productivity with no commensurate increase in wages.

The minimum wage makes it difficult to hire unskilled workers. If it didn't exist, there would be a lot less unemployment for young people just starting out.

Is that true? My understanding is that classical economic theory predicts this, but empirical evidence has been very mixed.

Lowering the minimum wage, the theory states, will open up more unskilled job hours, and thus decrease underemployment, if you define underemployment as people who work part time, but would like full time work.

the idea being if one guy with one of those parking lot cleaning trucks can clean my parking lot in an hour and it takes, say 10 man hours to clean my parking lot with brooms, if the guy with the truck costs $50/hr to clean my parking lot and a guy with a broom costs $10/hr, it's cheaper for me to hire the guy with the truck. If I can get guys with brooms to work at $4/hr, suddenly it makes sense for me to hire 10 guys with brooms (assuming I need it done in an hour, and the work scales that way) rather than one guy with a truck.

On the other hand, if you hire 10 guys with brooms, you just eliminated a higher paying job in favor of 10 low paying jobs. this will tend to increase the number of people taking work that is beneath their skill level. so one could say that a high minimum wage is a subsidy on skilled labour.

I mean, even my company. right now, most of the provisioning is done by hand... this is because I'm able to obtain fairly cheap (well, quite a bit over minimum wage, but still, cheap by the standard of such things) SysAdmins who /can/ provision people by hand. If the job market was better, I'd be forced to pay much higher rates for my sysadmins, and my current mostly-manual situation would be untenable. Granted, either way, automation is a high priority, but with current market conditions, 'just do it by hand' is an option, and that simply wouldn't be the case if the job market was in better shape.

If the job market was better, I'd be forced to pay much higher rates for my sysadmins.

Wow, now I know why it takes a week for my machines to be rebooted.

pretty much.

How come you couldn't reboot it yourself?

Also note, we're pretty liberal with refunds if you decide we aren't good enough.

Because where I work, rebooting machines is the Domain Of The Sysadmins.

And there's no refund policy :)

ah. I thought you were a customer complaining about my bad customer service. We have a ongoing problem of dropping tickets on the floor that we're working on. Part of my problem is that /within my financial constraints/ I will choose someone who is skilled who is not particularly customer focused over someone who is unskilled but customer focused. the other part of the problem is that until recently, I haven't really been 'backstopping' the customer support queue. The problem is getting better, I think, as I have been putting more effort into it, but it's not solved yet.

Of course, unless something breaks on my end (or, more often, the customer loses his auth. key) my customers can reboot their own server, no matter how badly the mess it up. For my system to scale, this is absolutely essential.

Tell your SysAdmins to setup powerman. it's a wonderful tool that lets you control access to different brands of remote rebooters in a very sane way. They could easily set it up so devs can reboot, say, dev, test, and staging but not prod.

I think a /whole lot/ of this current 'cloud' craze is just an overreaction to the bureaucratic problems with internal IT departments... like SysAdmins not providing timely support /and/ not allowing access/tools so that devs can do it themselves.

  I think a /whole lot/ of this current 'cloud' craze is just an overreaction to the 
  bureaucratic problems with internal IT departments... like SysAdmins not 
  providing timely support /and/ not allowing access/tools so that devs can do it 
  themselves.

That's definitely one of my reasons for going that direction. As a soon-to-be-an-academic grad student, it's nice to have my own thing I can take place-to-place anyway, but due to inertia, it being free, and essentially infinite bandwidth, I'd probably be using university IT stuff if they would let me do anything on it. But, the fact that I have to round-trip through a person to get anything installed, and also have a big hassle of explaining why I need it and hoops to jump with their security policy, just makes it easier to buy a server somewhere not on the university network where I have root.

I've never seen a university network that prohibited CS grad students from having machines with root.

I've heard of networks like this—in some places I didn't expect—but it is neither acceptable for a research environment nor the status quo and you should push for changes in your department if this type of harebrained thing is preventing your ability to do science.

Oh, I do have root on my own desktop machine. It's getting root on a machine that I can use to serve things up to the internet that's a hassle. The official way to deploy web-app type stuff is to ask university IT to look it over and deploy it on their servers, which they understandably don't much like doing when the webapp includes callouts to a bunch of possibly-buggy research code, some of it from third parties, or depends on stuff they don't have installed on their servers (Prolog, Lisp, etc.). But they also don't like un-firewalling my machine so I can just serve it up from there. Research groups can indeed set up servers that they request to be un-firewalled (a prof. usually has to initiate that), but it's just less of a hassle for me to move web-demo stuff to a VPS.

That is only looking at one side of the minimum wage coin. There are also a lot of people who may only contribute 4$ of value per hour (inexperienced, etc) who would like to work at that wage but won't get hired due to their lack of value. But if they could get a job, they would gain experience and eventually start contributing more value and thus be able to justify a higher wage. Minimum wage hurts those who it is trying protect -- in fact when I worked menial "minimum wage " jobs, I was always actually paid more than minimum wage.

did you read what I wrote? specifically:

"On the other hand, if you hire 10 guys with brooms, you just eliminated a higher paying job in favor of 10 low paying jobs. this will tend to increase the number of people taking work that is beneath their skill level. so one could say that a high minimum wage is a subsidy on skilled labour."

So yeah, a higher minimum wage does favor more expensive people who can be more productive over less expensive people who are less productive.

My first job didn't pay minimum wage, and I know that some 15 year old fixing computers is rather different than an adult labourer trying to feed a family, but I feel that I benefited from having the job; It got me my next job (which was minimum wage) which started me down the path, a few years later, to a 'real job' with real pay.

It got me my next job (which was minimum wage) which started me down the path, a few years later, to a 'real job' with real pay.

It's all relative. When everyone starts having 2 unpaid internships or related work as a kid paid under the table, businesses start to expect this level of experience before hiring someone for a "real" job.

start to, nothing. most businesses expect you to have experience now, and, uh, you need to get that experience somehow.

for me, it was a bigger problem than for most people. I didn't have a degree. It's hard to get a real job with a degree and no experience. getting a 'real job' with no degree and no experience is pretty much impossible.

My brother, on the other hand, has been making $20+ an hour at his internships; a line I didn't cross until I made programmer. To be fair, he's the age I was when I got a 'programmer' title, and his responsibilities and accomplishments are similar to mine at his age; the only real difference is that when school starts, he heads back to school, while I kept working.

In a recession, it appears less skilled people are hit hardest in terms of underemployment and unemployment, perhaps the minimum wage needs to be "seasonally adjusted" in terms of the economy, otherwise the subsidy for skilled workers will be higher relatively during recessions. Unless, of course, that's what you wanted in the first place.

what we need is useful work to give unskilled people. something that pays at least minimum wage. Come on now, I know there is /something/ these people can do. How about cleaning houses? the barrier to hiring housekeepers, I believe, is mostly social. (and I think the problem with the employment market there is that most housekeepers work through agencies, which take huge cuts in exchange for providing little more than a classified ad and insurance.)

Obviously, that won't solve the problem by itself. But we need to focus on finding something productive for the unskilled masses to do.

I applaud you for your sanity, despite it risking not being politically correct.

I'll risk being even less PC and point out the elephant in the room: illegal immigrants aren't an insignificant factor.

If I'm to trust my anlysis of the context of popular media[1], illegal immigration was already considered a problem by the late 70s. Does anyone know how many people were included in amnesties[2]?

My belief here is that "undocumented" workers aren't subject to the same rules, parrticularly minimum wage. If there are millions of illegal immigrants (not all of whom are workers, granted), there are already jobs out there.

The question is, can those jobs pay at least minimum wage? Even if they could, how many currently unemployed would be willing and able to work them. This, as it applies to farm labor, has been discussed previously on YC[3].

Your mentioning cleaning houses, however, is what prompted me to think in this direction. One of the most valuable things the agencies provide is a membrane of legitimacy, shielding the customer from the liability and administrative headaches (insurance, which you mention, being one of them) of being an employer.

In any case, I agree that finding or creating productive (even minimum wage worthy) work for unskilled (not-yet-skilled?) labor is beneficial to the economy and society as a whole. The confounding factor is that such work in the US tends to attract such labor from outside our borders. I posit that even a successful effort would have no effect until the flow is stopped.

Whether stopping the ingress of unskilled workers is feasible, politically or economically, is another matter.

[1] Borderline (1980) http://www.imdb.com/title/tt0080465/

[2] e.g. IRCA, NACARA

[3] http://news.ycombinator.com/item?id=1500872

As for illegal immigration, I think it really only makes a difference in service jobs that need to be done in person. I have to compete with foreigners, and that wouldn't change even if you completely eliminated immigrants. the service I provide is also provided by companies in other countries, and really, location doesn't matter that much.

I'm just pointing out, even if you completely stop immigration, manufacturing jobs and service jobs that are done over the 'net will still need to compete internationally, unless you also want to completely shut down international trade. So why should in-person service jobs get a subsidy that other types of work don't?

Personally, I think the next outsourcing craze will be "inshoring" - if you are willing to hire a Midwesterner, you can get an American accent at Indian rates.

>Your mentioning cleaning houses, however, is what prompted me to think in this direction. One of the most valuable things the agencies provide is a membrane of legitimacy, shielding the customer from the liability and administrative headaches (insurance, which you mention, being one of them) of being an employer.

Really, I think it's a pretty big problem... There are /many/ people (US citizens, even) willing to clean houses for $10/hr... and I think the difference between $10/hr and the $30/hr you are going to pay an agency (of which $7/hr goes to the poor schlep actually doing the work) makes the difference, for many people, between a weekly cleaner making sense and not.

I think that lowering the liability and hassle barriers to becoming an employer (with an eye towards cutting the agencies off at the knees) would benefit the workers on the low end quite a lot.

How is a young person with little or no work experience and no college education "underemployed"? That is basically the least qualified group possible.

Least qualified for what? In previous decades young people with little work experience and no college education had a solid blue-collar track available to them.

Nowadays, not so much.

My point is if you're lucky enough to get a solid union unskilled blue-collar job, great. If you get stuck doing a similar job without a union for much less money, that sucks but it isn't underemployment.

I suppose, but it will cause deflation, and whatever you want to call that deflationary pressure, we're getting dangerously close to it.

By definition, someone who wants full-time work but is unable to find it is "underemployed". It's not really a value judgment about whether they deserve more employment or anything, just a statistical category tracking people who cannot find a full-time job (much like "unemployment" is a category tracking people who cannot find any job at all).

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