Youth unemployment: The outsiders
economist.com
economist.com
That is not the only problem, for sure - the economy certainly is bad. But at some point, we will need to acknowledge that there is simply not enough work to keep everybody gainfully employed 40+ hours a week. And the lower the skill level, the less work there is that can't be automated.
This is a problem that's looming for a long time - at least since Drucker talked about the Knowledge Economy (in 1966!) the writing has been on the wall.
We've been failing to acknowledge that ever since, since it's considered classist/elitist to point out the problem.
One of the biggest impediments is competition from government benefits. To induce a person to work, an employer needs to offer them enough to compete with their next best alternative. At low wage levels (i.e., low skill labor), this is extremely difficult. Consumption as a function of earned income is actually flat up to about $20k/year.
Thus, it is economically rational for low skilled individuals to choose not to work, even if others are willing to pay for their labor.
The question we should be asking isn't "how can we make low skill workers work for less money?". That is a race to the bottom that results in bigger societal problems and overall, bigger societal costs as those dispossessed people who are expected to work longer hours for less money than they can survive on realise that its easier and more profitable (and therefore more economically rational) to mug people in their homes, strip copper from empty houses and bridges and generally turn to crime.
People need a purpose. Something to do. That's a big part of what work is -- and our society provides all sorts of incentives that take those opportunities away and destroy the communities (as in people communities) that people with less means once depended on. In the process, we make alot of other people rich.
Crime like what you describe is evidence of desperation -- people are able to strip copper out of buildings because none of the neighbors give a shit, and the local government's policies make it viable for speculators to keep buildings vacant.
Read "The Death and Life of American Cities". Poverty doesn't need to equal misery, and being provided with stuff doesn't equate to happiness. We forgot about that after World War 2.
with no minimum wage limit, what is to stop pay dropping below the 'viable life' line, however you personally define it?
"People need a purpose. Something to do."
They also need money: to eat, to live, to feed their dependents, to transport themselves (to work!), to educate themselves, to clothe themselves and to warm themselves in winter. To medicate themselves. To participate in life.
"Crime like what you describe is evidence of desperation -- people are able to strip copper out of buildings because none of the neighbors give a shit, and the local government's policies make it viable for speculators to keep buildings vacant."
That may be why people get away with it. but people perform those acts out of desperation. because they need money to do all the above.
"Read "The Death and Life of American Cities". Poverty doesn't need to equal misery, and being provided with stuff doesn't equate to happiness. We forgot about that after World War 2."
Im not talking about buying them televisions. Im talking about being able to afford to take your daughter to the doctor, to buy yourself a book for school.
If you can so easily brush off the sodding huge downsides of poverty, I am going to go out on a limb and claim that you have never experienced it in its real form.
Poverty is brutal. It makes people hard, it makes people stupid and it makes them desperate.
I'm not white-washing and pretending that being poor is fun. But the combination of US economic, social and criminal policies in the United States has created great injustices that have destroyed millions of lives. 1 in 3 black men will find themselves incarcerated during their lives. (http://www.sagepub.com/upm-data/14873_Chapter9.pdf) That statistic is a national disgrace.
oh? what other supplements, exactly? more minimum wage jobs? how many supplements do you expect me to utilize?
"The actual minimum wage required to support a small family without external assistance is probably more like $15-18/hour."
how do you define 'support'? do you mean to educate, clothe, provide warmth and food. Do you just mean food? food and housing? food 4 days a week, and housing 5 days a week? are both parents working? who is looking after the kids? just one parent? so they are supporting how many people?
"1 in 3 black men will find themselves incarcerated during their lives. "
Indeed. lets see whether we can find a solution to that which doesn't require lowering the minimum wage.
Second of all, if you want high skilled workers to subsidize the unskilled, it's not necessary to disincentivize work. You could instead use guaranteed jobs - replace unemployment/welfare/etc with a job picking up trash by the roadside, cleaning the DMV, beautifying public spaces, etc. This is what FDR did.
Thus, low skill workers would no longer be faced with the choice of TV or flipping burgers. It would instead be DMV bathrooms vs flipping burgers.
To create even further incentive for work, you could stigmatize those with the guaranteed jobs. Instead of paying money, you could pay with in-kind benefits: rooms in a dormitory instead of housing vouchers, standardized cheapo clothing instead of money to purchase Modern Couture, cafeteria meals instead of McD's. Thus, even if your material standard of living doesn't go up from getting a job, your status does.
So, at your bare bottom essentials, you're looking at 260 a month, and hope you don't break an arm or have a life-threatening injury, because that's more money than you may make in a year.
That means, at a minimum, you would need to make ~3200 to survive. That assumes no crisis ever. And most importantly, that assumes no children. After all, you have no extra money for condoms or other birth control, and if you're raped, you have no money for an abortion.
And that's to live three to a studio eating a step above gruel. 3200 goes a heck of a lot further in India. We just can't compete.
But what we forget is that welfare isn't for the mother -- it's for the child. It's to make sure we don't have kids begging in the street rather than going to school, that we don't have emaciated children nutrient-deficient, lowering their IQs by nutrition -- no fault of their own. The question becomes, how do you make sure we establish a baseline for children so that those who have the ability to rise out even have a chance?
Under my proposal, there are no starving children. At most, their parents have a lower social status because they live in government issued dormitories and wear government issue grey sweatsuits. This gives the parents a social incentive to get a job with no deprivation.
As for my comparison to India, adjusted for purchasing power, the top 5% of India are poorer than the bottom 5% in the US. This accords very well with my anecdotal observations. I have far more sympathy for the Indian professional working 8-10 hours/day + 2-3 hours commute (who still can't afford AC or a car, unlike the poor American) than I do for a poor American sitting on the couch watching Jerry Springer.
http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-t...
Yes, someone on welfare is doing pretty well by Indian standards, but that isn't available to people without children. Compare the homeless population, not someone on welfare.
PS -- I like the idea of infrastructure help for welfare, but what do we do with the 3 year old left alone at night so that mom can do janitorial work?
I like the idea of infrastructure help for welfare, but what do we do with the 3 year old left alone at night so that mom can do janitorial work?
4 moms do janitorial work, 1 does day care work.
It's called the workhouse. The Victorians tried it. Read Dickens for example.
Do you have an objection to what I actually proposed, rather than some straw man from 150 years ago?
Are you suggesting people raise their families in dormitories ? It's one thing for students or a military barracks (which are for unmarried soldiers anyway). It's quite another for people wishing to bring up a family in privacy and dignity.
Incidentally, apart from the fact that the parents would have lower status, how is raising a child in a dormitory (shared with the parent) different from raising a child in a home paid for with vouchers?
I totally agree with the idea that instead of just giving money we should give them work. Personally I would farm out most government jobs to the unemployed. Many of those jobs that have a fixed employee are low skilled themselves and could be done by someone looking for work with just a couple of training courses, if that.
However, I would pay them real money. I hate this idea of stigmatizing the jobs. If they're happy staying in these jobs, we always need something done. The problem with your idea is that once a person ended up in these "stigmatized" jobs, they could never get out. They can't go to an interview for a nice job in "standardized cheapo clothing". The class stigmatization will ensure that once in, one can never leave this class.
To paraphrase a republican, if the minimum wage was abolished, everyone would have jobs.
yummyfajitas, are you somehow unaware that there are millions of people who desperately want to work, but can't find jobs? And that they would happily say goodbye to unemployment benefits in order to get back into a job?
Or do you simply not believe them?
Also, are you somehow unaware that there are millions of people who illegally enter the US in order to do jobs that Americans are unwilling to do? One would think that if millions of people desperately wanted to work, that demand for illegal immigrant labor should be drying up.
But could you please clarify where the jobless person gets $22k per year for leisurely consumption?
http://www.census.gov/hhes/www/poverty/about/overview/measur...
Withdrawals from a 401k and SS count as income, so if that homeowner is a retiree they might not be poor.
When I originally read "the poor do not want to work," I mistakenly (and hastily) interpreted this as a criticism of the so-called underclass or working poor (decent folks who are honest and hard-working but who are broke after life throws them a curve ball like unemployment or health problems).
Of course that's not who you mean. In my mind, I think your definition fits the "technically poor," not the socially and economically marginalized.
The technically poor would be those with substantial assets like a paid-off condo or house, with a six-figure 401k, good credit and family with substantial means, who suddenly become unemployed and so meet the income criteria, if only temporarily. Some of these people are low-skilled, and some are high-skilled.
For those folks, it certainly could be rational (if demoralizing) to stay on unemployment, because their real safety net is tapping into their assets at some point, e.g. when their benefits run out.
In my limited experience, the "working poor" are very demoralized by government assistance, accepting it as a last resort, and they tend to want to get back into a job for reasons of pride and ego.
The people who are morally corrupt and willing to exploit the system have absolutely nothing to do with poverty. They exist at every income bracket, and I've met plenty of middle class and high net worth individuals who would qualify :)
I apologize for jumping to the wrong conclusions and for my initially antagonistic tone. I regret the error and will not repeat it.
Collecting garbage is a job that cannot be outsourced, but doing mundane paperwork can and is.
This cohort doesn't appear to be very poor at all, in fact -- they report negative self-employment income. I wonder if you've confused low income with poverty. Or perhaps i'm confused, and haven't grasped your argument.
[0] I'm taking welfare to be the sum of "Unemployment and workers' compensation, veterans' benefits" and "Public assistance, supplemental security income, food stamps".
As for my confusion, I'm only looking at people near or below the US poverty line. Business owners who take a loss are defined by the government as living in poverty. You might argue that the government overstates poverty, and I would agree with you.
As for the sources of income section, it is clearly incomplete. If it weren't, consumption would be equal to income + change in net worth.
The poverty line sets a minimum level of consumption. These people are consuming above that threshold, so i don't think the government counts them as poor.
> If it weren't, consumption would be equal to income + change in net worth.
You're forgetting change in asset prices. If i own a house, and consume all my income, my net worth can still change if the price of the house changes.
Poverty is defined by income, not consumption. Please go read the link I provided explaining how the census calculates poverty.
You're forgetting change in asset prices.
Unless you are proposing that most poor people are homeowners, and that the value of their houses increased in 2009, that explanation doesn't carry much weight.
Fun fact: only cash transfers are counted as income. A housing voucher, for example, pays for consumption, but does not count as income.
Seems unlikely. We've been eliminating jobs with labor-saving devices for centuries. In the past they've always created as many jobs as they destroyed. What are the odds that this moment is the point when that finally stops happening?
The problem is that the amount of value that could hypothetically be created isn't the limiting factor. Rather, there are at least a dozen different structural forces that are all aligning to prevent people who want to work from connecting with companies that want to create jobs. And while these problems could theoretically be removed with the stroke of a pen, they probably won't be for another few decades, at least in the U.S.
E.g. if you look at the literacy levels in America, it should be pretty obvious why this is an issue: http://nces.ed.gov/NAAL/PDF/2006470.PDF
Perhaps we're butting up against limits on the amount of energy per unit time available to the economy in a way that we haven't in the past couple centuries?
For very low skilled jobs, automation can do the job better than a poor quality worker, because it is predictable and consistent. For jobs that still can't be automated, many of them can be done remotely, and are now done in lower labor cost countries by ambitious, conscientious workers. Jobs that can't be done remotely are being filled by illegal immigrants who are also ambitious, conscientious workers.
If you are at the bottom of the American labor heap, you have never faced competition from machines, globalization, and immigration like you have now. The problem is not just that the alternatives to low-end domestic labor are cheaper, but that they are higher quality, and therefore push the price of low quality domestic labor to near zero.
In the long-term, as machines become able to do more jobs better than humans, people will simply not be willing to pay any price for an error-prone human to do a worse job than a cheap machine. Then, low skilled humans will only be employed in jobs that can only be performed by humans, such as prostitution.
This shows a lot of ignorance of the economics and sociology of poverty in America and elsewhere, including poor educational opportunities that are not created by laziness or stupidity by the students. The statement detracts from your other well-made points.
If you are at the bottom of the American labor heap, you
have never faced competition from machines, globalization,
and immigration like you have now.
I strongly question the assertion that we are currently losing lowskilled jobs to automation or competition at a faster pace than in the past.
Also, I'd argue the biggest leap is computer technology, and it's having a lot of impact still. My guess is bio-engineering is next. If that happens (and it's a big if, in my book), there will be even more impact.
So, going back to the point, my original assertion was we're slowly running out of low-skills jobs. That's backed up by pretty much any look at employment figures. Manual labor has been wiped out to an insane extent (agriculture is what, 3% of the labor force now?). And the service industry is next, IMHO. Retail is slowly bleeding to death, for example.
Actually I think they would. Being an employer of a human would be a sign of prestige for the wealthy.
Just imagine you're at a future cocktail party and your host unveils his pretty human waitresses. He's obviously wealthy to afford a real human instead of using robots like everyone else
The point is, for a large class of servants, you need both immense wealth disparity and a large class of insanely rich people. We've increased a) and in the process, b) has gotten smaller.
Don't get me wrong, many people are rich - but only a few are rich enough that they can afford servants. This might change if the job situation gets worse, increasing the disparity so that more rich people now qualify as insanely rich.
It is difficult to overstate the increase in opportunity over the last hundred years for women in particular. Back then, there were so very few avenues to the middle class for even an extraordinary single woman. Today, Mary Poppins would probably go to a fine college and be able to land a job as a pharmaceutical sales representative at the very least.
The US discriminates against poor people. The fully-loaded cost of a US citizen is too high because the do-gooders require all sorts of expensive benefits and mandates. If a farmer pays a US citizen $12/hour to pick tomatoes, he also pays another $8/hr for code-compliant housing, workers compensation and unemployment insurance.
But, simultaneously, the government turns a blind eye if you ship in some Mexicans or Latin Americans and treat them like slaves.
Collectively, we share this psychosis where society wants to provide all of these great benefits and human rights for citizens, while treating this other class of person as something less than human.
This seems dubious. The avg. work week has been decreasing for a long time. It was only a century ago that significant amounts of <10 year olds were working, and the average work week was twice as long. Now it's slipping towards 30 hours a week.
This seems to just to continue that trend. It's becoming less likely that <20 year olds will have ever held a job.
I can't see it getting any better as boomers get older and refuse to give up their jobs.
We are not talking about a 'point' where the 40 hour week stops. It is a gradual decline in the amount of human labor, which has been going on for centuries. Automation means just that.
Thinking that work can forever shift towards other areas is stated on the assumptions that: 1. Not everything can be automated. 2. Human need will always grow to accommodate supply.
Now more than ever, you should question nr. 1. And in the areas that prove difficult to automate (e.g. education, law, healthcare, design..) there really is only so much work. (Except for law, maybe.)
Regarding the second assumption, when I look at highly educated people (which in my eyes, represent what in the future modal educated people will be like), they recognize desire as something that should be limited. They know that more money does not make you happier. Some even find a lot of joy in living simple and frugal.
It's been doing a good job so far. If there's enough of something, we tend to multiply until there isn't. You also seem to take it as given that "supply" is constrained by available human labor (and the efficiency of its application) and not by the power output of the Planet Earth. (You may, of course, be correct. I have absolutely no idea how one would even go about refining such an assertion enough to test it).
If it's happening at all, it's bound to happen at some point. We're just the people who live at that point in time. So what you're asking is, "what are the odds we're living now". Since we're (presumably ;) alive, they're 100%.
The first is housing and social services. In the US, social services, especially housing vouchers for hard-to-find apartments are only available to single mothers -- a household with an able-bodied male will almost never qualify. The result? Two-parent households are priced out of the market, as demands for the best low-income is driven by single mothers with housing vouchers. (A poor tenant with a voucher is preferable, because the government always pays the rent.) So we incentivize single-parent households, which are more likely to remain in poverty.
The second is the nature low-wage employment. We expect wage-earners to pay for alot of stuff that is really expensive for a low-wage person to afford. That $20 week health insurance premium with $20 co-pay is expensive when you make $30k/year -- and the coverage usually sucks. In the US, low-wage workers tend to get minimal vacation time as well, so you're basically one illness away from being indigent.
Costs for events that tend to happen are out of hand. My wife found a cache of old bills and vouchers in her office. One was a reimbursement for worker who fell into a hole and broke his arm in 1950, resulting in an overnight hospital stay. The bill? $25. ($135 in 2010 money) In 2011, you'd be hard-pressed to find a motel for that price, and an ER visit for a broken arm would easily cost $10,000.
Yes, there's an incentive here, but it seems unlikely to me that this is going to be enough to make people get divorced or probably even fail to get married if they meet the right person. More likely they would just fail to mention it to the government.
I definitely agree on the rest of what you're saying, though.
Check out old census reports on a rainy day. Its amazing how things have changed!
I'm not for government involvement in things, so I'm hesitant to suggest they be taxed additionally for having children, but it's certainly reasonable to stop encouraging them to breed when they can't even afford rent as it is.
That's what Marx was actually wishing for, i.e. more intensive work done by the machines equaling more free time for the laborers, who would use it to improve themselves etc.
Of course, he was aware of the fact that were the machines to be owned by a select few (the "capitalists") then the profits would go mostly their way, this is why he said that the "means of production" should be owned by the workers.
It must be nice to live someplace where all of the parks and streets are clean. (There are plenty of other examples.)
In my area, we "pay" folks far more than minimum wage to clean parks, which means that we have dirty parks AND pay people to do nothing.
What percentage of college grads are unemployed? What percentage of high school dropouts are unemployed? Several decades ago, when the 55+ crowd was under 24, what were their employment rates? What are these trends across gender?
Given how few sectors feature competition between 55- and 15-year-olds for the same work, the given comparison is far less interesting...
http://news.ycombinator.com/item?id=2525621
There was also another discussion earlier today on youth unemployment in the US:
http://news.ycombinator.com/item?id=2730268
which argued that youth unemployment is related to the 55+ demographic retiring later (as opposed to minimum wage laws).
This is the only way to change the world economy and stop the race to the bottom.
Would unemployment be lower if these people got healthcare and engineering degrees instead? Of course. But I really don't think people with less practical degrees are nearly as big of a problem as people with no education at all are/