Saturday, July 16, 2011

Why don't politicans pay more attention to the youth employment crisis?

A good reminder from the always perceptive Ezra Klein of the inexorable link between money and influence in the US political system.

Pondering Washington's paralysis in the face of widespread and persistent unemployment -- 15 million people unemployed, and more than 20 million underemployed -- Klein's recent piece in the Washington Post looks at various explanations for the inaction of policy makers.  Ultimately, he muses, "I’m sure all of these theories are at least partially right. But they’re missing the big one that has the best evidence behind it: The unemployed don’t have very much money. And it’s money that gets the political system interested in your agenda."

Klein cites an analysis of 30 years of polling data that traced the connection between popular support for a policy change, and the likelihood that the change was actually put into place.  Not surprisingly, the study found that the preferences of the poor rarely motivate political action, whereas strong support for a proposal among the rich often led to its enactment.

Stuck at the bottom of today's labor ladder, unemployment hits poorly educated young people the hardest.  Given that disconnected young people in particular rarely contribute significant funds to political causes and vote in much lower numbers than other groups -- only around a quarter of eligible high school dropouts aged 18-24 voted during the 2008 presidential election -- politicians feel little pressure to address youth issues.  (It's a "chicken or egg" situation, of course.  With little discussion of their concerns, many young people see their participation in the political system a waste of time.) 

As Kline notes, "If 15 million college-educated professionals were unemployed right now, the political system would care."

Wednesday, July 6, 2011

Money, money, money -- how little is (barely) enough?

As we celebrate our country's Independence Day this week, we should take a moment to contemplate how much money a young person requires to really become independent -- no longer having to rely on friends for a place to sleep, on government food stamps to eat, on family for handouts.

The federal government defines the poverty line as the threshold below which families or individuals are considered to be lacking the resources to meet the basic needs.  The table below indicates the official 2011 poverty line as calculated by the Federal Dept. of Health & Human Services.

2011 HHS Poverty Guidelines
in Family
48 Contiguous
States and D.C.
Alaska Hawaii
1 $10,890 $13,600 $12,540
2  14,710  18,380  16,930
3  18,530  23,160  21,320
4  22,350  27,940  25,710
5  26,170  32,720  30,100
6  29,990  37,500  34,490
7  33,810  42,280  38,880
8  37,630  47,060  43,270
For each additional
person, add
   3,820    4,780    4,390

SOURCE:  Federal Register, Vol. 76, No. 13, January 20, 2011, pp. 3637-3638

Many researchers criticize the way the federal government calculates the poverty line, not least because it fails to differentiate between high- and low-cost regions.  While a single person might be able to survive in rural Arkansas on $10,890 per year, such a paltry sum does not go far in a place like New York City.  And a family of four living on $22,350?  Fugghedaboutit!

The Living Wage -- the geographically-adjusted amount of money a full-time worker would need to earn in order to pay basic living expenses in his or her specific area -- offers a more realistic measure of self-sufficiency.  The magnificent Living Wage Calculator at Pennsylvania State University combines statistics from multiple sources to create more nuanced numbers for virtually every community in the United States.  The Calculator shows how much a person would need to earn hourly depending on family size; a breakdown of living expenses; and average earnings in different types of jobs. (Even these figures may underestimate true costs.  The site notes that "the results a minimum cost threshold that serves as a benchmark, but only that.")

Below is the Living Wage Calculator results for Manhattan (New York County).  The Calculator provides separate figures for The Bronx, Brooklyn, Queens and Staten Island.

Few young people who lack basic education and training are likely to find themselves in jobs that pay enough to cover their basic bills, especially if they also have one or more children to support.  Given this bleak reality, it's no mystery why so many drop out of the labor market altogether rather than struggle for low-wage positions that leave them increasingly in the hole.

For youth practitioners, it's not enough simply to get a young person any job.  We must also show them the pathways (education, training, apprenticeships, etc.) by which they can move above the living wage threshold into true self-sufficiency, and then help them create a concrete plan to do so.  Otherwise, we risk simply setting them up for a life on the margins.

Friday, July 1, 2011

Why aren't employers hiring?

The Great Recession officially ended two years ago this month.  Corporate profits are reaching record levels.  Yet the United States has seven million fewer jobs today than it did in 2007, and even under the best scenario might not get back to full employment levels until 2020.  What's going on?

The McKinsey Global Institute has some answers.  In An Economy That Works: Job Creation and America’s Future (June 2011), McKinsey found a number of structural challenges that make this recovery different from previous recessionary periods:

1) So-called "jobless recoveries" are becoming the norm.  From the end of WWII to the 1980s, the economy on average recovered its lost jobs within six months after the end of a recession.  According to McKinsey, "it took 15 months after the 1990–91 recession and 39 months after the 2001 recession. At the recent pace of job creation, it will take more than 60 months . . . for employment to recover" just the jobs that have been lost over the past several years.

2) Even as the economy struggles to replace lost jobs, the potential labor force continues to grow.  Under the best scenario, the economy will not be able to produce the 21 million new jobs required to provide work for everyone who wants a job until 2020.  "However, in the low-job-growth scenario, only 9.3 million net new jobs are added—implying continued levels of high unemployment. In our midrange scenario, about 17 million jobs would be created, with the unemployment rate remaining at nearly 7 percent in 2020."  Disconnected young people at the bottom of the labor pecking order will undoubtedly feel any shortage of jobs most acutely.

3) Under current trends, the United States will not have enough workers with the right education and training to fill the skill profiles of the jobs likely to be created.  As a result, companies that lay off workers are opting to invest in equipment rather than workers when demand picks up.  The New York Times recently noted that in the past two years "businesses’ spending on employees has grown 2 percent as equipment and software spending has swelled 26 percent, according to the Commerce Department."  One employer illustrated the challenges in hiring:

“I dread the process we have to go through when we want to bring somebody on,” he said.
“When we have a job posting these days, we get a flurry of résumés from people who aren’t qualified at all: people with misspellings on their résumés, who have never been in the industry and want a career move from real estate or something. It’s a huge distraction to sort through all those.”
Culling the résumés takes three days. Then he must make time to interview applicants, and spend $150 for each drug test.
Once a worker is hired, that person must complete a federally mandated safety program, which Vista pays an outside contractor a flat fee of $7,000 annually to handle. Finally, Vista’s best employees spend several months training the new hire, reducing their own productivity.
“You don’t have to train machines,” Mr. Mishek observes.

4) The bulk of job growth over the next 10 years will occur in just six sectors: health care, business services, leisure and hospitality, construction, manufacturing, and retail.  These sectors account for 66 percent of employment today, but up to 85 percent of new jobs created through the end of the decade.  To meet the demand for qualified workers, policy makers must do a better job in highlighting labor trends and pushing schools and colleges to better prepare young people for the emerging opportunities.