Never mistake motion for action. ~ Ernest Hemmingway
Our young people are suffering mightily. The combined, ruinous effects of fiscal policy idiocy, minimal macroeconomic growth, and much reduced wealth/savings and stagnating wages for the majority of American working adults has devastated the employment possibilities for young people throughout this country and beyond. Over the past 5+ years, all too many Millennials are becoming our Lost Generation. The chart below shows the shameful youth unemployment rates that persist in too many so-called developed nations. In May, the US teenage unemployment rate is an astonishing 322% more the overall US unemployment rate. As high as our youth unemployment rate is, it's less than one-half as large as either Spain's or Greece's youth unemployment.
Meanwhile members of the Senate sit on
their derrieres and pat themselves on the back for adding billions of unnecessary
dollars to "strengthen" the US-Mexican border with ever-longer
20-foot high fences, drones, cameras, hired-guns, guards and electrified razor
wire. Congress has delusionally dismissed the facts of immigration: the number
of immigrants seeking legal or illegal entry into the US has decreased by 80% during the past decade. Members of Congress still live on their mental plantations of
the past [decade, century?]. Perhaps this all too common evidence of
reality-denial by public decision-makers should be added as yet another
"disease" in DSM-5.
Congress and the President have not
addressed far more consequential economic issues concerning our nation's present
and future. These concerns including encouraging equitable macroeconomic growth
that supports hiring workers, especially young people, and improving the
incomes of more than the top 0.001%. Last week, the Bureau of Economic Analysis
reduced its estimate of this year's first-quarter GDP growth to a moribund
1.8%. Parsimonious conservatives continue to endorse cutting education,
training and support programs' budgets and worry about non-existent inflation.
Businesses remain reluctant to hire more workers, especially
young ones, when Congress is retreating. Meanwhile many corporations sit on
mountains of retained earnings and cash. This is most definitely not the needed
counter-cyclical fiscal policy that I explain to high-school economics students.
Congress' and the President's
dismissal of youth's travails borders on myopic madness. It doesn't have to be
this bad; look at Canada in the figure, which has the lowest youth unemployment
of any OECD nation. But even its 13.5% rate is quite high by recent historical
standards.
In 2012, of the 2.1M 16 to 24 year olds
who want a job but can't find one, 217,000 were so discouraged that they dropped completely out of the labor
force. The labor force participation (LFP) rate for US teenagers is now 35.0%,
the lowest of any category of US workers and the lowest in decades. The LFP
rate for all US workers has dropped to 63.4%, also low by historical standards.
Most of the decline in the US unemployment and LFP rates is caused by workers
(like teenagers) leaving the labor force (not "actively" looking for
work), rather than actually finding jobs. There has been no improvement in
youth employment for almost 5 years, especially for those who haven't gone to
college or who are non-white.
I've mentioned before the problems facing our Millennial generation, and
unsurprisingly no Federal programs have been created to remedy this
generation's considerable economic plight. In fact, interest rates on Stafford student
loans doubled on July 1 – from 3.4%
to 6.8% – because Congress couldn't find time to authorize the continuation
of lower rates before it adjourned for its extended July 4th
vacation.
The meager life of all too many US
young people – as well as their compatriots in Europe, South America, Africa
and Asia – has not been a priority for politicians. However, as
politicians across the globe have seen, they disregard these issues at their
own peril. Witness the "revolutions" and massive displays of public upset
in Egypt, Brazil, Turkey, Chile and China.
When youth movements like Occupy here and
tamarrod in Egypt figure out how to organize people within the political process – and not just for impressive public demonstrations
– and be clearer about what they want (not just what they don't want), politicians
will be forced to remedy the issues that young people are facing.
What types of public actions can help
Millennials gain a more assured economic life here in the land of the free
(disregarding the ever-present PRISM, of course)? There are at least 4
inter-related types of human-capital investment programs that in the past have
proven their worth for improving people's economic well-being now and in the
future.
First, immediately resume subsidized
public loan programs for post-high school education. This includes re-funding
Federal Stafford loans at below-market interest rates and increasing similar State-specific
education loan programs.
Second, increase funding for Community
Colleges and vocational programs (including high-school programs especially
those that include joint private-public sector participation). By "vocational"
programs I'm not talking about traditional wood shop classes, I'm referring to a
broad array of classes from mobile software development to applied engineering
to health-science that provide skills which will remain in demand by private
employers.
Third, Federal and State post-high
school education funding should be provided only to institutions that limit
student cost increases to less than the yearly inflation rate. Continued super-escalation
of tuition and fees should not be allowed to continue. In other words, Federal
and State education funds should be provided only if colleges, universities and other education providers'
student expenses are reduced in real (inflation-adjusted) terms. With the sizeable
fiscal leverage that Federal and State government agencies have on all types of
educational institutions that charge tuition and fees, and assuming these
agencies – such as the Dept of Education, National Science Foundation and Dept
of Health & Human Services – wish to exercise this leverage on behalf of
enrolled students (rather than administrators; always a large assumption), I'm
sure tuition and fee increases can be much moderated as soon as such policies
are enacted.
Fourth, create a multi-year public job
corps program that principally focuses on youth without college degrees. Sure,
all age groups need more employment opportunities, but our future rests most
directly on having 16 to 24 year olds in full-time jobs, and especially
"disadvantaged" youth – principally Hispanic, Black youth without
college degrees who are not enrolled in post-high school education programs.
Remember, although much media attention is deservingly made of under-employed
college graduates (7.0% of youth with a BA or more are now unemployed), the unemployment
rate for youth with only a high-school degree is 18.5%; with less than a
high-school degree it's 28.5%. These numbers support the well-recognized maxim;
the longer you stay in school and get decent grades, the more likely you'll
find a job.
Current unemployment rates for Hispanic-Latino
youth and Black-African American youth with only a high-school degree are
disproportionately huge, 34.8% and 40.8%, respectively. A job corps program that helps such youth would
initially be expensive, but the nation's overall, longer-term health requires
it. The economic benefits of this investment would be both broadly-received and
substantial. Very few voters disparage the G.I. Bill (the Servicemen's Readjustment Act of 1944)
that provided an expansive range of benefits to returning US soldiers,
including cash payments of tuition and living expenses to attend college. [US
public debt right after WWII was as high as it's ever been, 122% of GDP. This debt didn't cripple us, as
conservatives now expect, and we survived to become a mega-power. We will carry
on now as well, in spite of Republicans' ill-founded prophecy of certain economic
catastrophe.]
This pioneering, publicly-funded human
capital investment law paid for itself and more. Like the G.I. Bill, the youth
job corps outlays can create hundreds of thousands of jobs for
currently-displaced young people that would buoy our economy and thus benefit
everyone.
Should we middle-aged (and beyond)
citizens be uncharacteristically magnanimous about spending billions on such
youth-oriented programs? Absolutely. Because Millennials are now starting to
pay for our public retirement and
Medicare expenses. And because Millennials are our future; the better off they
are, the more protected we Boomers (and the rest of the US) will be. The
Millennials' economic welfare is vital at this point if the rest of us want to enjoy
a sustainable, secure future. We need to act now and mitigate the toll that our
youth are suffering from.
