Young America, Job Hunting, & Desperation

ARE COLLEGE DEGREES WORTHLESS?

Hey there college crowd, raise your hand if you’ve earned a bachelor’s degree.  Now put your hand down if you’ve found a position in the career you were shooting for.  According to an article on Bloomberg Businessweek yesterday, more and more of you still have your arm raised and may be throwing both hands up in total desperation.

What’s going on?  I’m an optimist but also a realist, and truthfulness demands taking a hard look at some tough facts lest we bury our heads like the ostrich who finally looked up only to see the rest of the pack had moved on.

THE SITUATION

The youth unemployment rate is nearing a whopping 20% these days.  That’s the highest number since the Department of Labor began compiling the data in 1948.  I said 1948!  Let’s clear up two quick points here.  First, the age bracket for youth unemployment is generally considered 16-24 years old.  Second, the 20% figure is unemployment which means people trying to find work yet unable to do so.  The number of 16-24 year olds without jobs is way higher, somewhere over 50% in recent weeks.  We haven’t seen this many young Americans without jobs since World War II.

THE CAUSE

An estimated 7 million jobs worked by young people have disappeared during the current economic downturn.  Basic economics explains much of this shortage of opportunities, but there’s another factor that can’t be ignored.  We have never seen this type of competition for entry-level jobs between young and older workers in America.

Older Americans are themselves facing a jobs crisis.  Pensions have been devastated, securities threatened.  More folks over the age of 55 are working now than before the recession as spousal incomes and home values decline.  When these workers get laid off they enter the same race for work already packed with so many young job seekers.

Another challenge is increasing competition among cohorts of recent graduating classes.  The current class is competing with grads from ’09, ’08, and so on.

THE OUTLOOK

Let me submit to you three major impacts we’ll likely see from this trend.

1. Tougher future.

Future job and earning prospects are hurt by this current downturn.  The Bloomberg article notes that two recessions in the early 80s created wage losses for the next 15 years for those who entered that bad job market.  Their initial entry positions were lowered, their wages less, their skills slower developing.  We are hovering around that same unemployment level now, so the future may not be as bright for new workers as it was 5 or 10 years ago.

Put simply, the quicker you get out of the gate the better, and right now the gate is jammed for a lot of entry-level seekers.

2. Deeper Debt.

There’s no end in sight to our skyrocketing debt (personal and national) in an age of continued consumption.  The average college debt is now over $23,ooo up from around $18,000 in the mid-late 90s.  Incomes are down, living and education costs are up, and financial discipline disappeared somewhere back there behind that broken starting gate.

Overall credit card debt in the United States increased around 18% in 2009 with some states seeing a rise as much as 30%!  The plastic cards are double-edged swords indeed.  Plenty of those charges go towards living expenses, but you know many of the purchases are for non-essential items.  Too often being broke and out of work is no longer an excuse to deprive ourselves of what we just gotta have.  After all, we deserve it right?