The Idled Young Americans

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Ego
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Post by Ego » Tue May 07, 2013 2:44 pm

Yesterday I had two separate conversations with unrelated friends who are both ready to retire but continue to work so that their unemployed mid-twenties children can have health insurance.
Today I saw this in the New York Times:
https://www.nytimes.com/2013/05/05/sund ... .html?_r=0
I find it interesting that they chose the word "Idled" as opposed to "Idle" for the title.


secretwealth
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Post by secretwealth » Tue May 07, 2013 2:58 pm

I was just commissioned to write a piece on unemployed young adults. It's a massive problem and not one with any clear answer on the horizon.


Dragline
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Post by Dragline » Tue May 07, 2013 3:39 pm

For the individual, the most clear answer would seem to be "get a college degree, but don't pay too much for it". The article notes that the unemployment rate for that group is only 3.3%. But I would imagine that includes lots of people with college degrees working low-wage jobs that don't require them.
I saw an article yesterday that noted that college grads in petroleum engineering start at $90K. If I were a young person looking to ERE at 30, I'd seriously be looking at something like that at a mechanism to get there.
I don't know of any magic solutions for this and would be very skeptical of anyone who claims to have one. Part of the issue is a demographic one -- the Boomers need to retire, but haven't saved enough. This same issue was on the table in the 1930s. One of the solutions then was to implement social security.
I would not be surprised to see labor shortages in some industries in the US in the 2020s, especially if our relative energy costs remain lower than elsewhere. But that's a long time to wait for the current unemployed.


JamesR
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Post by JamesR » Tue May 07, 2013 4:01 pm

secretwealth,
Perhaps there are lots of clear answers, but none that people would even consider? ;)
Points:

* There's a lack of jobs, perhaps a post-scarcity trend, but this is ultimately not the real issue.
* Education system and parental expectations and the general culture put pressure on the youtube generation to get a job. However, there's a mismatch to the reality of today's world. In many ways, there seems to be a lack of incentives to get a job. The youtube generation is somewhat aware of the mismatch.
* People want to work and do interesting things. But perhaps it needs to be almost in the same style as post-ERE work. So the younger generations are transitioning towards this new style of work.
* The internet is definitely part of this transition. It's probably reducing incentives to work regular careers. It's also helping to create the means & tools for people to create their own work.
* There's probably a rough transition period happening currently since the education system was so inadequate that it is probably more of a hindrance in some ways to helping the young adults make this transition. For instance, education system was probably too geared towards careerism.


Spartan_Warrior
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Post by Spartan_Warrior » Tue May 07, 2013 4:22 pm

"I find it interesting that they chose the word "Idled" as opposed to "Idle" for the title."
The implication being that idleness was forced rather than chosen. Do you disagree?


Seneca
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Post by Seneca » Tue May 07, 2013 5:39 pm

For the individual, the most clear answer would seem to be "get a college degree, but don't pay too much for it". The article notes that the unemployment rate for that group is only 3.3%. But I would imagine that includes lots of people with college degrees working low-wage jobs that don't require them.
I saw an article yesterday that noted that college grads in petroleum engineering start at $90K. If I were a young person looking to ERE at 30, I'd seriously be looking at something like that at a mechanism to get there.

For a student with some natural interest in math/science I think this is the best advice. Less and less American students are getting engineering degrees and more and more foreign students are getting their degrees and leaving the US. This gives a bit of a demographic bump in the value as well.
Engineering and engineering focused schools consistently top ROIC rankings for colleges/degrees.
http://finance.yahoo.com/news/college-r ... tml?page=1


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Ego
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Post by Ego » Tue May 07, 2013 5:42 pm

"The implication being that idleness was forced rather than chosen. Do you disagree?"
After hearing the woman mention she was still working to keep her adult child insured even through she could afford to retire, a younger mother across the room chimed in with, "No! No! No! I'm getting my kids to 18 then they're on their own! I tell them that every day." I've known her for a while and I think it is safe to say she is the anti-helicopter mother. I have no doubt her kids will be self-sufficient young adults.
Maybe neither "idle" or "idled" are correct. Maybe "allowed to be idle", is the best way to put it. Adults who have been helicoptered their entire lives.
The article mentions the MIT study by Esther Duflo that found job counseling did not simply displace other employees but increased overall employment. That suggests the problem is not entirely with the economy. When people are trained (encouraged) to get jobs, they do, and they're not simply beating out someone else for the job.
Also, in September 2010 the Affordable Care Act provision regarding insurance coverage for adult children under 26 kicked in. The drastic change outlined in the story is based on 2011 numbers. Did we remove a strong incentive to get work when we extended coverage to these adult children?
As the story says, Europe has had these problems forever. It is a new phenomenon in the U.S.


Spartan_Warrior
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Post by Spartan_Warrior » Tue May 07, 2013 6:53 pm

@Ego, if I may respond to an anecdote with an anecdote...
My parents were "helicopter parents" to the extent that they paid for a large amount of my college, paid for certain privileges, and were very financially generous. I certainly felt like they always had my back if I made a mistake, that I always had a place to go. They didn't throw me out at age 18; in fact, I lived at home for part of college and a couple years afterward.
Now at age 26 I am not only 100% independent but my net worth very likely exceeds their own...
My point is not that helicopter parenting is beneficial in forming independent adults, but rather that it is not a deciding factor. To me it's simpler to fathom economic causes for economic problems. Occam's Razor. I find it hard to blame parenting styles when broad, objective data on the economy, hiring, value of higher education, etc. are just as explanatory and tell the same story--that the labor market is particularly hard on this age group.
"The article mentions the MIT study by Esther Duflo that found job counseling did not simply displace other employees but increased overall employment. That suggests the problem is not entirely with the economy. When people are trained (encouraged) to get jobs, they do, and they're not simply beating out someone else for the job."
Hm, I didn't get that from the article. To me this sounds like people are being taught to be entrepreneurial and create new jobs rather than compete for existing ones. That is a solution to an economic problem (e.g. needs/customers exist and labor has a value, but the market is not efficiently connecting the customers with suppliers), so I'm not sure how this implies that the problem is not economic in nature.


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Ego
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Post by Ego » Tue May 07, 2013 8:22 pm

Spartan, as usual you've allowed me see it from a different perspective. That's why I come here. Thanks.


bluejoey
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Post by bluejoey » Wed May 08, 2013 1:01 am

Another anecdote here. My parents helped me financially to the best of their ability with college, and thanks to their help as well as that of the fed. gov, I effectively graduated without loans. I went to grad school, got a degree in one field, worked a bit, and am now in another grad program while continuing to work. Like Spartan Warrior, I'm independent, married, and doing well. My wife came from similar, though substantially more affluent parents, and is also doing very well.
Nurturing parents aren't the issue. Factors like decades of neoliberal policies in the US and Europe, ballooning CEO pay, stagnant wages, government-enabled corporate outsourcing, and soaring healthcare, education, and real estate costs have far more to do with our current economic crises than factors related to the individual.


arebelspy
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Post by arebelspy » Sat May 11, 2013 4:37 pm

Pretty much everyone who had help from their parents and are on a forum like this will be a self selected sample that is successful. Those anecdotes don't mean much, IMO.
"My parents were "helicopter parents" to the extent that they paid for a large amount of my college, paid for certain privileges, and were very financially generous. I certainly felt like they always had my back if I made a mistake, that I always had a place to go. They didn't throw me out at age 18; in fact, I lived at home for part of college and a couple years afterward.
Now at age 26 I am not only 100% independent but my net worth very likely exceeds their own..."
My situation is similar (besides never moving back), including the last sentence (but a year older).
My question is: how much did doing that sort of stuff set back our parents? It may be telling that our net worthy exceed our parents'...


RealPerson
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Post by RealPerson » Sun May 12, 2013 2:25 pm

A weak job market always poses challenges for the young. When employers can hire experienced workers for the same price as recent grads.....they do. I grew up during the 1970s oil crisis and distinctly remember the prevailing attitude that everything would be owned by OPEC. Higher energy prices would push everybody into poverty. There was a lot of pessimism in those days, but look what happened in spite of it.
My net worth greatly exceeds that of my parents, but I was hard working and entrepreneurial. No surprises there. In retrospect, they were not helicopter parents, but initially helped me where needed. That worked out great.
I agree that this forum probably self selects for more successful individuals. The lesson from these posts may be that success really depends on the choices of the individual, regardless of the "economy" or what kind of parents we have. That is in and by itself reason for great optimism.


Felix
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Post by Felix » Mon May 13, 2013 6:40 pm

Idled means they are kept out of work. Idle means they don't want to work. Why idled and not structurally unemployed? I guess it sounds nicer. With no demand for their work, they will remain unemployed.


secretwealth
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Post by secretwealth » Mon May 13, 2013 11:04 pm

"There was a lot of pessimism in those days, but look what happened in spite of it."
Yeah, this is what happened: http://i242.photobucket.com/albums/ff90 ... swages.png


RealPerson
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Post by RealPerson » Tue May 14, 2013 12:22 am

The graph shows hourly wages generally in line with the CPI, except during the huge inflation spikes in the 70s. Isn't that what you would expect to see? The other feat was the roaring economic growth in the 80s.


secretwealth
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Post by secretwealth » Tue May 14, 2013 12:45 am

Perhaps this chart makes it clearer: http://www.realitybase.org/storage/macr ... 6731974576


RealPerson
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Post by RealPerson » Tue May 14, 2013 12:57 am

This link is not working for me.


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Post by jacob » Tue May 14, 2013 1:01 am

What JamesR said ... Those who believe that a degree is a ticket to a magic wage-land [which no longer exists(*)) are probably going to learn that that's no longer the case, the hard way (it'll take decades).
(*) Look at all the wasted time in a typical office. Companies are learning that they don't need all those 40 hour job workers.


secretwealth
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Post by secretwealth » Tue May 14, 2013 1:04 am

@RealPerson: Reposted it here: http://i.imgur.com/jpEleO6.gif


RealPerson
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Post by RealPerson » Tue May 14, 2013 2:54 am

@SW. Interesting graph. My take is that you do not want to be average. Globalization does not work out well for those who represent the mean. A college degree will not change that. Young people will need to offer more than a piece of paper.
"Look at all the wasted time in a typical office. Companies are learning that they don't need all those 40 hour job workers."
Agreed. Europe has experimented for decades with shortened work weeks in hopes of reducing youth unemployment. Mixed results at best.


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