To be young, unemployed, or working for free in the USA
from David Ruccio
As the semester draws to a close, I’ve been hearing from my students about their job prospects. And it’s pretty ugly.
Some have landed decent-paying jobs, either for the summer or upon graduation. But many others have not been able to find a real job or they’re going to be underemployed or they’ve accepted unpaid internships. And they’re pretty sad.
It may not help much but they should also know they’re not alone why they join the ranks of the unemployed/underemployed/unpaid youth in this country.
According to the Bureau of Labor Statistics, the official unemployment rate among young people (ages 16 to 19 years) is 24.9 percent, up from 23 percent a year ago. And, according to the Associated Press, the weak labor market already has left half of young college graduates either jobless or underemployed in positions that don’t fully use their skills and knowledge.
About 1.5 million, or 53.6 percent, of bachelor’s degree-holders under the age of 25 last year were jobless or underemployed, the highest share in at least 11 years. In 2000, the share was at a low of 41 percent, before the dot-com bust erased job gains for college graduates in the telecommunications and IT fields.
Out of the 1.5 million who languished in the job market, about half were underemployed, an increase from the previous year.
Broken down by occupation, young college graduates were heavily represented in jobs that require a high school diploma or less.
In the last year, they were more likely to be employed as waiters, waitresses, bartenders and food-service helpers than as engineers, physicists, chemists and mathematicians combined (100,000 versus 90,000). There were more working in office-related jobs such as receptionist or payroll clerk than in all computer professional jobs (163,000 versus 100,000). More also were employed as cashiers, retail clerks and customer representatives than engineers (125,000 versus 80,000).
That’s why many college-age students are taking unpaid internships, not only for the summer but even as they finish their degrees.
Here we have an entire generation that is young, sad, and it wouldn’t surprise me in the least if they’ve turned to getting high.
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Real-World Economics Review Blog 
And there was I thinking that the USA was the land of unlimited opportunity.
Henry Law #5…
I found the book available in the web… I will start downloading and read it. Always eager to get possibly new (in this case to me…) perspectives. Thanks.,
This is a ticking time bomb. Look at under 25 unemployment in some European economies: More than 50%. The underlying driver is an increasingly automated production and distribution system that decreases the need for human participation. This is even true of the military with automated weapon systems.
So what happens if the consumers that this system is supposed to serve do not have the purchasing power to take delivery of needed and wanted goods and services?
The system grinds to a halt.
Unless, of course, we create automaton consumers that grind up the products and services offered in return for automated consumer credits allocated to each robot. That way, the production cycle is perpetuated and everybody is happy; except our young people that are spunging on their parents for survival.
So, why don’t we allocate consumption credits to our young people instead?
That is the Luddite argument. Someone is going to have to service and update these systems. If they appear to cause unemployment then there is a blockage in the economic system. Which we know there is, since demand is unlimited.
The problem with the argument «someone is going to have to service and update these systems» is that even that is becoming less and less necessary (in terms of number of employees/workers that are actually required). One only needs to talk to unemployed maintenance engineers to see why that is happening.
Did not understand your statement following «then there is a blockage in the economic system», in particular «since demand is unlimited»… Could you clarify?
All is explained in “Progress and Poverty” by Henry George. Get a decent abridged edition. The Hogarth Press version is a good one. I think Shepherd Walwyn has the last few otherwise it is Ebay.
What do you mean, demand is unlimited? Desire may be unlimited — maybe not –, but demand is limited by the ability to pay.
If you can produce you can pay. If you are locked out of the production process by land enclosure then you can not produce and can not pay. Land enclosure is the blockage.
How can you be so correct here while I don’t fathom your points elsewhere? I know it’s me.
Pierre Delfaud (in «Keynes et le keynésianisme») wrote in 1977 about the unemployment crisis in France in the Thirties: «it is to another measure that, most of all, we owe the reduction in unemployment: the reduction in the weekly duration of work, from 48 hours to 40 hours with a prohibition to exceed that limit and without a reduction in salary by the law of 21st June 1936»… I know that some readers will come back with the «lump of labour fallacy». But if those economists who defend such an argument are so knowledgeable about WHAT WOULD happen if our governments were to impose a 30-hour a week schedule, why were they not able to predict this unemployment crisis ?!… I did.
The right way to reduce unemployment is to raise the threshold below which income tax is not payable, to reduce any direct or indirect payroll taxes, to reduce taxes on goods and services, and to implement a tax on the annual renal value of land.
Anything else is tinkering which does not address the problem.
Those measures that you mention will most certainly go a long way to reduce unemployment by enabling a «more just» redistribution of wealth and therefore what they call «effective demand»… But also think about the historical fact that about 150 years ago workers had to labour 12 hours a day… Then it was reduced to 10, then to 8… It was allways the result of hard struggles, both in the streets, as well as in the factories and in parliaments… Doest it not make some sense to continue and further reduce to 6 hours a day?… And remember, when the workers had those 10 or 12 hours a day they actually lived «next door» to they work locations. Now they have to commute and spend those same total 10 or 12 hours a day away from their families… Is this rational? For a society that has put members of its own species on the Moon?:… Incidentally, in the past they always said that reducing the number of hours of work per day «would be an economic disaster»
I think that the trend today is that some people work 60 – 80 hours per week and more and more people don’t work at all, as jobs become inceasingly more technically demanding.
While ever improving technology is generating more jobs on the high end, it is eliminating even more at the low end.
Something has to give.
There is no shortage of unskilled work to be done but the tax system makes the cost of labour prohibitive at the low end. The tax system must be reformed or the problem will get worse and worse.
That argument presupposes that land monopoly is the only problem. The equally valid argument is that it is the accumulation of financial assets by rich individuals and companies (marxist analysis – not necessarily related to falling rate of profit) which is causing the impasse. Wages are squeezed, jobs are lost, leading to decreasing economic demand, which is necessary to stimulate investment. Increasing minimum wage, increasing public investment in infrastructure renewal, putting cash directly into taxpayers’ bank accounts (like the Aussies did) could all help. Taxing land values cannot and won’t be implemented in time to clear up the mess but it is essential to prevent the same thing happening again, as you say, in another 15 years or so.
“Financial assets” are mostly land titles wrapped up in something eg shares and securities. Taxing land values in the correct way could be implemented in time to clear up the mess but you are right, it will not be, so we are all going to have to face the much nastier alternatives of massive social unrest, inflation and perhaps war. It’s a choice.
I should explain (given the last line of my post) that the original post was accompanied by this video of the Dave Rawlings Machine.
Good video. I posted it on my newsblog.
I agree with Carol. There is a lot of money doing nothing, roosting on balance sheets.
Its cousin, debt, is roosting on other balance sheets in equal amounts, but the twain do not meet to cancel each other out.
The result is economic paralysis in the macro economy.
A dance of Credit and Debt, to the tune of “We shall not, we shall not be moved!”
With the Devil on the fiddle.
Yes but the problem is not about money, that is just a token. The reality is land held out of use because the market is not functioning ie prices are not falling to market clearing levels. That in turn is primarily because of the absence of LVT which encourages land speculation, leads to over-taxation of labour, and leaves no land over, freely available at the margin.
I refer to myself as an applied economist, analogous to, say, a general practitioner, among brain and heart surgeons. Though I operate at a much lower level than what I have come to appreciate in these blogs and comments, I have a share and tell applied labor econ perspective from my youth. It goes like this : At fourteen years of age I earned the minimum wage of $1.65 per hour working in California lemon orchards. I hurried to work to get the most hours in struggling through tall, wet weeds, carrying heavy irrigation pipe and pulling my feet from deep mud with each step. My earnings could buy 13 candy bars and sodas per hour, $25 – $33 in today’s candy bar dollars. There were few migrant workers in the orchards.
Food was not overly expensive at the grocery store, my single mom worked, fed three children and finished college to become a school teacher.
Today we have no idea what the optimum rural to urban population ratio is. The most educated human population ever to have lived is ho hum in corporatist capitalism, which has squeezed the people off the land and imports labor to hold their wages down (US is among the top five fastest growing populations, for example).
And while the people sit idle the meat factories feed their animals antibiotics in the food mix, which has caused evolution of disease resistant to medicines which a few decades ago were a source of wonder and awe.
I believe the time has come for economists to begin designing a rational economy. The indignados of Spain and Greece are as idle as the graduates of the US for the exact same reasons. Many unemployed graduates would be happy to move back to the land for 25 – 30 dollars per hour, and they would produce at almost twice the efficiency of output per acre as mechanized corporate farms, which produce much more per hour raising food for animals and use semi-slave labor for fruits and vegetables.
I’ve just finished reading Paul Krugman’s “Stop This Depression Now.” His kind of liberal capitalist economics does not see beyond pump priming for growth and increased inflation for loan devaluation and ease of rollover so the pump prime never has to be paid back. Ponzi capitalism is not sustainable and endless analysis of its foibles does not break new ground to feed the imagination of humanity.
I am beginning to think the only way to reduce unemployment is to smash the global oligopolies (cartels) that rule us all and their technologies…and start all over again.
The first thing to do is to understand what actually needs to be done. A prerequisite is free access to land at the margin. The way to achieve that is in most contemporary circumstances the replacement of existing taxes on labour goods and services by a tax on the annual rental value of land. Without that reform, any change is ultimately fruitless.
It may be necessary to smash banks, cartels and all the other revolutionary things to achieve that, but then again it may not. But smashing alone will achieve less than nothing.
Another method is to tax energy until it includes all externalities; asthma, cancer, climate damage, etc.
This course would also open a huge number of jobs for economics grads.
Taxing land is easy. You can see the stuff. I’m not sure how you tax energy.
Taxing energy is where the huge number of jobs for economists come in. The cost of each product and service can be accounted for using standard accounting methods and substituting calories for dollars. Actual tallies are assigned to accountants while economists manage interdisciplinary research into caloric costs, such as transport of food (an easy one). The job will eventually become easier when the currency itself is based on calories and actually measures something, when that day arrives it will be a simple matter to asses national government efficiencies by how close their currencies trade against the kilocalorie.
What do you want to create jobs for anyone, just for the sake of it? Like the bean-counting exercise you are proposing.
Are you suggesting that there are no useful tasks still waiting to be done?
Henry, I have been reading the book «Progress and Poverty». So far, so good… However, you should bear in mind that the book was written in the context of the XIX century, with «plenty of land still available» «on the margin»… In this context, how will a (presumably heavy) tax on the land achieve your prerequisite of «free access to land on the margin»?
On the other hand, heavy taxation on industrial/commercial (factories… and shopping malls…) may help aleviate the tax haven problem by «forcing» companies to pay what is due where they actually do perform their real business activities… That seems to be one of recommendations of most «tax justice» activists with which I tend to agree.
Henry, are you suggesting that determining and applying the cost of cancer associated with a product is bean counting? Or the cost of untreatable infections resulting from feeding antibiotics to meat animals associated to cost of meat and leather products. Are these bean counting exercise less productive than examining arcane employment, market and banking statistics in obsolete cultures that are destroying democracy and the environment?
Regarding people who live in cold climates : Why shouldn’t they pay the real cost of energy? Including the gory atrocities committed to secure the energy for them?
Working things out down to the last cent is bean counting. Antibiotics should not be put in animal feedstuffs for many reasons. It does not necessary to wait for accountants and economist to come along and put a price tag on this activity before deciding that it should not be happening, and if those who benefit from the abuse are determined, they will take no notice anyway.
Everyone knows that US meat is packed full of this junk so people can stop stuffing their faces if they are concerned. Or not, as appears to be the case.
The reason umeployment is so high in the US is because deregulation and globalisation and great tax laws for the corporations of the US have allowed them to go anywhere, do anything, pay little tax and exploit ever cheaper labour elsewhere ie slave labour which they willingly desert when they find even cheaper labour in some other country – hence drive wages down everywhere…to what levels? To exploitation levels?
Is it any wonder US youth cant get jobs and its ugly out there? Is it any wonder european youth cant get jobs and its even uglier?
Because somewhere some previously European corporation or some previously US corporation is using semi slave labour somewhere else in some far country where labour is cheaper and when its no no longer cheap there they will leave a mess (devastation actually) behind and go to exploit some other place where labour is even cheaper. Lets not turn a blind eye.
Yes – we gave them all this freedom and this is how they repay us?? – by the rich getting obscenely richer and more getting poorer everywhere.
Tax laws need to go up on the rich and close the doors to all the rapacious (free to be greedy) licenses we gave them under the Greenspan Ayn Rand colaition of disastrous ideas.
It just isnt working. Period. Do they really call these outcomes good economic policy?
Who gets to judge and when? Its a huge inefficient waste when a young educated person cant get a job.
One of the big policies driven through by the rich in both US and UK was to reduce property taxes. This has been disastrous in such places as California which has ruined its tax base. Here in the UK the Tory government abolished a progressive domestic rating system; introduced the ‘poll tax’, which led to riots in London and quickly replaced it with the Council Tax. This has now resulted in a single resident in a £135m apartment being liable to a property tax of just £1100 pa.
This is often lamented by real estate speculators in California who resent mere citizens who simply live in their homes. The property tax system in California allows for continuity of culture. Those who are not playing the real estate game may live in their home until they die at a 1% annual increase. The property is usually revalued at the time of death and taxed at the modern rate. Property taxes go to local government while the State, which is in dire straights for many reasons, relies on income tax.
Homes in California are the most unaffordable in the US. You don’t have an option but to play the real estate game if you want to purchase one.
I have a friend who lives in the north of England. He was all in favour of taxing energy until I reminded him that people in Newcastle where he lives have to head their houses from September to the end of April whereas on the South Coast it is necessary only from November to March, most years.
He changed his tune then.
I meant HEAT THEIR HOUSES from the beginning of September to the end of April.
Henry,
I’m currently living in western Massachusetts; zero energy structures are now being built here. Your friend and I would upgrade more rapidly if our taxes were associated with energy rather than income or property value … though I do agree that property taxes are relevant and that every human person should pay equally as a percent of value indexed to market values at purchase date. (Non-human persons, being immortal, will require a specific generational rebirth number for property tax adjustment).
On a more theoretical note, we are thermodynamic chemical process; adjusting economic analysis to generate systems that mirror earth and life processes more closely will help maintain our specie as well as diversity of the species required for ecosystem maintenance. Our atmosphere was created by bacteria and is maintained by specie diversity, for example.
Taxing property on the basis of its purchase price at the time of last sale is exactly how property tax should not be done. Property taxes should be based on current annual site rental values, and these need to be kept up to date. Here in Sweden it is done on a rolling 3-year cycle.
But why should people be penalised if they live in a cold part of the country?
The way property taxes work in California is far different than what you describe in Sweden, possibly because the values and rents have changed so dramatically. My mother, for example is a retired school teacher who bought her house for $8,000 in 1957. While her taxes went up 1% per year, the land around her was gentrified by Hollywood movie stars and venture capitalists. If her house was torn down and a speculative mansion was built suitable for wandering venture capitalists she could probably rent it foe $8,000 per month. Traditional economists would say this is the correct course to follow because they place zero value on continuity of culture or the environment. Humanists support the 1% increase per year because it is a priceless good for the local culture to have resident retired school teachers who enjoy and tell stories to the children and grandchildren of her students.
Neighbourhoods change. I did not like the swanky new people who started moving in, blocking the streets with their cars and having noisy parties.
I myself moved for that reason, and a property that is suitable for someone in their twenties is not going to be suitable for a pensioner. But property taxes should be based on current site rental values, not on current or historic selling prices.
If property tax evaluations are not related to rental values, then there is some sort of organizational problem in the taxing agency or a political decision to avoid such a relationship.
When all land is enclosed and not directly subject to a tax on its rental value, then people are forced to work on sub-marginal land. Wages are then driven down to a lower level than they would be if marginal land were available.
If land were taxed at its rental value and taxation lifted from wages, marginal land would appear as people moved on to the better sites which were forced into use through taxation.
On principle that is supposed to work, BUT… the land on th planet is finite.
When Henry George wrote his book the world population was approximately 1.500 million. Now we are about 7.000 million… So, my point is that we must search for another answer (namely redistribution of the workload) apart from taxation on more valuable land. As we stand, it has been estimated by agronomists at FAO that – with currently available tecnology, about one million farmers can produce enough food to feed 8.000 million people. Those are rough (but indicative) numbers and put aside for the moment environmental issues). «What do you do with about 1.000 millions peasants», they ask… On the environment side, if those 1.000 million farmers keep pushing the limits of land available, they will simply encroach more and more on forests… As is being done in Africa (for example…)
0r.
This idea of taxing land at academically determined market rent values glosses over indigenous agriculture being almost twice more efficient per acre/hectare. It also ignores that those one million techno farmers are office workers backed by many millions of semi-slave displaced people who are now going to behave like stressed mammals and begin reproducing at the maximum biological rate. The destruction of forest land has immediate visual surface causes which only seem to be unrelated to original colonial disruptions and modern resource wars of neocolonialism, the world bank, ITO and the veil of international law protecting globalization. Large numbers of people with education that restores lost cultural knowledge have the labor power to garden earth back to full production and enjoy reduced family size attributable to education, without enlightened regulation.
Are you saying that there is a surplus of labour in the world? Were that the case, then there would be no poverty, since everyone would already have everything they need for their sustenance and to satisfy their broader requirements.
Where exactly does a surplus of labor fit into your logic, Henry? A surplus of labor leads to the decline in wages sought by capitalists in an imperfect economy or a dominated democracy. Why else would the United States be among the top five fastest growing populations, via immigration, which is politically vilified to further depress the wages of surplus labor. Please explain the mistake in my thinking. Thank you, Garrett
The notion of a surplus of labour is nonsensense. There is an apparent surplus but that is due to land enclosure.
I agree, Henry. But could we expand the idea to enclosure of the Commons as the creator of apparent surplus labor? This opens the doors of many enclosures, including our DNA and rock and roll. On this subject you may enjoy “Common as Air” by Lewis Hyde, especially his vignettes on Benjamin Franklin, aka Silence Dogood.
And perhaps open academic doors to this:
Click to access Why_the_Occupy_Movement_N.pdf
Garrett Connelly #39:
In general no argument here…. Except that those one million «techno farmers» – to use your term – I was referring to (from FAO figures) are not office workers. Any «office workers» (and R&D as well) are excluded from that figure of one million. These would be the actual people on the field – agronomists, bio-engineers, technical specialists servicing machinery and tending irrigation systems, as well as «agricultural extension workers»…
Please, give me a good old farmer any time. Someone who knows the land and what it takes and gives in return. The whiteshirts are welcome to their office chairs.
Yes, insecticide spray schedules are worked out from the high towers of metro centers according to spray plane rotation, antibiotic doses in the feedlots are adjusted upward as the number of dead animals increases, and the people of Africa are squeezed off the land on the advice of young econ grads returning home to advise their government to gear up for the efficiencies of corporate agriculture that will employ once proud humans as now impoverished and homeless semi-slaves. Countries like Spain, Greece and France bring in migrants and let their educated youth rot in unemployment while the endowments of their colleges speculate in land, which is washed into the sea after being sterilized by chemicals and trampled by machines. Economic efficiencies of many corporate activities besides agriculture are total illusions propped up by falsely named Nobel econ prizes.
I think smaller economies should just shut their borders and concentrate on their own economies because the way this globalisation is going, many economies face far greater risks through being plundered and indebted by a so called” advanced” nations.
They can either take it lying down or they can get up and fight!