The truth about employment statistics is ugly when laid out in black and white.
Last month, the U.S. economy added a mere 126,000 jobs, the weakest growth in more than a year. These were disappointing numbers. The Washington Post reports economists had expected employers to have added 245,000 jobs in March.
But what’s even more shocking about these figures is who is getting those jobs.
Those 55 and older saw an increase in 329,000 in the past month. Every other age group saw losses, resulting in the net gain of only 126,000 jobs. The 25-54 age group lost 64,000 jobs, while the 20-24 age group lost a staggering 291,000 jobs.
The Bureau of Labor Statistics reports labor participation for older people 55-69 has been steadily rising, while labor participation for people 25-54 is steadily decreasing.
Essentially, as Tyler Durden notes on ZeroHedge, “The labor force has been turned upside down, and the only jobs being created are those for aged workers.”
What accounts for these wildly skewed statistics? Why are younger workers losing jobs in droves while older workers are gaining so many positions?
Many older workers are still in the workforce because they aren’t confident they’ve saved enough to live comfortably during retirement. More than half admit they’re not saving as much as they should, simply because they can’t afford it with the high cost of living.
Additionally, savings vehicles have altered. Employer-provided defined benefit pensions are nearly a thing of the past, making early retirement less affordable. Many retirement and savings plans took a severe hit during the recent economic downturn, a hit that was particularly devastating for those nearing or already in retirement.
“While the stock market has recovered most of its pre-recession value, housing prices have not, and for most people their house is their biggest asset,” says David Weir with the Institute for Social Research.
“There are a variety of factors about why there are glaring job gains in the older demographic group and very little job creation for young adults,” Dr. Mark Thornton, senior fellow economist at the Mises Institute, said in an interview with WND. “The foundations for retirement are being killed off. The only financial investment benefits come from the stock market, which is risky – too risky to throw in an entire nest egg.
“Many times older people don’t have the savings to retire,” he continued. “Social Security doesn’t cover even a lower middle-class income, especially if you don’t own your home outright, so people are forced to stay in, or get back into, the workforce to build a nest egg.”
Some people saw their nest egg wiped out in the 2008 financial crisis. “That hurt a lot of older workers,” said Thornton. “And even for those with substantial savings, there’s no place to earn interest due to ZIRP [Zero Interest Rate Policy] and quantitative easing. A $1,000 CD at two-tenths of one percent interest only earns $2 per year, and a good chunk of that is taken up by inflation and taxes. So there’s no way people can retire unless they have a substantial amount of wealth, where they can afford to take risks in the stock and bond market.”
On the other side of the equation, young people who are unwilling to accept entry-level minimum-wage positions out of high school are desperately staying in college (courtesy of government student loans) and accruing multiple diplomas. For many, this academic bubble must end at some point and the former students, now saddled with crushing debt, enter an unforgiving job market with little demand for their particular areas of study. The frequency of baristas with a master’s degree in something is almost becoming a stereotype.
Predictably, opinions vary for reasons young people face high unemployment. Some shrug and believe it’s nothing unusual. The Atlantic states the challenges concerning employment are: (1) young people aren’t looking for work because they’re in school; (2) young people can’t find work for the simple reason that they’re young, and this demographic has always suffered from higher unemployment than the rest of the country (unless they have a college degree); and (3) young people face the same deep recession and slow recovery as everyone else. Besides that, concludes the Atlantic, “There is nothing uniquely wrong with the youth job market” (emphasis in original).
But even the Atlantic admits what the New York Fed reports: “It has become more common for underemployed college graduates to find themselves in low-wage jobs” since the 2001 recession.
Others, such as this opinion piece in the Wall Street Journal, point out that jobs for young people are scarce because of government policies, which make entry-level jobs more expensive.
But beyond the issues of a sluggish economy, a 2014 study by Bentley University illustrates an enormous gap between what employers want and what Millennials give on the job. Companies report a lack of work ethic, lack of hard skills, and lack of preparedness as some of the reasons behind the high employment rate for young people. “Among the perceptions from the survey were that recent college graduates are harder to retain, lack a strong work ethic and aren’t as willing to pay their dues as previous generations were.”
“The younger generation has a different skills set than the older generation,” said Thornton. “They don’t have a lot of work experience. During my generation, by the time kids graduated from high school they would have had several types of jobs already, which built up an early work history. In this generation, young people may be college grads, but they may lack certain abilities.
“Younger people are highly skilled in some areas – computer science, coding, technical skills – but deficient in practical, blue-collar skills such as welding or wiring,” he continued. “Right now in our economy, we have a glut of workers for management, liberal arts and computer skills but a shortage of workers for practical skills. Public schools and universities have not kept up when it comes to preparing students for a realistic place in the workforce. They’re not looking at supply and demand. There’s either a huge surplus or a huge shortage.”
The problem won’t get any easier in matching supply and demand as industries change. “In banking, for example, more people are banking online so there will be less of a demand for physical banks. Financial education will have to accommodate this trend,” said Thornton.
Younger and older workers alike must face the future and recognize the changes taking place in the workforce. Thornton concludes, “One of the main forces of modernization and development is this: Technology, which increases productivity, is destroying jobs in certain areas while creating jobs in other areas. It’s our job in education and technology to convey this to younger people.”
