The jobs picture, for example, is even bleaker. And depriving young people of jobs is like depriving pandas of bamboo shoots: It’s all they have.
Older people can watch their stocks, real estate, and bonds go up in price.
A young person can only look at the ‘Help Wanted’ ads…and hope for a break.
20 million fewer jobs
In 2000, 56% of the working-age population was employed. That was an all-time high. It has fallen ever since…and is now down to 46%.
The working-age population is about 200 million people. This suggests there are about 20 million fewer people with jobs today than there were at the start of the century.
Guess who those people are?
People with all their teeth, all their hair, and all their wits.
Since the stock market bottomed in 2009, only one group has added jobs — people 55 and older. Every other age group has lost out.
New businesses hire young people. Old businesses hire old ones. Imagine a new company — Uber, Snapchat, or Pinterest — recruiting grey-haired workers.
They won’t. The older generation wouldn’t understand. They’d be out of place.
But the rate of new business start-ups has fallen sharply. And fewer new businesses means fewer places for new workers to get work.
Also, older workers might like to retire and give their jobs to younger workers. But they can’t afford to. They are squeezed by their own economy.
Now they must hang on to their jobs as long as they can.
This leaves young people with no way to get on the bottom rungs of the ladder.
To get ahead in the business/employment world, you have to get started. Then you work hard…you learn…you progress.
But today, young people mill around, wasting their time in college, flipping burgers and parking cars while they wait for a ‘real’ job opening.
Then it is too late.
They go for a job interview at 25, 30, or 35…and employers want to know what the heck they’ve been doing for the last few years.
They may never get onto the bottom rung, never learn a real trade or profession, and never be able to play their part in the adult, debt-soaked, middle-class economy.
The Atlantic magazine looked at the situation. It concluded there was ‘nothing uniquely wrong with the youth job market.’
But something is wrong.
It is not nearly as bad in America as it is in France, for example. But every labour rule drives employers to protect themselves.
Hire a young person and who knows what you get?
He has no work experience; he cannot prove that he won’t cause trouble.
Instead, you look for a résumé with familiar assurances: ‘Oh, he worked for 10 years at the Ford Motor Company,’ you tell yourself. ‘Then, he’ll be fine here.’
Callow youths entering the workforce have few skills. They should be cheap. But as the cost of hiring these new people goes up — costs imposed by the older generation — the price of older workers, relatively, goes down.
Entry-level jobs are scarce partly because old people — using the police power of their government — have made them more expensive.
A stacked deck
The declining availability of income opportunities is just one way the older generation has stacked the deck against the young.
You have no doubt heard about how today’s highly financialised US economy favours the rich over the poor. You might just as well say it favours the old over the young.
Financial assets — stocks and bonds — have gained value. Jobs have not. Incomes have been flat for an entire generation, as capital gains have soared. The old have gotten richer; the young have gotten poorer.
In 2013, for example, there were 50 million people in the U.S. who earned an average of just $6000.
Who were they?
Disproportionately, they were young people.
This is where it gets really interesting…The ‘financial economy’ — roughly the value of stocks and bonds — has gone up 15 times in the last generation, an increase from $6 trillion to $95 trillion.
But do young people own stocks and bonds?
Nope. Financial assets are owned, in the main, by old, well-connected, skilled, and successful people. Young people have little but their own time.
When you are starting out in life, you need to trade your time and energy for money…and gradually accumulate financial assets. You need an economy in which you can work…and earn money.
But that economy — the economy of work and wages — grew only five times during the same period (as measured by GDP).
‘The financial sphere,’ explains former Reagan administration budget adviser David Stockman, ‘occupied 212% of GDP in 1981…now, [it] weighs in at 537%.’
In short, the geezers have done much better than the under-30 crowd.
Although average wages have barely risen at all, the value of America’s corporate equity has gone up 28 times since Jimmy Carter was president.
Was this just an accident? Was this just an honest market economy at work?
No, the fix was in…as we’ll show you tomorrow.
For the Markets and Money, Australia