16 November 2011

Youth unemployment: not that puzzling

EconLog | Arnold Kling | Youth Unemployment: A Puzzle for Any Story

Mike Konczal writes,
Every age group has seen a substantial drop in the employment-population ratio during this Lesser Depression, but no other group I've seen comes close to this plummet. For the first time in half a century, a majority of young people aren't working.
I think it is hard to tell a sticky-wage story for new entrants to the labor market who do not have any wage history. By the same token, it is hard to tell a story in which these young people started out in one industry and then lost their jobs to a shift in demand or technology.
I don't find this that puzzling.

(1) Sticky wages are people being resistant to changing their expectations about how much they should be paid. Even people without wage history have expectations. Those expectations even might be particularly out of whack for those without experience.

(2) Young people may not have started in one field and need to switch, but they still need to switch from the field they expected to be in. A lot of people in my generation are holding out hope much too long that they will find employment in puppetry-like fields. While being paid a lot. And working for a non-profit. In a fashionable city. On the strength of their liberal arts degree from a middling school.

I don't see how that's substantially different than a steelworker in the rust belt needing to transition into something else. Just because they've never had that job before doesn't make them resistant to switching away from the job they imagine they could (or should) have.

(3) Youths often have the luxury of being stubborn sticky. I have a cousin who can choose to live at home and wait tables at a cafe a couple of nights a week while waiting for the world to recognize his genius as an architect and offer him that six figure salary he thinks he deserves. If he was 40 and had three kids and wife to provide for he wouldn't be so quick to turn down full time jobs that didn't live up to his expectations, as my cousin has done.

(4) Younger people have been brought up to expect a certain romanticism from work.  My generation and the one before it expects not only to be paid for working, but to achieve personal fulfillment and satisfaction.

This is obviously a trend which has been going on for some time, in concert — probably not coincidentally — with the romanticization of marriage.  (Alain de Botton discussed this quite cogently, perhaps in this EconTalk though I can't be sure.)  In the realm of marriage we have shifted from seeking someone who is compatible, both socially and in terms of complementary economic production, to seeking someone who uplifts our mental as well as material condition.  This has gone far enough that we now have a set of the population who were so picky for so long while looking for "The One" that they end up un-married or settling for runners-up and left-overs in their 40s.

I believe the same thing has happened in work.  Early in the 20th century, and before, people took work that put food on their table.  Then they came to expect work they enjoyed, then work they loved, now they look for their Soul Mate job.  Many of the young unemployed are like the 45 year old woman who, having failed to find their Soul Mate, end up with no one at all.

This romanticism adds a dimension on which to be sticky.  If all you want from work is the paycheck, you only need to adjust one variable in order to find work.  If you also want psychological benefits, then you must balance both, and if your expectations were too high coming out of college (and judging from the saccharine, insulting, deluded, go-save-the-world commencement speeches graduates hear, they almost always are) then you must adjust both downwards.

I've lot track of how many times I've seen someone described in an article on OWS which said they either quit or turned down work in the private sector because they wanted a non-profit job.  That's a form of sticky expectations you're not going to see from someone in their 50s.

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