September’s monthly payrolls report showed once again how much the U.S. economy is struggling to create jobs. It’s now becoming clear that our country, once the envy of workers around the world, is developing a European-style structural unemployment problem.
The weakness doesn’t result from a cyclical slowdown, but is emerging as a permanent condition. This is why it cannot be cured with good old fashioned “stimulus.” In the past measures like government spending and low interest rates produced at least some temporary benefit because society was structurally geared toward creating jobs. While they never really worked, they have much less effect today because something has changed, which I will now address.
My thesis is that young people have essentially become slackers. This results partially from their own choices, and also from the instruction given them by adults and society. In particular, blame lies at the feet of our “education” system.
But before turning to that, let’s start with some numbers. I’m basing my research on the Labor Department’s “employment-population” rate, a much more honest data point than “unemployment.” The employment-population simply takes the number of employed people and divides it by the population (excluding prisoners and military). All the chicanery of “discouraged workers” and “people leaving the workforce” is thereby avoided in this chart based on numbers from the Bureau of Labor Statistics:
It shows us that the employment-population rate for kids aged 16 and 17 years has been steadily falling since the late 1970s, with a sharp acceleration of the decline in the 1990s. This immediately stands out because it occurred at the same time that more Americans overall were working. Therefore the cause wasn’t economic but cultural: These young people chose not to work. They chose to be slackers.
To measure this phenomenon. I simply calculate the difference between the employment-population ratios for 16- and 17-year olds (green line) from that of the total population (blue line). The resulting slacker rate is shown in red on the chart.
There is also no doubt that this slackerdom was originally voluntary. We know that because official “unemployment,” which excludes people not seeking work, stood at a 30-year low for these kids in the late 1990s. That means they were not, in fact, looking for a job. They were just slacking off.
This chosen indolence runs counter to all historical norms. The employment-population rate for 16- and 17-year olds fluctuated between 30 percent and 40 percent for more than five decades after the Second World War, but in the last 10 years has fallen to just 16 percent. We also know that it was much higher before the data started in 1948 because kids worked on farms and spent less time in school. Recent times show something totally new taking shape.
Sadly, when people don’t start working young, many of them never learn how to work. They form other habits, often bad ones, and become structurally unemployed. Ever wonder where the Occupy people come from? Once a slacker, always a slacker.
In a future post I will delve into why this has happened. Today I wanted to start by introducing the data.