The American Work Force: The Old Push The Young Onto The Bread Line

Being young has its advantages, but apparently being employed is not one of those. A new study from the Economic Policy Institute shows that people between 16 and 24 years old are 13.5% of the work force. However, they make up 26.4% of unemployed people.

The older portion of the population has it much better. People over 55 are 19.1% of the population, but only 13.4% of the unemployed.The situation is not likely to get any better. The same study shows that “the median household with a person between the ages of 55 and 64 saw their wealth fall by almost 38% between 2004 and 2009.” That means the older part of the work force will almost certainly have to work longer than expected to accumulate money for retirement. Many people will have to work beyond 65 because the equity value of their homes and investments has fallen so much during the last three years. The equity markets may have recovered somewhat, but, in many regions, housing prices are still falling.

The young, of course, especially those under 22, do not tend to be as well educated as people over 55. Older workers are often forced to take jobs that pay less than the ones they had before the credit crisis crippled the economy. Most employers will opt for highly educated workers if they are available at the same hourly rate as those who are less well-schooled.

It may be an overstatement that those who have never had jobs, the young, or those who have only had jobs briefly are not as likely to miss work or need it as much as older people. The young tend to have fewer “things” to pay for whether those things are cars or homes.  Those over 55 may have mortgage obligations, and the expense of the educations of their children. Many are also caring for older parents.

The conclusion of the EPI study is unusually depressing. “The 2007 recession has produced an unemployment crisis for young workers—one that has increased labor market inequalities on a level not seen by any other age group. Whether they are one of the many who have left the labor market discouraged or one of the many that have taken low-skilled work, the recession will have a significant scarring effect on their human capital and therefore on their earnings. It is not enough for the economy to recover; young adults need robust growth in the labor market to minimize the effects of the current recession.”

Even if the job market recovers, and that will take years according to many economists and the CBO, an entire generation will have lost its chance to earn a fair living. That in turn will undermine consumer spending substantially ten years from now, just as Americans who are 55 today are retiring. The financial burden of Social Security and the national debt will begin to reach unprecedented levels. And, there will be no well-compensated labor force which can be taxed to offset those obligations.

Douglas A. McIntyre