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What High Youth Unemployment Means For Our Economy

 

Probably not what you intended to do with that BA in English. When the economy recovers, will there still be college graduates working low wage jobs?

More than a quarter million American college graduates worked for minimum wage last year—that’s 70 percent more than ten years ago. We can all agree that’s a sign of an unhealthy economy.

But what kind of unhealthy? Is degreed underemployment just a product of the Great Recession, or does it reflect more fundamental economic problems?

In a recent paper, economists Paul Beaudry, David A. Green, and Benjamin M. Sand argue that there has been a “great reversal” in the demand for skilled labor. That is, fewer employers need to hire employees with college degrees. The Daily Beast’s Megan McArdle suggested that the findings mean “A BA is now a ticket to a job in a coffee shop.”

Ominously, the reversal began well before the recession started.

“Many researchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000,” the researchers wrote. “In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow.”

So does that mean we’re headed for an education surplus? Are those college-educated minimum-wagers here to stay?

It’s too early to tell, according to Dean Baker, co-director of the Center for Economic and Policy Research.

“I do think we will need more college grads,” Baker told Campus Progress. “The question is: do we need them at the same rate we’re producing them? And that’s just much less clear.”

To find out for sure, though, we’ll have to bring the economy back to full employment.

“Let’s assume the economy does recover five, six years out,” Baker said. “I think we’ll see a lot of college grads working at jobs that would not ordinarily require college degrees.”

However, that doesn’t necessarily mean they’ll be working for minimum wage. Even if it’s not a requirement for the job, employers will likely still be willing to shell out for the skill set and credentials provided by a college degree.

But, once the economy has recovered, if college-educated Americans still find themselves in dead-end jobs, there might be a political gain in their economic pain. As The Roosevelt Institute’s Dorian Warren said recently:

“The Millennials who are more privileged and get to boomerang are finally starting to feel and realize just a sliver…of what these groups of poor black and brown kids are experiencing, and that does open up possibilities for alliance and solidarity.”

Posted at Campus Progress. Photo: Flickr / Judy Baxter

There’s No Riot Goin’ On

Word:

While the late 1960s violence that erupted in urban centers across the country was all somehow related to racial politics, historians and social scientists have disputed the extent to which race played a role in the Detroit riots of 1967. A number have suggested that there should be a shift in emphasis from race to poverty in understanding what happened that summer. But we shouldn’t be cavalier about teasing apart these important social dimensions. In the mid- and late 1960s, the black community in Detroit was suffering through the first wave of what would turn into a decades-long (and obviously still continuing) period of economic hardship. […] Even just twenty years earlier, when housing discrimination was especially bad, young black men could look forward with reasonable optimism to finding service employment at one of the auto plants or their subsidiary factories. But early in the 1960s, the job market for African Americans in the inner city had collapsed, and prospects, especially for young black men, were dismal.

—Pp. 53.

After the riots, Lyndon Johnson’s Kerner Commission found that they were caused by lack of employment opportunity. According to Thomas Sugrue, about 25 percent of young black men in Detroit were unemployed at the time. A quick search of BLS data puts Detroit’s current unemployment rate at about 18 percent.

A Tale of Two Cities

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The thriving DC economy, in this Sunday’s New York Times:

For the city itself, the good times are a bit more complicated, given Washington’s place in the national psyche. But they’re no less striking. Washington may have the healthiest economy of any major metropolitan area in the country.

The unemployment rate was 5.7 percent in June, compared with 9.3 percent in Chicago, 9.6 percent in New York and 10.3 percent in Los Angeles. The average house price in the region is more than 10 percent above the 2009 nadir, while nationwide prices remain near a decade-long low.

And you can actually see the prosperity. Although much of the city itself remains poor, several neighborhoods are noticeably brighter, and the city’s population has been rising for more than a decade. Downtown Washington is full of cranes building City Center DC — a mix of apartments, stores, offices and a park scheduled to open next summer. In McLean, Va., and Potomac, Md., mansions continue to rise from the ground.

I wish the Times would make the distinction between “Washington” and “residents of Washington.” Even better would be the distinction between “residents of Washington” and “some residents of Washington.”

Yes, the city’s economy is doing well in aggregate; unemployment is low, and the median income is high. But aggregation can easily obscure what’s actually going on in different sectors of the economy. Construction is booming downtown, but unemployment in Ward 8 is still at 22 percent. The DC metro area is the nation’s richest, but east of the Anacostia River 30 percent of families live in poverty.  

This is about more than just inequality. Much of the prosperity described in the Times isn’t trickling down to the city’s poorer neighborhoods—and when it does spill over, it creates as many problems as it does solutions. Neighborhoods see economic resurgence, but the people who live there frequently don’t. The result? The rising cost of living pushes them out, often over the Maryland border.

So: Washington as a geographic unit is doing well, but why is that relevant? A region’s prosperity should only matter to the extent that it translates into success for actual people.

Photo: Northeast Washington, DC. 2010.