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Thoughts from the Frontline

Where Will the Jobs Come From?

November 19, 2012

Choose your language

For the last year, as I travel around, it seems a main topic of conversation is “Where will my kids find jobs?” It is a topic I am all too familiar with. Where indeed? Youth unemployment in the US is 17.1%. If you are in Europe the problem is even more pronounced. The basket case that is Greece has youth unemployment of 58%, and Spain is close at 55%. Portugal is at 36% and in Italy it’s 35%. France is over 25%. Is this just a cyclical symptom of the credit crisis? Much of it clearly is, but I think there is something deeper at work here, an underlying tectonic shift in the foundation of employment. And that means that before we see a true recovery in the unemployment rate, there must be a shift in how we think about work and training for the future of employment. This week is the first of what will be occasional letters over the coming months with an emphasis on employment. (This letter will print a little longer, as there are a lot of charts.)

But first, the staff at Mauldin Economics is furiously putting the finishing touches on your free Post-Election Economic Summit webinar, which will air tomorrow at 2 pm Eastern. They are distilling multiple hours of discussion into a fast-paced, thoughtful (and often lively) conversation about what is in store in our economic future. Panelists and guests include Mohamed El-Erian, James Bianco, Barry Ritholtz, Gary Shilling, Barry Habib, and Rich Yamarone. We also have a truly unique interview with the chiefs of staff of Majority Leader Harry Reid and Senator Rob Portman. While we excerpted part of that interview for the webinar, the entire interview will be made available. If you want to get a true feel for what is going on in Washington, I suggest you listen in. You can sign up to listen here. Now, let’s think about employment.

The Next Bubble

Let’s look at a few facts put forth by the Young Entrepreneur Council from their list of 43 (available here):

·  1 out of 2 college grads  – about 1.5 million, or about 53.6 percent, of bachelor’s degree holders age 25 or younger  – were unemployed or underemployed in 2011.
·  For high school grads (age 17-20), the unemployment rate was 31.1 percent…

Discuss This


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Nov. 24, 2012, 1:38 p.m.

Agreed. This is a nice article. Engineers are what is truly needed across the board in terms of job growth.  However, in the case of the US, defense spending to protect the world has infringed upon both education and health care to the American public.  This can not continue. Both and the US credit worthiness will continue to erode like that of Europe. And with an overbearing student debt burden, students come out of the gate at a loss.

Ronald Nimmo

Nov. 22, 2012, 6:18 p.m.

This letter contains vitally important ideas which need to be understood by our leaders. Too many, especially among Democrats, continue to prattle on about the importance of getting any kind of college degree.
However the datapoints cited in the following series appear to contradict each other.

·  1 out of 2 college grads – about 1.5 million, or about 53.6 percent, of bachelor’s degree holders age 25 or younger – were unemployed or underemployed in 2011.
·  For high school grads (age 17-20), the unemployment rate was 31.1 percent from April 2011-March 2012; underemployment was 54 percent.
·  For young college grads (age 21-24), unemployment was 9.4 percent last year, while underemployment was 19.1 percent.

The first data item states that college degree holders under 25 suffered 53.6% combined unemployment and underemployment while the third data item states that for 21-24 year college graduates unemployment + underemployment totals 28.5% (19.1% + 9.4%). Since these two groups are virtually identical, how can there be such a huge difference between them in combined unemployment and underemployment?

Walter Clayton

Nov. 21, 2012, 3:44 p.m.

Why on “earth” would American “free enterprise” companies who exist to maximize profits for their shareholders be moved in any way to do anything to advance the cause of “America.”  That idea is now oxymoronic, and expressly in terms of “free-enterprise” and in light of recent politics of “free markets?” “Elementary, my dear Watson…” Is not Adam Smith’s treatise all about the “invisible hand?”  So I hear it said, repeatedly, CNBC and many other places.  If so, then the providential guide of land, labor and capital, has directed “free enterprise” to the very four corners of the compass, no more to USA, except to benefit from “sales and profits.”  Indeed, “profits” being the sole measure, then why continue anymore but “sales” for larger “profits” and then move on as “other” markets become the “consumer” nations?  Does “free enterprise” have a “flag” or “loyalties” or “homeland?”  I think if you reckon the recent politic, we see the answer, “Certainly not!”  But then I recall Sir Smith’s treatise, it’s title is cunning… The Wealth of Nations… not rich individuals, or the “providentially” fortunate few, or the opulent oligarchs?  In the end, does Smith relish the Randian ideation of the successful survive and the lessors, only serve??  Could Smith have meant that the “wealth” belongs to the nations, and those who benefit from the formulation of ideas, land, labor and capital “benefit” rather than run away with it all???  My son, a candidate for a doctorate in Finance, said, “America has it’s royalty, not by blood but by privilege and bank account.”  To wit:  Can you be capitalistically “good?”  Or is the idea of “goodness” the game for dolts?

Nov. 21, 2012, 10:14 a.m.

In your article you mention the metal fabricator not able to find qualified staff and that 1 in 2 grads are either unemployed or underemployed.  Is it possible that these grads have degrees (buggy whip making) that have no economic/employment value?

Gordon Davis Jr

Nov. 20, 2012, 10:03 a.m.

The phenomenon of low volume high skilled demand for labor in manufactureing is transitory and does not signal a trend. Advances in technology will soon obviate the need for high skilled manual labor with “math skills”. Technology will bring manufacturing back to the US, but not the jobs. There will be demand for some well educated, skilled workers, but not in manufacturing, which will be dominated by computer directed machines.

Nov. 19, 2012, 9:59 p.m.

“U.S. bachelor’s degree holders are more likely to wait tables, tend bar or become food-service helpers than to be employed as engineers, physicists, chemists or mathematicians combined – 100,000 versus 90,000.”

Well golly, perhaps that’s because so many bachelor’s degree holders have only acquired an “education” that qualifies them to wait tables and/or tend bar, probably for those who have actually studied chemistry, engineering, etc -

With degrees in engineering, chemistry and physics, I can attest to the fact that studying these disciplines is both difficult and humbling, with many setbacks along the way. 

A generation attuned to easy gratification is not well-served by an educational system that too often promotes self esteem over the substantially more difficult task of actually learning something of value, nor by parents that don’t make their kids get out there and struggle and fail and recover and learn what it actually takes to do something.

I’ve personally hired and trained kids with backgrounds ranging from high school to technical doctorates - they all take a fair bit of work to spin up, typically the biggest hurdle is getting them to understand how hard one must work to actually achieve something, and that this can’t be done while surfing on the iphone

In a global economy, if you don’t bring something to the table, then you shouldn’t be surprised to wind up waiting the table.


Nov. 19, 2012, 5:46 p.m.

Just like labor eliminating machines in agriculture the same thing occurs in all walks of manufacturing.  Machine civilization,  combined with corporate consolidation and job offshoring are the roots of our economic catastrophe.  Why would non contented capitalist pay $12.00 per hour to stuff boxes and turn screws at home when they can get it done for a buck overseas? 
The idiot elite can’t see that the box stuffer and nail driver he oppresses builds his upper seat and and keeps his slop trough and wallowing hole full.  It will be a great day when they both run dry.

Frank Blangeard

Nov. 19, 2012, 4 p.m.

You write that ‘the reality is that government doesn’t create jobs’ and that small business people create jobs. Your prime example however is a small business that needed welders who could ‘meet the standards of the U.S. military and aerospace industry’. Welding armor on Humvees was one of the tasks needed to be performed. Are these not jobs created by the U.S. government?

Fritz Rosendahl

Nov. 19, 2012, 3:49 p.m.

No doubt you considered this but central to solving the problem posed in your piece seems to me to be that the higher education system must change to keep pace with the real world. This is not a new call. When, many years ago, I was taking a degree in what was then called Liberal Arts much air was expended debating the value of this course of study. Things have changed as you so succinctly point out. Education must follow. Preferably lead. But that may be asking to much.

Nov. 19, 2012, 1:55 p.m.

Is this an implicit argument for the German education system? 

Germany has relatively low young adult unemployment, but their education system divides pupils into three tracks at a very young age.  While tracking a child for life at the age of 10 would be anathema to most Americans, the results are hard to dispute.

The way I understand it is that one track is for the top students, who are university-bound and could choose a number of paths at university, though likely a profession (law, medicine, teaching, etc).  There’s another path for highly-skilled engineers, who bypass the ivory tower for hands-on apprenticeships.  It may be a throwback to the medieval way of doing things, but it remains relevant.  Indeed, the relevance may be even stronger in light of current manufacturing trends, as John illustrates.  The final path is for everyone else.

So, perhaps that’s what we need to do.  Ironically, we have the tools in place to achieve this: our nationwide system of land-grant universities are particularly poised to be the leaders in such a shift.  Let the flagship schools and liberal arts universities keep sending graduates into the professions.  The land-grant schools, such as Auburn, Texas A&M, Clemson, Virginia Tech, or even (yes) MIT, are perfectly poised to educate our next generation of highly-skilled engineers.  The pieces are in place.  Time to make it happen.

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