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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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Willis Smith

Nov. 19, 2012, 11:54 a.m.

I keep reading how businesses create jobs and are only waiting for the U.S. government to get out of the way so they can work their wonders.
Without real growth in after tax income for consumers, it is hard to create more jobs. If one new business is formed and hires people, then its success results in some cannibalizing of the sales of other companies.  Its a very leaky bucket to serve the economy.  If companies would accept a low profit margin while paying a higher salary and hire a few workers they don’t need at the moment, then consumer part of the economy could help drive the overall expansion.

Since 37% of the population has an IQ of 95 or less, it will be hard to find enough jobs that they are capable of doing as productivity, robotics and self-service functions reduce the job prospects for minimally capable people.  Moreover, the salaries that they will earn will be near minimum wage if they have a job.  It raises the specter of an permanent and large underclass.

Nov. 19, 2012, 11:48 a.m.

I think the chart on exports, as an example, would be more meaningful, if it was corrected for dollar inflation.
Robert Fleischer

Richard Davis

Nov. 19, 2012, 9:08 a.m.

“But Congress recently passed new bankruptcy laws, and unlike housing loans, student loans cannot be discharged in a bankruptcy.”

John, I am advising my daughters to vote along youth lines, not party lines.  Wherever they have a choice, vote for the younger candidate. We are fortunate in that one has already graduated debt-free, and has a great job as a mechanical engineer.  The younger one is a junior, will also complete her undergrad debt-free, and is considering grad school.

But for others, the view is grim. Their future is being stolen, and they need to salvage what they can. 

How long before the un- or under-employed youth are a large enough bloc to influence state house races?  Congress?  And what will candidates be able to promise (let alone provide) them?

I just re-read “The Clash of Generations” by Kotlikoff/Burns.  Would very much like to hear what other countries are saying and doing relative to youth debt and employment.

Nov. 19, 2012, 8:13 a.m.

China is number one in manufacturing, according to the UN !

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