The Youth Unemployment Bomb

[JME2]

From Bloomberg

I meant to pose this a few days back and the article is too long to quote all of it.

But quotes like this encapsulate my feelings regarding the current quagmire.

Here's what makes it extra-worrisome: The world is aging. In many countries the young are being crushed by a gerontocracy of older workers who appear determined to cling to the better jobs as long as possible and then, when they do retire, demand impossibly rich private and public pensions that the younger generation will be forced to shoulder.

In short, the fissure between young and old is deepening. "The older generations have eaten the future of the younger ones," former Italian Prime Minister Giuliano Amato told Corriere della Sera. In Britain, Employment Minister Chris Grayling has called chronic unemployment a "ticking time bomb." Jeffrey A. Joerres, chief executive officer of Manpower (MAN), a temporary-services firm with offices in 82 countries and territories, adds, "Youth unemployment will clearly be the epidemic of this next decade unless we get on it right away. You can't throw in the towel on this."

[KlavoHunter]

When this part of the quote you selected makes up half of that, I'm a little worried that you may have missed the point of the article.

Here's what makes it extra-worrisome: The world is aging. In many countries the young are being crushed by a gerontocracy of older workers who appear determined to cling to the better jobs as long as possible and then, when they do retire, demand impossibly rich private and public pensions that the younger generation will be forced to shoulder.

In short, the fissure between young and old is deepening. "The older generations have eaten the future of the younger ones," former Italian Prime Minister Giuliano Amato told Corriere della Sera.

The true kleptocrat winners here wish to defraud even the elderly out of their pensions, too - Do not let them divide you into seeing this as a generational war, this is merely a "welfare-queen"-like distraction from the fact that this is a class war, of the super-rich against all those who are not.

[bobalot]

Pensioners here in Australia get generous pensions and discounts but still whine about how they are being hard done by. They know the generous benefits they have voted themselves will be difficult to shoulder for the younger generations but they simply don't give a shit. What makes it worse is they make up the older conservative demographic that continually complains about people on welfare.

Even the superannuation system is unsustainably rigged in favor of older workers.

These people make up a large voting demographic that makes or breaks governments and unfortunately there is nothing we can do about their bullshit.

[madd0ct0r]

yes there is. emigrate.

the gerontocracy is only in the developed countires.

choose yourself a nice up and coming developing country and surround yourself by a useful youthful population.

there may be a catch.

[D.Turtle]

I don't think its a battle between young and old workers - or some "gerontocracy". Older people (>50 or so) also find it very difficult to find a job if they lose their old one. The problem is the transition from no experience to having several years of experience in a job. Why should employers hire an inexperienced person fresh off the university, if they can instead hire some person who has 10 or 15 years of experience?

The thing is that if businesses and their leaders are totally and completely trained to just look at efficiency and rewarded for efficiency, then they will do exactly that. And what is one of the easiest ways to gain (short-term) efficiency? Fire people. Why train people, if you can let other companies do that for you?

In addition, the fears of "old people" eating away the future of young people with their obscene demands of pensions is in most cases overblown or completely false. In the US, for example, Social Security is fine without changes for the next 25 or so years. And it would be fine for eternity if they would raise or eliminate the cap on it so that people who earn more than 100k or so pay more. Where the money problem really is, is medical costs. And there are a lot of things that could be done to improve that by looking at what other countries do.

The thing is that in many countries a "free market will solve everything" or "whats good for businesses is good for the country" or "whats good for profits is good for businesses" approach has solidly embedded itself in the minds of government leaders. That is the real problem - not some misguided impression that "old people" are out to filch the "young people".

[mr friendly guy]

Pensioners here in Australia get generous pensions and discounts but still whine about how they are being hard done by. They know the generous benefits they have voted themselves will be difficult to shoulder for the younger generations but they simply don't give a shit. What makes it worse is they make up the older conservative demographic that continually complains about people on welfare.

Even the superannuation system is unsustainably rigged in favor of older workers.

These people make up a large voting demographic that makes or breaks governments and unfortunately there is nothing we can do about their bullshit.

Aren't old people supposed to be from a generation which saves more than generation Y? Granted they didn't have superannuation, you would expect them to be able to save. Even if they don't have a lot of cash, their property would have gone up in price vastly from Australia's property boom. They can take a reverse mortgage on their homes and use that money to enjoy themselves if they are short on cash. But I know they won't, and will demand tax and welfare concessions. *

* a few years back in WA the ALP considered increasing some property tax if you have a house worth $1 million index to inflation. Naturally people bitched and cried poor, because you know, they are asset rich but income poor (or liquid assets poor), so they can't afford to live blah blah blah.

[JME2]

When this part of the quote you selected makes up half of that, I'm a little worried that you may have missed the point of the article.

Here's what makes it extra-worrisome: The world is aging. In many countries the young are being crushed by a gerontocracy of older workers who appear determined to cling to the better jobs as long as possible and then, when they do retire, demand impossibly rich private and public pensions that the younger generation will be forced to shoulder.

In short, the fissure between young and old is deepening. "The older generations have eaten the future of the younger ones," former Italian Prime Minister Giuliano Amato told Corriere della Sera.

The true kleptocrat winners here wish to defraud even the elderly out of their pensions, too - Do not let them divide you into seeing this as a generational war, this is merely a "welfare-queen"-like distraction from the fact that this is a class war, of the super-rich against all those who are not.

Fair enough.

I just never thought I'd be worrying about over-taxation and retirement at the age of 25 -- and I don't mean vague worries, I mean REALLY worrying.

[Big Orange]

The Boomers in Britain and America have the lucky advantage they had because they bullt their careers in the 70s, 80s, and early 90s when the retarded Globalisation was not yet at full blast: in the last ten to fifthteen years young workers in the private sector are facing a steeper uphill struggle to build a meaningful career when companies have more "dynamic" employment practices. When IBM had a department in India that employed 5000 people from there only eight years ago but by last year employed 100, 000 Indians, bolstered by outsourcing. In the UK the biggest private sector employer is Tescos and they have an average pay of 10 to 20K per year, so little wonder the US and UK economies are imploding.

[Illuminatus Primus]

When this part of the quote you selected makes up half of that, I'm a little worried that you may have missed the point of the article.

Here's what makes it extra-worrisome: The world is aging. In many countries the young are being crushed by a gerontocracy of older workers who appear determined to cling to the better jobs as long as possible and then, when they do retire, demand impossibly rich private and public pensions that the younger generation will be forced to shoulder.

In short, the fissure between young and old is deepening. "The older generations have eaten the future of the younger ones," former Italian Prime Minister Giuliano Amato told Corriere della Sera.

The true kleptocrat winners here wish to defraud even the elderly out of their pensions, too - Do not let them divide you into seeing this as a generational war, this is merely a "welfare-queen"-like distraction from the fact that this is a class war, of the super-rich against all those who are not.

This. Exactly. Although it is an important concern today to look at the immigration and generational issues, that divide working class people, the principle contradiction in society - and the primary constituency of 'mandatory' austerity measures - remains the struggle between the people who subsist off society's wages and produce its commodities - working people -, and those who own the rights to that productivity and productive capacity - the 5% of the U.S. population that controls the deciding share of virtually all wealth.

[Alphawolf55]

In addition, the fears of "old people" eating away the future of young people with their obscene demands of pensions is in most cases overblown or completely false. In the US, for example, Social Security is fine without changes for the next 25 or so years. And it would be fine for eternity if they would raise or eliminate the cap on it so that people who earn more than 100k or so pay more. Where the money problem really is, is medical costs. And there are a lot of things that could be done to improve that by looking at what other countries do.

The thing is that in many countries a "free market will solve everything" or "whats good for businesses is good for the country" or "whats good for profits is good for businesses" approach has solidly embedded itself in the minds of government leaders. That is the real problem - not some misguided impression that "old people" are out to filch the "young people".

Except according to this http://www.dailyfinance.com/story/retir ... /19804267/ SS is in the red already.
and with Obama cutting payroll taxes, it's not exactly going to bounce back.

[D.Turtle]

Yes, there is that small recession thing that caused the revenues to fall. Unless the economy never recovers to its long-run growth, that will not have any large effect on the long-run fiscal soundedness of Social Security. Its pretty much the weather vs climate effect: Short-term there are larger swings, that even-out in the long run.

The Social Security payroll tax holiday is unfortunate, however it is compensated from the governments general fund - which means it is revenue neutral for Social Security. Hopefully, it will not lead to any permanent cuts in Social Security, but even if that were to happen, it would be a political decision to weaken Social Security - not anything systemic to Social Security.

Again, if the cap on Social Security would be lifted or eliminated, Social Security would be self-sustaining into the future. It is not going to put too much burden on working people to keep it running.

That is a very strong contrast to health care costs (including Medicare/Medicaid) which are on an unsustainable growth path.

Now, in other countries, pensions etc could very well be a big problem, but in the US they aren't.

[Alphawolf55]

I wasn't arguing against the proposed changes, I was just pointing out that saying the system is solvent without changes for 25 years might not be entirely accurate

[Omega18]

It also should be emphasized that in the US, the birth rate is still ahead of the replacement rate, and when you combine that with generally reasonably young immigrants entering the county, you do still end up with a large number of workers to pay the costs of those retiring. (Some European countries are definitely worse off demographically.)

Medicare is the one area where the costs really could be seriously problematic, but besides recent changes already technically implemented, I expect some serious changes to occur here sooner or later due to financial necessity regardless of what the elderly would ideally like. (Basically if every other group starts to get concerned enough about the issue that could force some real reforms regardless, especially if the budget realities start to become sufficiently explicit.)

[tim31]

George Friedman believes that in the next twenty years labour will become a commodity that China and Mexico in particular will clamour for... Does that fit this model?

[Stravo]

There is a growing meme out there driven by the right that is slowly building resentment against unions and pensioners in general. They are depicting the supposed "crushing weight" of so called overly generous pensions, in particular pensions set up by labor unions, as unbalancing city and state budgets. There is a shrill call for the unions to have to start giving things up for the good of everyone.

So let me get this straight, the working man who generally has nothing usually outside of his pension and his social security benefits come retirement time has to cut back? On the other hand, his boss, the managers of his company and his majority stock holders have vacation homes in different states and countries and stock portfolios to generate wonderful little golden parachutes to float away on in their elder years. No one is asking them to give back. No one is asking the executives of these companies who are making now hundreds of times what their workers make to give a little back. No one is asking the well to do and rich to give back a fucking thing. But the working man's retirement benefits which BTW he contributed to and worked for is the issue isn't it? Those dirty labor unions don't get it do they? Everyone has to sacrifice in this economic environment, right? Well, as soon as I start seeing some of these executive assholes start giving up portfolio and obscene bonus structures then MAYBE I'll give a shit. I am personally fed up by this constant drumbeat led by right wing cocksuckers that we need to sacrifice, as long as you make under 120,000 a year.

My father's pension after 30 years of working in this country amounts to $98.00 a month. Fuck you if I think someone like him needs to give ANYTHING up. This country, especially the working class needs to wake the fuck up before they get robbed of everything to keep the 1% happy and fat. Class warfare talk? To quote one of the tea party champions - You betcha.

[Alphawolf55]

Except the two issues are a bit different. I'm not saying that the rich shouldn't have to sacrifice, but there is a bit of a difference in complaining about the lavish of public union benefits that take up a considerable portion of state budgets and complaining about the lavishes of the private sector.

[Zaune]

Define "lavish benefits". A retirement income that enables one to live on something other than beans on toast and instant ramen?

And that reminds me of something that irritated me in the original article; the implied criticism of the UK for the minimum wage relative to average income being excessively high. Armok forbid the minimum wage be vaguely proportionate the cost of living in this country, eh?

[Alphawolf55]

Define "lavish benefits". A retirement income that enables one to live on something other than beans on toast and instant ramen?

And that reminds me of something that irritated me in the original article; the implied criticism of the UK for the minimum wage relative to average income being excessively high. Armok forbid the minimum wage be vaguely proportionate the cost of living in this country, eh?

Getting overtime while on vacation or getting pensions that are in some cases considerably higher then the medium household income while also drawing SS, or manipulating their work hours to work less then 40 hours a week while getting overtime for a third of them. I would call that in some circumstances lavish, now they pale in consideration to some private sector packages but like I said, the arguments between whats lavish in the public sector and in the private different.

[Zaune]

Getting overtime while on vacation or getting pensions that are in some cases considerably higher then the medium household income while also drawing SS, or manipulating their work hours to work less then 40 hours a week while getting overtime for a third of them. I would call that in some circumstances lavish, now they pale in consideration to some private sector packages but like I said, the arguments between what's lavish in the public sector and in the private different.

The first two examples would come under the heading of fraud in most jurisdictions, which is a different issue altogether. As for overtime, that's fair enough if they're working anti-social hours.

[Alphawolf55]

No the first two are considered legal in NYC. Note for the third, I'm talking about working 12 hour days. It's not required by the employer but instead of working 5 8 hour shifts, they'll work 3 12 hour shifts and get overtime during the final 4 hours of them.

That's not including in NYC, for example if you work on one line in the MTA and shift to another for the day (a 10 minute trip at times), that's an extra day pay.

[bobalot]

Except the two issues are a bit different. I'm not saying that the rich shouldn't have to sacrifice, but there is a bit of a difference in complaining about the lavish of public union benefits that take up a considerable portion of state budgets and complaining about the lavishes of the private sector.

Please provide a source for this.

[Psychic_Sandwich]

And that reminds me of something that irritated me in the original article; the implied criticism of the UK for the minimum wage relative to average income being excessively high. Armok forbid the minimum wage be vaguely proportionate the cost of living in this country, eh?

The minimum wage isn't actually a living wage in large swathes of the country, either. It falls short by about £2,000 a year unless you somehow manage to do entirely without heating or something.

[D.Turtle]

I find the focus on minimum wages quite interesting - considering that Germany does not have an official nation-wide minimum wage at all. There are some industries or sectors that have official minimum wages, and there are groups who want to expand that or implement a national minimum wage.

[Zaune]

The minimum wage isn't actually a living wage in large swathes of the country, either. It falls short by about £2,000 a year unless you somehow manage to do entirely without heating or something.

It's possible to get by fairly well in a shared house, or one of the increasing number of bedsits that throw in utility bills with the rent; that's about the only sector of the property market where market forces are sort-of working right now. There's also Working Tax Credit once you turn 25 (or at least there will be until the Tories get done with the benefits system), which always struck me as a thoroughly arse-backwards solution but better than no solution at all. It's a long way from ideal, but it could be a lot worse.

I find the focus on minimum wages quite interesting - considering that Germany does not have an official nation-wide minimum wage at all. There are some industries or sectors that have official minimum wages, and there are groups who want to expand that or implement a national minimum wage.

Your labour market isn't quite as dependent on unskilled manual labour as ours, however, and I seem to recall that Germany has tighter price controls on groceries. I suspect collective bargaining is less of a joke over there than it is in Britain as well.

[Thanas]

My father's pension after 30 years of working in this country amounts to $98.00 a month. Fuck you if I think someone like him needs to give ANYTHING up.

Holy crap. It would be considered unconstitutional in Germany to give anybody that small a pension.