Jobless Recovery - Hiring Ice Age for 2009 Grads

From Christopher Swann from Reuters: The danger of a lost generation


NEW YORK, July 24 (Reuters) - For the first time in three generations, Americans across the nation are facing the threat of long-term unemployment. Already more than one in four jobless Americans have now been out of work for more than six months, the highest level since records began in 1948.

For both individuals and national economies, long-term joblessness has proved to be extremely corrosive. Skills atrophy after extended periods of enforced indolence. Then, when an economy recovers, these workers are no longer in a position to fill new jobs.

As a result the potential maximum speed at which the economy can grow declines, and the workers themselves come to be seen as “damaged goods.” Those unlucky enough to be graduating in 2009 may find that their salaries never match those of similarly qualified peers who finished in 2006.



A multitude of academic papers suggest that an early bout of long-term unemployment can have an even more pernicious result. According to a recent study by Tom Mroz at Clemson University, a six-month spell of unemployment at the age of 22 tended to reduce wages the following year by eight percent.

More worryingly, almost 10 years later these workers were still paid about three percent less than their peers, even controlling for education, region and personal characteristics. Other studies have shown an even more powerful hit, with wages still about 10 percent lower five years after the initial period of joblessness.

“Youth unemployment creates permanent scars rather than temporary blemishes,” says Dartmouth Professor David Blanchflower. An unfortunately timed demographic bulge means that there will be an unusually large number finishing school over coming years. For more experienced workers, there is a risk of permanent displacement from the labor force. This risk is especially great for workers in financial services — an industry that is unlikely to grow back to its peak size any time soon.


Subject Meta: 

Forum Categories: 

and do you know

they are planning on turning our university system into an automatic green card machine? They are claiming there is a worker shortage?

That does two things. It squeezes out U.S. citizens from opportunities in higher education and it makes it even worse for U.S. citizens to get a job upon graduation.

Sad reality.

I was surprised by the frankness of the reporter. Did you notice the disclaimer at the top of the post about "the following is strictly the opinion of the writer" business?

Maybe when people realize that upward mobility has become the exception and not the norm we will have significant changes.

Worker Shortage? Skills Shortage?

When you use the phrase "labor shortage" or "skills shortage" you're speaking in a sentence fragment. What you actually mean to say is: "There is a labor shortage at the salary level I'm willing to pay." That statement is the correct phrase; the complete sentence, the intellectually honest statement.

If you start raising your wages and improving working conditions, and continue to do so, you'll solve your “shortage” and will have people lining up around the block to work for you even if you need to have huge piles of steaming manure hand-scooped on a blazing summer afternoon.

Re: Shortage due to retirees: With the majority of retirement accounts down about 50% or more, people entering retirement age are being forced to work well into their sunset years. So, you won’t be getting a worker shortage anytime soon due to retirees exiting the workforce.

Okay, fine. Some specialized jobs require training and/or certification, again, raise your wages and improve benefits! You’ll incentivize people to self-fund their education so that they can enter the industry in a work-ready state. The attractive wages, working conditions and career prospects of technology during the 1980’s and 1990’s was a prime example of people’s willingness to fund their own education.

Great post, but.....

'"There is a labor shortage at the salary level I'm willing to pay."'

This is a very well-thought out post, but still it contains a programmed misconception (or foundation-sponsored "manufactured consent" phrase): that any such labor shortage at such a salary actually existed.

Should you ever do any extensive research, you will find many Americans working beside undocumented workers throughout North America, fact - not fiction!

The notion of a worker shortage due to "baby boomer" retirees was first promoted (and promoted quite strenuously up to the present) by Peter Peterson, formerly with the Reagan Administration, former head of the Peterson Commission, former head of the NY Federal Reserve Bank and Council on Foreign Relations, and founder of the Blackstone Group and the Peterson Institute for International Economics (whose sole agenda is the offshoring of American jobs and the privatization of social security - sometime check out their membership list).

Great post, but mental flexibility and that sunlight disinfectant are still required.