Monday, September 30, 2013

For High School Grads, the Labor Market is Brutal

40 years ago in 1973, as a senior in high school, I dropped out of school to work full-time in a union sheet metal shop in Massachusetts to earn $7.50 an hour --- which is more than the minimum wage is today. In today's dollars, that would be $39.51 an hour. I received on-the-job training, and with time and in-house seniority, I could move up to better paying jobs. That was before all our manufacturing was offshored overseas.

I used to work Monday through Friday, from 7 am to 3:30 pm with 30 minutes off for lunch (with two 10 minute breaks in between). Every Saturday there were 4 hours of over-time available whenever I needed a little extra money in my pocket. I was paid once a week on Fridays after work. I also had healthcare benefits and a pension plan --- not to mention paid sick days and vacation time.

Today, $39.51 an hour (plus benefits) would be considered a dream job...especially for a high school graduate, and even more so for a high school dropout. These days, and in this brutal economy, those opportunities of yesteryear no longer exist for those who are first entering the work force.

Today college graduates are having a hard time finding work as a bartender or cab driver --- and may be working at Walmart earning $9.00 an hour --- which would only be $1.71 in 1973 (when the minimum wage was $1.60).

According to the NCES, a research arm of the U.S. Education Department, the U.S. had approximately 18 million high school graduates from 2008 to 2013. We had a record 3.4 million high school graduates this year alone, and currently there are only 3.7 million job openings for 11.3 million counted unemployed. For a high school graduate, the labor market is brutal.

The Bureau of Labor Statistics reports that only 48.8 percent of the 3.2 million youth who graduated from high school last year were "in the labor force" (either working or looking for work).

The labor force participation rate for recent high school graduates (as of April 22, 2013) who were enrolled in college was 38.2 percent. Recent high school graduates who were enrolled as full-time college students were about half as likely to be in the labor force (33.9 percent) as were their peers enrolled part time (69.2 percent).

This past April the BLS reported that 66.2 percent of 2012 high school graduates were enrolled in colleges or universities in the U.S. --- and that of the most recent high school graduates (if not enrolled in college) 69.6 percent of those would be working or looking for work.

Forbes: "Dear High School graduate: Everything you've been told is false."

Not only are there not a plethora of decent-paying jobs just waiting for you upon graduation, there are structural changes afoot in the U.S. economy making your human labor “incidental.” You see it in the increased operating efficiencies of corporations across the fruited plain, almost all of whom have enjoyed record profits post-2008 without an appreciable increase in their human labor pool. No doubt you’ve been told that more (and better targeted) skill sets are the expensive answer to your job predicament. Unfortunately, only 21% of all jobs in the U.S. require a bachelor’s degree or higher. In addition, more than half of recent college graduates are working in an occupation that does not require a college education.

L.A. Times: "College-educated workers are taking jobs that don't require degrees."

College graduates are tending bar and driving taxis, pushing people without degrees out of those jobs. As more college graduates have flooded the market, employers are able to offer lower wages. The earnings of college grads have fallen about 13% in the last decade. Because college is so expensive, many [high school] graduates are facing a dilemma: If they go to college, they still might not get a job that requires a college degree and they'll be on the hook for big student loan payments. But if they don't go to college, they might be pushed out of entry-level jobs by overqualified college graduates who can't find other work.

New York Times: "More young Americans out of High School are also out of work."

For this generation of young people, the future looks bleak. Only one in six is working full time. Three out of five live with their parents or other relatives. A large majority (73 percent) think they need more education to find a successful career.

For a high school graduate, the labor market is brutal --- so imagine being a high school dropout. Labor statistics shows that dropouts are nearly twice as likely to be unemployed as a high school graduate (or a holder of a GED). High school dropouts would also be competing for the same jobs that those with college degrees are taking that don't require a college degree.

In a 14-page report last February by Rutgers - John J. Heldrich Center for Workforce Development, they note that only 27% of high school graduates were working full time (twice the level of unemployment 10 years ago -- and earning lower wages as well), while 15% worked part-time jobs (but wanted full-time work). Many were only temporary jobs. A whopping 44% of high school students were unemployed --- who either looking or not looking for work. (From the report, see the chart below)

Many times in the past, when jobs were scarce, one could always enlist in a branch of the military --- where one could also seek college benefits through the VA. But it's not so easy now, especially with the wars in the Middle East winding down. The poor job market was a big reason why so many military service personnel had re-enlisted since 2008. Getting into the military these days is getting tougher because just like in the private-sector, the military is also seeking higher-skilled recruits. For a high school graduate, the labor market is brutal.

While although college increases one's chance of landing a job, not everyone can attend college, even though Obama has set a goal to increase the nation's number of college graduates by 50 percent by 2020. But while the increased high school graduation rates show that more students are completing secondary education, fewer than half of those in the class of 2012 were "college ready" as determined by the College Board last fall. (So therefore, considering the current job market, they were also not qualified to drive a cab or tend a bar.)

Question: From the summer of 2008 to the summer of 2013, how many NET new jobs were created to re-employ the 8.7 million who lost jobs during the Great Recession --- all while 18 million young people had been graduating from high school?

Answer: Not nearly enough. And from this point going forward, I predict that there never will be --- because offshoring will continue, and the CEOs and Wall Street will only get greedier. I see very few politicians attempting to interject any checks or balances. I thank the good Lord I didn't just graduate in 2013, otherwise, I don't know how I would have survived as long as I have already.


  1. There are claims coming from the Democratic side that they have created 7 million jobs. If one takes a look at the Bureau of Labor Statistics numbers for the total number of private sector jobs from January of 2008 to August of 2013, some interesting facts come up.

    In January of 2008 there were a total of 115,668,000 private sector jobs. And as of August 2013 there were a total of 114,302,000 private sector jobs. That shows that this country has not recovered the jobs that have been lost in the recession. We are still 1,366,000 jobs behind the count of January 2008.

    And this is not taking into consideration the growth in population and new people entering the labor force for the first time.
    A conservative estimate for that is 100,000 people per month. So from January 2008 to August 2013 is a total of 67 months at 100,000 jobs per month. There should have been 6,700,000 jobs created just to accommodate the natural growth in population.

    So if anything we are still 8,066,000 jobs in the hole.

  2. That's why I'm assuming the BLS says the labor force participation rate is at a 30-year low...not just because of people who are unemployed who once had jobs but can not get rehired again (and is later not counted as part of the labor force (which the BLS says "had dropped out"); but also because first-time job seekers (who never found work) where never counted as part of the labor force in the first place.

  3. TIME:

    Some academics, like Harvard’s Rosabeth Moss Kanter, think the mismatch between the skills that are needed in today’s workforce and the skills kids graduate with is responsible for as much as a third of the growth in unemployment since the Great Recession. While college graduates as a group did much better during the financial crisis and recession than those with only a high school degree (who suffered double-digit declines in employment), even young college grads are suffering from high rates of what’s called “mal-employment” — meaning, they are doing things that are much more menial than what their education trained them to do. Political scientists are working as bartenders, and English graduates are doing time as retail clerks. Unless you are a sharp kid, at a top school, you need to think long and hard about shelling out $100,000 for a degree that may net you a yearly salary of $33,265.

  4. My office is on a college campus, so it's especially hard to avoid noticing that the class of '13 is going to graduate into a difficult job market, as did their predecessors in the classes of '12, '11, '10, '09, and '08. Indeed, colleges and universities are now experiencing a situation in which freshmen arrived in a lousy job market, heard all about the lousy job market for four years of college, and then graduated into a lousy job market.

  5. 30 Statistics About Americans Under The Age Of 30 That Will Blow Your Mind

    "Why are young people in America so frustrated these days? Most young adults started out having faith in the system. They worked hard, they got good grades, they stayed out of trouble and many of them went on to college. But when their educations where over, they discovered that the good jobs that they had been promised were not waiting for them at the end of the rainbow. Even in the midst of this so-called "economic recovery", the full-time employment rate for Americans under the age of 30 continues to fall. And incomes for that age group continue to fall as well. At the same time, young adults are dealing with record levels of student loan debt. As a result, more young Americans than ever are putting off getting married and having families, and more of them than ever are moving back in with their parents. It can be absolutely soul crushing when you discover that the "bright future" that the system had been promising you for so many years turns out to be a lie. A lot of young people ultimately give up on the system and many of them end up just kind of drifting aimlessly through life."

  6. Robert Reich (November 2014)

    "People with college degrees continue to earn far more than people without them. And that college “premium” keeps rising. Last year, Americans with four-year college degrees earned on average 98 percent more per hour than people without college degrees. In the early 1980s, graduates earned 64 percent more [but] a college degree no longer guarantees a good job. The main reason it pays better than the job of someone without a degree is the latter’s wages are dropping. In fact, it’s likely that new college graduates will spend some years in jobs for which they’re overqualified. According to the Federal Reserve Bank of New York, 46 percent of recent college graduates are now working in jobs that don’t require college degrees. Employers still choose college grads over non-college grads on the assumption that more education is better than less. As a result, non-grads are being pushed into ever more menial work, if they can get work at all. For years we’ve been told globalization and technological advances increase the demand for well-educated workers. This was correct until around 2000. But since then two things have reversed the trend. First, millions of people in developing nations are now far better educated, and the Internet has given them an easy way to sell their skills in advanced economies like the United States. Hence, more and more complex work is being outsourced to them. Second, advanced software is taking over many tasks that had been done by well-educated professionals. As a result, the demand for well-educated workers in the United States seems to have peaked around 2000 and fallen since. But the supply of well-educated workers has continued to grow. The New York Times calls them "Generation Limbo" --- well-educated young adults “whose careers are stuck in neutral, coping with dead-end jobs and listless prospects.” A record number are living at home. Given all this, a college degree is worth the cost because it at least enables a young person to tread water. Without the degree, young people can easily drown." (MY NOTE: I guess that at this rate, one day they'll need a PhD to mops floors.)

    Timothy Taylor (November 2014)

    "The age group with by far the biggest rise in those saying they don't want a job since 2000 is the 16-24 age group ... We are in the midst of a social change in which 16-24 year-olds are less likely to want jobs. Some of this is related to more students going on to higher education, as well as to a pattern where fewer high school and college student are looking for work. I do worry about this trend. For many folks of my generation, some evenings and summers spent in low-paid service jobs was part of our acculturation to the world of work. As I've noted in the past, I would also favor a more active program of apprenticeships to help young people become connected to the world of work.

  7. UPDATES --- March 29, 2015

    Robert Reich: Why College Isn’t for Everyone (Sunday, March 22, 2015)

    "Not every young person is suited to four years of college. They may be bright and ambitious, but they won’t get much out of it. They’d rather be doing something else, like making money or painting murals.

    They feel compelled to go to college because they’ve been told over and over that a college degree is necessary. Yet if they start college and then drop out, they feel like total failures.

    Even if they get the degree, they’re stuck with a huge bill — and may be paying down their student debt for years. And all too often the jobs they land after graduating don’t pay enough to make the degree worthwhile. Last year, according to the Federal Reserve Bank of New York, 46 percent of recent college graduates were in jobs that don’t even require a college degree.

    The biggest frauds are for-profit colleges that are raking in money even as their students drop out in droves, and whose diplomas are barely worth the ink-jets they’re printed on.

    [After making all his relevent points, he concludes] It’s time to give up the idea that every young person has to go to college, and start offering high-school seniors an alternative route into the middle class.

    When a Summer Job Could Pay the Tuition