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Our Economic Malaise Is Impacting Young Workers the Most – Article by Ryan McMaken

Our Economic Malaise Is Impacting Young Workers the Most – Article by Ryan McMaken

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The New Renaissance Hat
Ryan McMaken
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In the wake of the 2007-2009 recession, 78 months passed before employment returned to where it had been before the crisis. This was, by far, the longest period needed to recover from job losses in decades. The second-longest period needed to recover jobs occurred after the 2002 recession when about 50 months were needed to recover lost jobs:

economic_malaise_young_people_1

Moreover, we see that in recent cycles, job growth during each recovery has been getting weaker and weaker over time:

economic_malaise_young_people_2

Some observers of the rose-colored-glasses-wearing variety have attempted to explain away the most recent malaise in job gains by claiming that fewer jobs are needed because so many Baby Boomers are aging out of the work force, and because people are so much wealthier, they argue, workers are leaving the labor force for non-economic reasons. That is, people are leaving the labor force for reasons other than being discouraged workers.

These claims are plausible, but the empirical data we have does not support them.

Keep in mind that ever since the 2007-2009 recession, the U-6 unemployment rate, which includes underemployed workers (i.e., involuntary part timers) and discourage workers, has reached multi-decade highs in recent years, and even now, is only at levels seen during the worst of the last recession:

economic_malaise_young_people_3

This is not simply a matter of fewer jobs being created because workers are going away.

To get a sense of the situation, we have to first look at the demographics of the working age population and the labor force.

(This demographic data on the working-age population is only currently available through the first quarter of 2015, so the time series ends in early 2015.)

economic_malaise_young_people_4

The top line is the total working age population (ages 15-65) published by the OECD and the World Bank. According to this measure, there is no decline in the working age population.

If people were aging out of the work force in droves to the point of driving a net exodus, we would see a downturn in the blue line. We don’t see that. In fact, from the beginning of the last recession at the end of 2007 to the first quarter of 2015, the working age population increased by 7.5 million people.

During that same period, the US economy added 801,000 jobs. That is, after the initial loss of 10 million jobs, the US economy began to add jobs again, but after more than seven full years, had only added a net of 801,000 jobs.

But maybe only 801,000 jobs were added because very few of those 7.5 million people wanted to be in the work force.

Well, it’s a safe bet that not all of them wanted to be in the work force, but we do know that using the standard BLS measure for the work force that 2.4 million people entered the work force during the period when only 801,000 jobs were added. (See the green line above.) That means over that time period, you had 1.6 million new people in the labor force while half that many jobs were added.

And this labor force measure only takes into account active job seekers and employed people. It ignores discouraged workers and involuntary part timers.

So we find that both the official labor force and the working age population were increasing at levels substantially above the employment levels.

Indeed, the only way we can find a number that suggests more jobs were added than workers is to look at the working-age population for ages between 25 and 54. That is, if we exclude all potential workers under 25 and all above 54, then yes, the working age population did decline by 1 million jobs. (See the red line above.)

In real life, though, the work force includes quite a few people who are, say, 22 years old, and quite a few who are 60 years old. If those people are included, the working age population is growing considerably.

Meanwhile, workforce participation has been falling for a number of years, and is now at some of the lowest levels that have been seen in more than 30 years. From 2014 to 2016, work force participation ranged from about 62 percent to 64 percent. That’s the lowest participation rate seen since the the early 1980s.

economic_malaise_young_people_5

Many have assumed this means that many older workers are leaving the work force. Unfortunately, it seems that it is young workers who are most likely to leave the labor force, which is problematic for future productivity. For young workers in the 20-24 age range, work force participation has been falling for more than a decade, and fell off significantly during the last recession:

economic_malaise_young_people_6

Meanwhile, labor force participation for 55-and-older individuals has held steady:

economic_malaise_young_people_7

It appears unlikely that it is now unnecessary to add jobs at a rate comparable to past recoveries because so many older workers are leaving the work force. Nor is it likely that young people are leaving the work force because they are so prosperous. It’s more likely that young people are leaving the work force as discouraged workers.

This supposition is further strengthened by the fact that the unemployment rate in the 16-24 age range has been above 10 percent for the past nine years. It was especially high even before the last recession.

But, unemployment among over-55 workers is among the lowest of all demographic groups, with a rate between 3 percent and 4 percent in recent years.

In other words, older workers are sticking around and doing relatively well. It appears that younger workers, meanwhile, are more likely to be unemployed, underemployed, or even totally out of the workforce as discouraged workers.

One phenomenon that gives us a reason to think this is the fact that the number of young people living with their parents has reached historic highs in the United States. As Pew recently reported:

In 2014, for the first time in more than 130 years, adults ages 18 to 34 were slightly more likely to be living in their parents’ home than they were to be living with a spouse or partner in their own household.

Living at home is more likely for men than for women, but in both cases, more young people are living with their parents than during any other period since World War II:

economic_malaise_young_people_8

Those who attempt to spin the current job numbers as simply the effects of people happily leaving the work force appear to be mistaken in assuming that older workers are leaving, and that younger workers need not work because they’re so unusually productive.

If young workers were so productive, is it too much to believe that they would choose to rent an apartment rather than live with their parents?

Once we look a the demographics behind the current job numbers, we actually find the situation is more alarming that we might have thought otherwise. We seem to be in a situation where younger workers are participating in the work force less, and putting off acquiring essential job skills that will lead to more productivity later.

Older workers are still sticking around in numbers large enough to keep the overall labor force number growing.

However, while both the working age population and the labor force are growing, overall job creation simply is not keeping up.

At some point, those 30-year olds living with their parents are doing to need full-time work, but will they have the job experience necessary (and thus the productivity) necessary to support the lifestyle to which they have become accustomed?

Or, will they simply enter the workforce with few job skills following a decade of part-time work or no work forced on them by our weak economy? When that happens, we’re likely to see a continued decline in the household and personal incomes.

Ryan W. McMaken is the editor of Mises Daily and The Free Market. He has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre. 

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

The Humility of Futurism – Article by Adam Alonzi

The Humility of Futurism – Article by Adam Alonzi

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The New Renaissance Hat
Adam Alonzi
April 20, 2014
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Civilization operates as if its troubles and their solutions will be as relevant tomorrow as they are today. Likely they were obsolete yesterday. How preposterous do the worries and aspirations of yesteryear seem now? What has not been refined since its conception? Our means of subsistence, entertainment, expression and enlightenment continue to change, although, at least unconsciously, they are accepted as stable. Change, once gradual, now quickens exponentially. Countless professions have been created and destroyed by advances; old orders have been destroyed, new ones have arisen; our world outlooks have been revolutionized by new discoveries over and over, although a sizable portion of the world is unwilling or unable to understand a man like Aubrey de Grey and an equally sizable portion of the population is still struggling with Copernicus. A Futurist accepts himself and his ideas as incomplete, therefore he actively works to improve upon them. Futurism is the first ideology that explicitly accepts the necessity and desirability of change.

It is a mistake to think we have reached the final stage of our journey. Plateaus are mirages conjured by the shortsighted; human evolution is a mountain without a peak. If a man has eyes, let him see all we have done and all we have yet to do. Let him gain the humility religion and liberalism have failed to inculcate into him and so many others. Each generation repeats this mistake. There is no evidence to suggest we are complete or are doomed now only to regress. Naysayers seem motivated to dismiss the triumphs of others out of fear they themselves will appear even less significant. Historically the distant future has received little attention compared to such pressing questions as the number of angels on the head of a pin or the labor theory of value. This may be thanks to a fondness for the apocalyptic, a fascination which certainly has not faded with time, but it is also attributable to the egotistical need to stand out. All epochs are transitions. The advances of this decade have failed to restore popular faith in progress, yet the very word is misleading. Faith does rest not upon an empirical foundation. There are scores of popular beliefs founded upon little or no evidence. Yet the proof of progress is all around us. Death wishes and earth-annihilating misanthropy aside, we can trace the modern disdain for the march forward to the fashionable nonsense of academia.


 Speculations and prophecies, even conservative estimates based on careful analysis, are treated with derision by the public. To say one has faith in technology is misleading. To compare the singularity to the rapture is like comparing planetary motion to Santa Claus. One is rooted in scripture, the other in observation. The doomsayers, secular and religious alike, enjoy forecasting our demise. The essential corruption critics charge Western civilization with is common to all; it is called human nature. It is meant to be transcended, not through critiques of immaterial “cultural entities,” but by improving our bodies and our minds through bioengineering. No belief is needed here. We do not rely upon a outworn holy book or the absurd dialectic of the Marxists. We change and adapt because we must. This is a point of pride, not one of shame. We do not worship the past; we have shrugged it off. Compared to the ridiculous claims circulating in the cesspool collectively referred to as “the humanities” this is a sane position, yet it is treated with nothing by scorn by those who, wishing so ardently to distance themselves from Western civilization, bite the hands that feed them, clothes them, and shelters them. While they navigate by GPS, post their inane tangents on social media sites, and try with all their might to discredit the culture to which they owe their lives and livelihoods, others push forward. Self-proclaimed critics of Western civilization should consider trading their general practitioner for an Angolan witch doctor. It is hard to respect those who do not practice what they preach.

Postmodernism and cultural relativism, though they have pretensions of completeness and delusions of permanence, are but passing fads. Something devoid of usefulness or, for that matter, a coherent hypothesis, cannot last long when technology is generating so much benefit to so many people. A meme will continue to propagate itself long after it has served its purpose, to the detriment of competitors and to society at large. It is the duty of Futurists and Transhumanists to demolish the acceptability of rubbish in academia and in the media. The Luddites are more dangerous than the Creationists. Hubris is barely acceptable in the hard sciences, but in an absolutely unempirical discipline like philosophy, it is deplorable. Our first priority should not be political or religious; it should be scientific. To whom do we owe our prosperity, and to whom do we owe our future? To whom do we owe our lives and the lives of our children? How many of us would not be here today were it not for the men and women of modern medicine? This is not the end. Forget the weary and the overwhelmed; they are weak. Forget the ones who have no desire to climb higher; they are unfit. Cast aside the ones who pray fervently for the undoing of their own species; they are the most vile of all. This is not the end. This is our beginning.
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Adam Alonzi is the author of Praying for Death and A Plank in Reason. He is also a futurist, inventor, DIY enthusiast, biotechnologist, programmer, molecular gastronomist, consummate dilletante and columnist at The Indian Economist. Read his blog Cool Flickers.
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Help the next generation embrace a progress-filled vision of the future by supporting the illustrated children’s book Death is Wrong (free in Kindle format until April 22, 2014), and the campaign to distribute 1000 paperback copies to children, free of cost to them. The Indiegogo fundraising period ends on April 23, so please consider making a contribution today.
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We Already Live in a Gerontocracy – Article by Reason

We Already Live in a Gerontocracy – Article by Reason

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The New Renaissance Hat
Reason
March 24, 2013
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Originally published on the Fight Aging! website

Gerontocracy:

Quote:

Government by a council of elders. Government by old people.

Image Source: Bernardino Campi (1522-1591) – “Heads of Old Men, Praying” – Photograph by Giovanni Dall’Orto

There are many knee-jerk reactions to the prospect of greatly increased healthy human life spans, most based on mistaken beliefs regarding the technologies needed, or mistaken beliefs regarding the way the world actually works – economics, human action, incentives. Some people believe that longer lives will result in stagnation, which is actually one of the more ridiculous and improbably outcomes once you start to pick it apart in any detail. Human society is restless and changeable on timescales far shorter than current lifespans, and the reasons why are rooted in day to day human nature. Our ambitions operate on a horizon of a few years, and that wouldn’t change all that much were we to live for centuries. We are driven to influence the world today, now, regardless of the years that lie ahead of us. So the fashions of this year are gone by the next. The idols of popular culture rise and fall with rapidity. The political and business leaders of this decade are gone in the next, displaced by peers. Even corruption and revolution on a grand scale are usually only a matter of a few decades, not lifetimes.

Nonetheless, rationality rarely prevails in knee-jerk reactions – so folk think of stagnation, even in the midst of this boundlessly energetic society we live in, packed wall to wall with constant, ongoing change. A subset of these beliefs on human longevity and stagnation involve the nebulous fear of a future gerontocracy, the rise of a self-perpetuating ruling elite of ageless individuals. Funnily, this is often voiced by people who are, unlike myself, perfectly comfortable with today’s Western governments. I say funnily because I have to ask: are not our present societies already gerontocracies? Isn’t any civilized society a gerontocracy? Who has had the most time to gather connections, a network, and make good use of them? The old. Who has had the most time to gather resources and invest them? The old. Who has had to most time to become truly talented and sought after? The old. Who has had the most time to work their way through a social hierarchy to challenge its existing leaders? The old. Where then will the elite and the leaders tend to arise? From the old.

Take a look at who just runs and influences companies, governments, knitting circles, successful non-profit initiatives, extended families, and so on and so forth for every human endeavor. Young leaders exist, but they are a minority among the ranks of the old. This is the natural state of affairs for any society that possesses enough technology to make thought and craft more important than strength and vigor.

All that is terrible in our present societies lies in the growing centralization of power, not the chronological age of those eagerly engaged in furthering the road to serfdom and empire. Even as power is centralized, there is still a year by year turnover of figures – even in the most defensible and corruptly secure positions of power and influence. They are largely kicked out by some combination of their peers and the mob in the sort of political anarchy that exists at the top, above the laws made for the little people. It is the rare individual who can stick it out long enough to be removed by the infirmities of age, even now, in this age of human lives that are all too brief in comparison to what is to come.

But back to the point. We live in a gerontocracy, and so did most of our ancestors. Yet change still happens just as rapidly as in past centuries when fewer people lived into later life in the sort of good shape they can manage today. Fear of some sort of comic-book gerontocracy emerging in the future seems, frankly, somewhat silly. But here is an article on the topic that treats such fears with a little more respect than I’m inclined to deploy.

Quote:

The human lifespan is set to get increasingly longer and longer. And it’s more than just extending life – it’s about extending healthy life. If we assume that the aging process can be dramatically slowed down, or even halted, it’s more than likely that the older generations will continue to serve as vibrant and active members of our society. And given that seniors tend to hold positions of power and influence in our society, it’s conceivable that they’ll refuse to be forced into retirement on the grounds that such an imposition would violate their human rights (and they’d be correct in that assessment).

In turn, seniors will continue to lead their corporations as CEOs and CFOs. They’ll hold onto their wealth and political seats, kept in power by highly sympathetic and demographically significant elderly populations. And they’ll occupy positions of influence at universities and other institutions.

So I asked James Hughes how society could be hurt if an undying generation refuses to relinquish their hold on power and capital. “Again, the question should be, how is society hurt when small unaccountable elites control the vast majority of wealth?,” he responded. The age of super-wealthy is pretty immaterial, he says, especially when most of the people in their age bracket will be as poor and powerless as younger cohorts.

Hughes also doesn’t buy into the argument that radical life extension will result in the stagnation of society. If anything, he thinks these claims, such as risk-aversion and inflexibility, smack of ageism and simple-minded futurism. “Seniors’ brains continue to make stem cells,” says Hughes, “and when we are able to boost neural stem cell generation in order to forestall the neurodegeneration of aging, older people will become as cognitively flexible as younger people.”

As noted in my comments above, the historical record shows that people at the top are not all that good at staying at the top for extended periods of time. There are always outliers, but they are rare in comparison to the vast majority of leaders and the famous who are just part of the churn, coming and going, displaced and quickly forgotten once their few years are done. The top of a pyramid is a challenging place to stand.

Reason is the founder of The Longevity Meme (now Fight Aging!). He saw the need for The Longevity Meme in late 2000, after spending a number of years searching for the most useful contribution he could make to the future of healthy life extension. When not advancing the Longevity Meme or Fight Aging!, Reason works as a technologist in a variety of industries.  

This work is reproduced here in accord with a Creative Commons Attribution license.  It was originally published on FightAging.org.

Review of Tyler Cowen’s “The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better” – Article by Kevin A. Carson

Review of Tyler Cowen’s “The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better” – Article by Kevin A. Carson

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The New Renaissance Hat
Kevin A. Carson
July 4, 2012
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Stagnation [for Carson]
Published by: Dutton Adult • Year: 2011 • Price: $12.95 • Pages: 128 •

Tyler Cowen’s thesis is that economic growth is leveling off and rates of return decreasing because we’ve already picked the “low-hanging fruit” (meaning innovations and investments that have high returns). The stagnation in GDP and median income in recent decades means “the pace of technological development has slowed down,” and the general population is benefiting less from new ideas.

I would argue, rather, that measured economic growth and income have slowed down precisely because of the increased pace of technological development.

The important trend behind the disappearance of “low-hanging fruit” is the decoupling of improved material quality of life from monetized measures of economic growth and income. Improvements in quality of life—although very real—don’t show up in conventional econometric terms.

Intensive development—increased efficiency in the use of inputs—isn’t necessarily reflected in increased money returns. Unless they’re turned into a source of rents by restrictions on competition, innovations that reduce production costs will benefit consumers in lower prices and better products.

Such rents are central to the business model of “cognitive capitalism”—the “progressive” model of capitalism pushed by Bill Gates and Warren Buffett. The most profitable industries in recent years have been those that depend on returns from “intellectual property.” But such artificial scarcities are fast becoming unenforceable, and technologies of abundance are growing so rapidly that they can’t be enclosed as a source of rents.

If anything, we can expect an implosion in metrics like GDP in the coming years, even as quality of life improves enormously.

Cowen almost gets it at one point. “[I]f our food supply chain harvests, retails and sells an apple for $1, that adds a dollar to measured national income.” Exactly: GDP measures value produced in terms of the total cost of inputs consumed—not the use-value we consume, but how much stuff was used up producing it. So anything that reduces the input costs of our standard of living seems to show up as negative growth.

Actually, Cowen contradicts his own thesis. He argues that official GDP figures exaggerate growth because so much of it is simply waste. But that undermines his treatment of reduced money incomes as a proxy for reduced growth in standard of living. If the additional portion of the GDP we spend on waste—and the hours we worked to pay for it—simply disappeared, we’d be better off by that much. He can’t argue both that economic growth is the best measure of technical progress and that the levels of growth that have occurred have too little to do with real productivity.

To be sure, Cowen does address the supposed diminishing returns of technological progress in terms of personal use-value. The blockbuster innovations with the biggest effect on our daily lives, he says, have already been adopted: antibiotics, automobiles, refrigerators, television, air conditioning. There’s been far less change in the character of daily life since 1960 than before. Aside from the Internet, recent innovations have been mostly incremental.

The Internet itself, Cowen argues, may be important in terms of personal happiness, but not of generating either revenue or employment. But to treat revenue generation and employment as ends in themselves—rather than a way to pay for stuff—is perverse. If the price of what we need falls because the amount of labor and capital needed to produce it falls, then we need less revenue—and less labor—for the same standard of living. The real significance of what Cowen mistakenly calls “stagnation” is that a growing share of our needs is being decoupled from revenue by technologies of abundance.

The reduced wage employment needed to produce our standard of living, as such, is a good thing. What’s bad is when artificial property rights enable rentier classes to appropriate the benefits of increased productivity for themselves. Our goal should not be to increase the number of “full-time jobs,” but to make sure that the productivity of the hours we do work is fully internalized.

Cowen focuses mainly on the Internet as part of the furniture of daily life—the fun of web surfing—to the neglect of a far more important benefit: the basic way society itself is organized, the relative power of the individual and networks versus large institutions, and the declining ability of hierarchies to enforce their will on us.

His focus on the objects of daily life ignores revolutionary changes in the way they’re made and on the structure of the economy. There’s not such a revolutionary change in going from picture tubes to gel panels, or from carburetors to fuel injectors. But there’s an enormous difference between John Kenneth Galbraith’s mass-production oligopoly economy and one of networked garage shops using cheap machine tools.

C4SS Senior Fellow Kevin Carson is a contemporary mutualist author and individualist anarchist whose written work includes Studies in Mutualist Political Economy, Organization Theory: An Individualist Anarchist Perspective, and The Homebrew Industrial Revolution: A Low-Overhead Manifesto, all of which are freely available online. Carson has also written for such print publications as The Freeman: Ideas on Liberty and a variety of internet-based journals and blogs, including Just Things, The Art of the Possible, the P2P Foundation and his own Mutualist Blog.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.