Graduating During a Recession Has Big, Long-Lasting Negative Consequences
Over the summer, there was a tendency for rising senior interns to ask me if I had any advice for someone set to be graduating into the face of a horrible recession. Unfortunately, the best advice I can think of is “hope the United States rapidly becomes more committed to equality and social justice” because the empirical evidence is that you’re screwed. Peter Orszag at the OMB Blog reminds us:
The chart below illustrates this effect: a one percentage point increase in the national unemployment rate is associated with a 6 to 7 percent loss in initial wages. The annual wage loss declines over time, but is still statistically significant 15 years later. Comparing the wages earned by the class of 1982 (a peak unemployment year) with the wages of the class of 1988 (a peak employment year) over the first 20 years of a career, the wage difference resulted in a difference of nearly $100,000 in cumulative earnings in net present value.
The long-term effect isn’t just a residual of low first-year wages: the author suggests that poor job match, lower prestige placements, and fewer opportunities for training and promotion also play a role. Other researchers have found similar effects: Oreopolous et al find persistent wage effects for Canadian college graduates; Bowlus and Liu find persistent wage effects for high school graduates moving directly into the work force, and other studies assess how the macroeconomy affects impact newly minted MBAs and economics PhDs.
Fifteen years later! If you’re graduating from college this spring, you’ll be sitting around at the age of thirty-five still suffering from the fact that Susan Collins, Olympia Snowe, Ben Nelson, and Kent Conrad decided to make the stimulus bill stingier in order to better bolster their credentials as preening centrists. When thinking about short-term inflation-unemployment tradeoffs, this sort of thing is crucial to keep in mind. Inflicting a high unemployment rate on the population has incredibly punitive and deleterious long-run consequences for young people.
65 Responses to “Graduating During a Recession Has Big, Long-Lasting Negative Consequences”
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October 24th, 2009 at 11:31 am
Cheap-Labor Conservatism sees this as a feature, not a bug.
October 24th, 2009 at 11:35 am
There’s no down-side to compromise, though!
October 24th, 2009 at 11:45 am
Damn! I should have graduated in the peak employment year of 1988. But I went through my undergraduate years at, er, a rather leisurely pace. Which means I got my sheepskin in 1990 (guess you could say I was on the six year plan!). Bad mistake.
Gotta hand it to those Bushes, though. They really do know how to throw a recession like nobody’s business.
October 24th, 2009 at 11:46 am
As an unemployed and looking-for-work graduate with a Master’s degree, this is a depressing set of statistics to start the day with.
Thanks for the pick me up!
October 24th, 2009 at 11:49 am
Matt:
What institution of higher learning did you graduate from? Obviously not from MY’s alma mater. It sounds like you should get your money back. Either that, or it shouldn’t be asking you for donations any time soon.
October 24th, 2009 at 11:55 am
“Cheap-Labor Conservatism sees this as a feature, not a bug.”
Yup. That’s also why the BushCo/Wall Street crowd pushed so hard for another illegal immigrant amnesty. And if they had succeeded how many more workers would be fighting now for the scarce jobs?
October 24th, 2009 at 12:01 pm
I’ve got a PhD in computer science and several years of teaching and research behind me, and for a variety of reasons (poor job market, spousal employment, my own missteps) I’ve ended up a giant tech firm doing computer stuff that’s kinda a related to my background, but mostly appropriate for 25 year olds with MS degrees in a specialty way different from mine.
Here’s how I’ve experienced it:
1. When you take a mismatched job, it’s really hard to focus doing well at that job. Even now, if I have any time, I often think of “how can I get back to doing what I really want to do?”.
2. The experience that I accumulate in my present job is largely unrelated to doing what I really want to do. It is just a paycheck. That makes me frustrated about the long term.
3. There’s a lot of area-knowledge that I still need to fill in for my new job. I can do the day-to-day tasks of my present job just grinding away using my general computer programming ability. But to move ahead in this job would require background knowledge and perspective that people usually fill with specialized degrees and years of internships– things that they do before they have kids. Making up for that while you have kids is really hard.
4. The whole thing just burns you out, you start viewing work as “just a paycheck”, and you caring more about the extra vacation days that come with seniority than the advances in rank and salary that come with effort.
October 24th, 2009 at 12:01 pm
For the record, 1988 wasn’t all that great a year, employment wise. Yes, we were improving after the recession and about to hit another recession, but it still wasn’t great.
Now, 1998 is a totally different story.
October 24th, 2009 at 12:01 pm
Yeah, Kafka. It’s a shame all those college graduates won’t have plum jobs picking lettuce, washing dishes or working in slaughterhouses.
October 24th, 2009 at 12:02 pm
so clearly, recessions are caused by poor quality college graduates.
October 24th, 2009 at 12:03 pm
Oh stfu with the partisan hackery. The failure of the stimulus accounts for like 1% of our problem. Mostly, we got f’d by the baby boomers. The economic policies of their presidents (Clinton + Bush), their lackluster business management (the greed in their own compensation and benefits especially by those “captains of industry”,the degradation of mentoring and ethics in the professions, outsourcing, union busting, the environment etc…all on their watch), the crushing tuition fee’s the baby boomer board of directors foisted on us when we were in school (how many of them started of life 150K in debt at the age of 23), and we are just starting the shoulder the huge burden of actually paying for their social security and healthcare…except that we don’t have jobs…In general the people responsible are from all over society, from the “bluest” districts as well as a the redest, so don’t just blame those 4 morons, the rot runs a lot deeper and a lot of the people you regularly shill for are just as compromised.
October 24th, 2009 at 12:06 pm
That’s also why the BushCo/Wall Street crowd pushed so hard for another illegal immigrant amnesty. And if they had succeeded how many more workers would be fighting now for the scarce jobs?
Um, zero?
Rather obviously, giving papers to underground workers doesn’t magically reproduce them. Instead, it allows them to do such things as join unions, enjoy the protection of labor laws, and access unemployment benefits. And the Democratic party, to its great credit, was (and is) a stronger and more reliable supporter of humane treatment for immigrants (and constructive reform of immigration policy) than the rapidly descending-into-permanent-minority party of “BushCo.”
October 24th, 2009 at 12:07 pm
so clearly, recessions are caused by poor quality college graduates.
Yes!! Especially of the top end schools. Considering that most of the “Masters of the Universe” probably have either bachelors or advanced degrees from Ivy League institutions.
October 24th, 2009 at 12:14 pm
For the record, 1988 wasn’t all that great a year, employment wise. Yes, we were improving after the recession and about to hit another recession, but it still wasn’t great.
Huh? We weren’t improving “after the recession.” The previous recession ended early in 1983 (when unemployment peaked near 11%). By 1988 unemployment was nearing its secular low. It’s true that a stock market correction in 1987 had begun to cause ripple effects into the financial sector, so the summer of ‘88 probably wasn’t a great time to get a job on Wall Street. But, however shaky the foundation of Reaganite prosperity proved in the end, 1988 was a solidly prosperous year for the US by any reasonable standard, and sadly powered the Elder Bush to a thumping victory in November.
October 24th, 2009 at 12:18 pm
Fucked over by the babyboomers, huh? Life is just so phenomenally simple, isn’t it?
October 24th, 2009 at 12:26 pm
This issue deserves much more attention than it gets. I’d like a quarterly report that assesses the conditions of the median college grad for various graduation dates, controlling for age, area of study
How can society ask people to be responsible as individuals (i.e. save for retirement) when society fails to be responsible for recognizing and restricting the impact of the economic environment such as that indicated by Mr. Orszag.
A lot more success is due to pure luck than to innate ability than many would like to admit. This issue is akin to flipping coins with H being success and T failure. Republican’ts want to blame the individuals for getting all T’s while letting the people who get all H’s keep what they “earn,” ignoring the role of luck and responsibility of the group to control risk. Is it any wonder that we are still fighting for universal health care coverage long after every other OECD nation has it?
October 24th, 2009 at 12:53 pm
Right, more stimulus would have helped. Pray tell then, why isn’t Japan a hopping economy now? They’ve been pouring stimulus at their economy for twenty years now, and the net effect has been this: utterly unsustainable levels of debt.
Quick, someone explain that to both Matt and Krugman.
October 24th, 2009 at 12:57 pm
[...] Matthew Yglesias points to a post from the blog of the Office of Management and Budget concerning the future of recent graduates during a recession. Not only do they get screwed when there aren’t enough jobs for them (20-24 year olds have an almost 15% unemployment rate), but there are long term effects because they start off with lower salaries. [...]
October 24th, 2009 at 1:26 pm
First, Matt Yglesias wrote:
… and then, wiley wrote:
Someone has to pay for all that debt runup, and I’d prefer Americans pay it rather than someone half way across the world just because the Banksters on Wall Street figured out how to sucker some pensioner in Iceland into believing that American Real Estate never goes down in value and so it’s somehow a safe investment. It’d be nice if we could have the Boomers soley pay for it, but oh well.
October 24th, 2009 at 1:29 pm
Way to take a good point and then f* it all up by adding a [truly] stupid comment.
Andrew Sullivan once wrote that Drudge told him that the secret to blog succes was to realize that it’s a broadcast and needs constant new material. Yglesias excels at this, he really is quite good at locating intersting material and posting it, sort of like a marvelous indexing service. Evidence of intelligence and curiosity.
Unfortunately, his comments on many of these posts are iditoci and reveal his ignornace of the topic, as is regularly demonstrated in the comments by people who actually know the subject in question. Geez, even beat reporters in the MSM have some clue what they’re talking about. Evidence that MY is a dilletante who thinks he can get by on cleverness.
October 24th, 2009 at 1:32 pm
Forget it James. There is no amount of evidence you can show them to convince them that a government dumping huge amounts of money at make-work projects fails to do anything except run up huge amounts of debt. For people like Matt and Krugman, government spending is the solution to every problem. In fact, if you can’t spend government money on it, it can’t even be classified as a problem.
October 24th, 2009 at 1:38 pm
Jasper, you seem to be pretending the immigration bill didn’t ALSO have a ‘guest worker’ provision to import new, cheap labor in addition to the granting amnesty to illegals already here.
But hey, who gives a shit about reality if it only affects the working class.
October 24th, 2009 at 1:40 pm
The U.S. military is a make work program for people from the south.
Anyway Gene,
You are a moron and a fool if you think that MY is wrong that much. I wonder what right wing think tank employs you, or maybe you work for an idiot republican congressman.
October 24th, 2009 at 1:42 pm
“They’ve been pouring stimulus at their economy for twenty years now, and the net effect has been this: utterly unsustainable levels of debt.”
James you are right! This is why JPY interest rates are so high. And why the JPY is so weak vs other currencies. It is the unsustainable debt that is driving their economy into the ground!
October 24th, 2009 at 1:50 pm
I began college at the end of the Dark Years of Jimmy Carter. 1979. I started at the age of 19, having spent a year out of high school fucking around and making money -about $220/week as a busboy and line cook with a one night a week bartending gig. I worked roughly 35 hrs/week, making, what, about $7/hr -which was ok money back then. I didn’t know it, but I made enough money in that one year to easily pay for college.
I went to the University of Buffalo, pretty good school, top 40 or 50 in the country at the time. Tuition averaged about $580 a semester. Books, supplies, sundries, misc items (bongs), name it -I couldn’t spend $150 on necessary items in a semester if I tried.
I was a History/Poly Sci type person so the workload was never crushing which allowed me to work about 20 hr/week, share a shithole apartment with some clowns and have a functioning car.
I graduated with a History Degree in the fall of 1983. It took me four and half years; I dragged it out an extra semester -mainly because I liked college and it was unbelievably cheap.
When I graduated, I was about $5,000 in the black AND had an apartment, a paid for car, and a library. In fact, right behind me on a shelf is the Will and Ariel Durant’s Story of Civilization -11 volume set- which I bought used but in perfect condition, just for the hell-of-it -cause I had some extra cash- at a college book store in 1980 -for 18 bucks.
My story is not unusual.
October 24th, 2009 at 2:00 pm
Recessions have always been hard on new graduates and have always had bad effects for their entire lives. What is bad is that creeping credentialism has just made it harder. Even though college is more expensive and jobs harder to get, employers and the elite keeping uping the requirements from degrees at selected universities, to unpaid internships, and to continuing education.
The long term problems are the very high tax rates that Employers and employees face in the long term to pay off the current debt, the regulatory environment that will discourage the private sector from creating jobs (See environment, transportation, health, and labor regulations).
October 24th, 2009 at 2:04 pm
re: kafka
“Cheap-Labor Conservatism sees this as a feature, not a bug.”
Yup. That’s also why the BushCo/Wall Street crowd pushed so hard for another illegal immigrant amnesty. And if they had succeeded how many more workers would be fighting now for the scarce jobs?
If you’re a college graduate who is competing with illegal immigrants for a job, you majored in the wrong subject. Good job wasting your money on a useless education.
Of course, if you graduated college and are making ignorant comments like this, I can see why you’re competing with illegal immigrants for jobs at the local fast-food restaurant.
October 24th, 2009 at 2:08 pm
Obama promised to keep unemployment at 8% if we gave him 700 billion$ to pay off his corrupt Acornistas.
He got the money and we got the shaft.
Now the Loony Lefties have to cast about for an excuse.
For the longest time it was “Oh but the stimulus hasn’t begun to work, you just wait!”.
Ol Honest Joe Biden was just a’crowin about what a Suckcess the Obama Stimulus was.
Well Romer said yesterday that’s it, the Stimulus has worked its magic, shot its wad.
WooHoo 30,000 jobs for 700 billion$!
That’s some bragging rights there Matty.
Now it is all the big bad Republicans fault that Obama lied.
And lied.
And then lied some more.
But wait, Progs to the rescue!
More deficit spending!
How Bushit of Barry.
How Cheneyesque the MattyKrugman mantra that Deficits Don’t Matter.
Well long as it’s Obama and Pelosi doing the screwing over.
How well does the Prog Program work?
Just ask the Japanese.
That lovely country is now littered with make work projects abandoned mid stream because they finally really truly just ran out of even funny money.
Gives a whole new meaning to those bridges to nowhere.
October 24th, 2009 at 2:11 pm
One problem with Japan’s stimulus was that it was directed to unproductive projects — bridges and roads that Japan didn’t need, because it had an overdeveloped infrastructure. Whereas one of the things Susan Collins cut from the stimulus was money for swine flu preparedness, which is currently having knock-on effects in the economy (when people get sick, they stay home).
But you know, we should continue to listen to morons who spent the last eight years aiding and abetting the administration that left the economy in the sorry state that Obama has been trying to ameliorate. Grab a mop, punks.
October 24th, 2009 at 2:49 pm
A bunch of people can’t seem to see the forrest for the trees.
While it is true that stimulus increases debt, it would be foolish to think that it is wasted money. People go into debt all the time for the purpose of increasing their standards of living. If there wasn’t “stimulus” spending, if the public did not use deficit spending, we would still be living in feudal conditions. It is the MOVEMENT of money that keeps the economy going, and when for psychological or natural causes money stops flowing, government spending becomes the only way to keep the flow moving (otherwise money sits in your wallet, your safety deposit box, your can buried in the backyard and becomes simply worthless papaer!) Complain all you want about stimulus/deficit spending (and some is clearly more effective than others), but it is necessary at the moment to keep any flow of money moving. Think homes would be selling if there wasn’t the $8k tax credit to new homebuyers? Or the car business would have sold anything in 09 without the cash for clunkers? Sure, you may not have benefitted, but if your neighbor goes broke, he can’t pay you for the services you might provide, so YOU become unemployed, and when his house is foreclosed on, yours becomes worth less. Free market your way out of that one folks. Because there were an awful lot of market crashes, bank runs and depressions prior to the New Deal.
As for the baby boomers being the cause of the financial mess, I think this is partly right (although the original poster is quite the whiner, as if someone owes him something better!). Making room for such a large group of college educated employees has come at a price, first in the inflation of the 70s and now in the future dangers of healthcare and end of life care costs. On the other hand, the baby boomers did bring about a world with much greater freedoms/opportunities for those who are not white, european ancestered, males, and this is not such a small thing. By bringing more of the “third world” people(and the lesser priveleged here at home) into the world economy through changing norms of economic morality, they have also caused a greater number to share in the increasing prosperity. Thus the rising tide has lifted an awful lot of boats, not just the few as before the boomers. Don’t mistake that past for fair, that prosperity was found on the backs of others who did not share in it. This does not excuse the rampant greed and materialism that has accompanied my generation, only contasts with it.
Most of the world is much better off now than it was in 1945-1960, and even though priveleged white american men may have recieved less than the major share of those advances that fact does not mean that somehow this generation let the world down. Its just that now you have to share the worlds prosperity with more of the worlds population, and the benefit to you of that sharing is generally greater freedom and peace. I don’t think your generation will be drafted into ww3 or fear it like ours did. You can go on make a living without worry that your neighbor’s civil rights are violated because someone doesn’t like the color of his skin or his religion, that countries in Africa aren’t colonialized, with their natural resources stolen from them. there is still more work to do, but the greatest cause of what you see as destruction of the american dream is mostly the sharing of wealth with the rest of the world and those that did not recieve a share here at home.
October 24th, 2009 at 3:18 pm
I just found my records. Tuition was $380, not $580, in 1979 and 1980 -per semester- and went up to $390 in 1981,82, and 83. I also called my brother. He went Indiana University. VERY expensive school at the time, compared to New York’s superb SUNY system of the 70’s and 80’s. He paid $3,800 for a year, tuition, room, and board. He came out of college in the black. He took a year off from school, in 1981, and played the French Horn for the Santiago Philharmonic in Chile, and made 22 grand. Came back, paid for school, and banked money.
My brother might be an outlier but no one I knew in high school that got a college degree experienced any crushing debt. There was no such thing. If you chose to, you could find ways to at least come out even without putting undue stress on yourself.
A really good friend of mine took up residence in College Station,TX, and got a job cooking in Steak House for a year because -I believe?- tuition was free back then in public colleges if you were a Texas resident. Graduated from Texas A&M. No debt. I think California had a very similar approach, because I remember another friend of mine moved to California to attend UC Santa Barbara because it was so freaking cheap if you were a resident.
What young people are experiencing right now -fighting impossible odds to find ways to afford school- are the DIRECT result of the unleashing of Free Market Forces. I know all their horror stories, bartending for them the last 10 years. It is national disgrace. It is a pathetic joke.
October 24th, 2009 at 3:39 pm
Max424,
Texas did charge tuition in 1980. However, all of the state univesities in Texas charged the same rate. There were student loans but they were capped at a fiarly low rate. However, a much lower percentage of 18-21 students were college students than today. The universities would look primative to today’s student with no computers, no health clubs, the dorms were generally crummy and the classes were large.
Students today would not attend the university of 1980. Also, the job market in 1980 was horrible and many of the baby boomers were underemployed compared to today. What affects expectations today is the late 1990’s when anyone with a degree in sociology could get a high paying job with a dot.com. Those jobs do not exist today and the good times spending and regulations have really hurt job creation. If you want new college graduates to get a job and to have a job on a career path, then grow the economy. However, it seems that the Obama Administration has zero interest in long term job growth based upon their policy proposals.
October 24th, 2009 at 3:49 pm
“What young people are experiencing right now -fighting impossible odds to find ways to afford school- are the DIRECT result of the unleashing of Free Market Forces. I know all their horror stories, bartending for them the last 10 years. It is national disgrace. It is a pathetic joke.”
Umm, not so much. It’s mostly the guaranteed loan and grant programs that let colleges ramp prices up to that level, and then above it for anyone who isn’t eligible for the programs. What we’ve ended up with, all through good intentions, is a system where only the poor (on aid) and the wealthy can afford school. Everyone else has been thrown into debt hell.
October 24th, 2009 at 3:54 pm
“the best advice I can think of is ‘hope the United States rapidly becomes more committed to equality and social justice’”
As far as I can tell, CAP is one of the few DC organizations that pays its interns. As such, I presume it gets a very high-quality applicant pool. Real strivers. Great grades. Good schools. People who are going to be hugely successful.
So, if progressives desire to redistribute money from the haves to the have nots…
And our system really is an out-of-whack non-meritocratic old-boys club littered with nonsensical signals like good grades at “prestige” schools…
And if the system really does close lower-class people out of this old-boy’s club…
You would think that these interns should really hope that the United States DOESN’T become more dedicated to equality and social justice. You know… so they can keep more of their ill-gotten gains?
October 24th, 2009 at 4:28 pm
@ 30
LOL at a baby boomer calling someone out for whining. Cut your hair, get back to work, and so help me if I have to hear you talk about your “feelings” one more time I’ll come back from the grave and give you something to cry about!
October 24th, 2009 at 5:23 pm
trust me, my dad wouldn’t argue about me calling out the original whiner. He might laugh that I finally understood what he meant though.
October 24th, 2009 at 5:24 pm
# 30
Your generation is not responsible for any of that good stuff. That was the done by political leaders from the previous generation elected by voters of previous generations. The great leaders of your generation who were active in that era were who? Abbie Hoffman and Rubin? A schizophrenic drug addict and a yuppie sell out? Jane Fonda?
Boomers did not get into positions of actual leadership and power until the 80’s then they discovered how good greed is, and f’d up the country for the generations that followed.
And I’m not whining, I’m fine, I’m one of the few of my generation that just might make it out pretty good. But I see legions of my peers, on the whole much more well credentialed and harder working at their age then the boomers were at theirs and I see the kind of prospects and problems we inherited…and I get mad. We had no say in the system, you were the generation in charge, and objectively speaking we are pretty f’d.
October 24th, 2009 at 5:41 pm
Boomers fucking blow and their children are even more entitled assholes.
October 24th, 2009 at 5:58 pm
Then your dad was jerk, like his son. The original poster you futilely tried to attack wasn’t whining, just telling it like it is. The same things he pointed out started happening in Japan in the 80’s and 90’s, and they continue there to this day. They were happening here during that time as well, only the U.S.’s priveleged position in the international economic system allowed it to cover up its problems for longer. The chicken’s are coming home to roost now though, and the children of the boomers especially are left to deal with the consequences. Do you think its a coincidence that, after giving the country only two leaders, the electorate went with a non-boomer in 2008, or that the majority of his initial support came from young people? Self entitled assholes boomer children might be, but they’re not stupid.
October 24th, 2009 at 8:10 pm
I thought the effects would be worse.
October 24th, 2009 at 10:19 pm
And when the economy picks up again, employers won’t want someone who was unemployed or underemployed during the lean years. They’ll be looking for someone fresh out of college.
Such a person will be too old at 24, and probably have a mountain of college debt. But the law says it’s not age discrimination until you reach 40.
October 24th, 2009 at 11:44 pm
so, lets see if I have this straight- ALL good of the past 40 or so years was done by others than boomers, but all bad was done by them (and not by some of them, but ALL of them!). Todays young people are smart enough to elect people other than boomers, but boomers can not take any credit for gains of past 40 years because leaders were not from their age cohort (even if we did help elect those leaders).
And stating that “their lackluster business management (the greed in their own compensation and benefits especially by those “captains of industry”,the degradation of mentoring and ethics in the professions, outsourcing, union busting, the environment etc…all on their watch), the crushing tuition fee’s the baby boomer board of directors foisted on us when we were in school (how many of them started of life 150K in debt at the age of 23), and we are just starting the shoulder the huge burden of actually paying for their social security and healthcare…except that we don’t have jobs” is not whining, its just stating a fact, like how unfair it is that I can’t have the world exactly the way I want the day I graduate college. (and after all, we know all those guys making those bonus’ on Wall Street these days were born in the 40s and 50s! None of them are in their 30s and 40s now, are they.)
Of course, when we boomers came of age, all was good, no terrorists to worry about (of course we had nuclear war drills ecvery day in school) no social problems to resolve, ethics and race relations in America were fine, college and universities were open to almost everyone (even though way fewer of us attended as a percentage than todays youth), and the jobs we had guaranteed involved squatting in rice paddies? Nah, no burdens on us, life was a walk in the park. Its all good dude, don’t let life get you down, I know that we are the group that took you away from Eden, but I have faith you’ll get us back there.
Isn’t it just possible that life is hard for each generation, and they are forced to fix the past generation’s failures and find a way to make the world the way they want it to be?
October 24th, 2009 at 11:48 pm
Interesting point mim. If I was about to graduate from college (or just did) without a job, I would consider grad school for a couple years. Chances are, the economy will be much better.
October 24th, 2009 at 11:53 pm
Oh, and my fathers bully-
you can point to Japan all you want, but the truth is that economically the individuals in that nation are on pretty safe footing (as is the government). They have much more of a social safety net than the US. for a further look at Japans actual economic situation, look here:
http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=10&year=2009&base_name=trashing_japan_to_push_deficit
The whole purpose of this post (and study included) was to show that by limiting a stimulus, it costs young people for years to come. Not that by creating a deficit you are spending young people future, but rather in asmuch as you lower unemployment, you are saving it.
October 25th, 2009 at 12:00 am
I sort of disagree with the apocalyptic tone of the blog post. (”the only hope you have is for a liberal agenda” seems a bit too revolutionary for me).
Instead of worrying about the government’s ability to redistribute wealth, if you in your 20’s and unemployed, you’d be much better off fighting hard in the labor market. Try to enhance your resume. Find your passion and work hard.
October 25th, 2009 at 12:49 am
@Alan-
I don’t disagree with the economic analysis you posted. I was, as was the poster you were attacking, making a sociological point. I’m actually not even sure if I fully agree with it, but I don’t think its something that should just be dismissed out of hand as “whining”. Here is a link to the kind of thinking that I causes me to at least give such ideas a fair consideration: I also don’t disagree with the idea that every generation faces struggles of its own. I just saw you pulling out the “whiner” card and decided to call you on it.
October 25th, 2009 at 1:41 am
James Robertson: “What we’ve ended up with, all through good intentions, is a system where only the poor (on aid) and the wealthy can afford school. Everyone else has been thrown into debt hell.”
James, “guaranteed loan and grant programs that let colleges ramp prices” is exactly what I am saying. Those are market forces, James, doing what they’re supposed to do, searching for a profit. Basically we took non-profit organizations, publicly funded and state run university systems, and privatized them. And yes, deregulation allowed these institutions to rake in big profits, and, without a doubt, the new system made many, many, individuals, filthy rich.
But the college and university system I encountered in 78-79 worked in the favor of young Americans. It wasn’t perfect, far from it, but there was a sound foundation there that we as a country could have built upon and improved. But instead, we decided to tear it down.
And that is a shame, James, in my opinion. When I was at University of Buffalo there was no question in my mind that looking 20 years into the future -the year 2000- all American high school graduates would have had the option -the option- to go pursue a secondary education without incurring ANY debt. I mean, at the time we all thought America was on a path to 70% graduation rates. On a path to greatness.
And one thing I would like to correct among the young people who comment on the blog and think that prospects were worse for high school graduates in 1979. Nothing could be further from truth. There was CHOICE.
One: College was cheap. Community colleges were dirt cheap.
Two: If you weren’t inclined to go college, there were union jobs. Good ones. Yes, it usually took 2 or 3 years of on and off again, part-time hours to establish enough time in to get a union card. Sometimes longer. But if you had a plan, and stuck to it, once you had that card you were 10 years away from paying off a house.
I know. I almost took a job at the Chevy Plant here in Tonawanda -in 1978. If I got couple of breaks I would have been making $18-20/hr two year later. I would have been rich at the age of 20. It was tough to pass up, believe me, but I chose the college route.
October 25th, 2009 at 10:23 am
So let me get this straight.. You’re saying that adding even more crushing debt to the future burden of repayment for those entering the work force currently will actually help them long-term? Considering that the 2 rounds of stimulus have been unprecedentedly large in comparison to GDP, the argument that the government is being “stingy” is ridiculous.
Arguing that this is an “equality and social justice” issue is equally laughable, since an entitled feeling of wanting a great job and a pampered life handed over on a silver platter does not qualify. Ask people who are starving to death in the world how that compares on the “equality and social justice” scale.
October 25th, 2009 at 11:45 am
#48-
Most of those people starving to death around the world are in their circumstances because a very few people feel they are entitled to be not just fabulously wealthy, but ungodly, obscenely wealthy. So wealthy they usurp and/or corrupt governments and their ability to provide for the welfare (a word found in our own Constitution’s preamble, oh horrors!) of the people they are presumed to represent.
October 25th, 2009 at 12:06 pm
You’re saying that adding even more crushing debt to the future burden of repayment for those entering the work force currently will actually help them long-term? Considering that the 2 rounds of stimulus have been unprecedentedly large in comparison to GDP, the argument that the government is being “stingy” is ridiculous
First, yes, the “crushing debt” will be less of a burden than the effects of a few years of more severe unemployment, both on the individual and on the gdp as a whole. Remember, the recession is here. The question is how best to minimize its effects both long and short term. It seems clear that more stimulus was needed not less to maximize its benefits, so in effect, yes, the government has been stingy.
Second, it is not close to being unprecedented, as the expense for WWII was a much greater stimulus, and clearly had no so crushing effects, either in its overall goal nor in its long term economic effects. (I also believe, although I may be wrong, that ther have been much greater deficits /gdp in the past that have been handled without a great decrease in americans well being.)
October 25th, 2009 at 1:17 pm
#49 – I agree that starvation is often caused by corrupt wealthy individuals, though that’s a very complicated topic with many causes. I think that it’s fairly obvious from the trillions of dollars doled out to bail out extremely wealthy banks (including the very well connected at high levels running JP Morgan and Goldman Sachs) shows that the US government has a high level of corruption.
#50 – Regarding point #2 (related to your first point as well), here’s a website with a nice visual comparing large expenses by the US government to the current bailouts: http://www.ritholtz.com/blog/2009/06/bailout-costs-vs-big-historical-events/. It’s not in the picture, but within that information set it shows the total US cost for WWII inflation adjusted, as $3.6 trillion. That site shows $15 trillion as the current potential liability, or 3-4 times the cost of WWII. Obama’s appointed special inspector general for TARP (Neil Barofsky) has a more recent and gloomier worst case of $23.7 trillion, based on potential exposure to insured financial assets: http://www.bloomberg.com/apps/news?pid=20601087&sid=aY0tX8UysIaM
It’s hard to have an apples to apples comparison with debt levels vs. GDP now vs. in the past since there’s a lot of spin in that area and many factors have changed. However, the peak of debt to GDP after WWII from sources I’ve read was around 120%. Official numbers currently have the US debt at around 90-100% of GDP, but that excludes large portions of the aforementioned bailouts, the $50 trillion well documented in unpaid for future Medicare payouts, social security, etc. This also does not include personal debt ratios, which is related due to taxpayer ability to absorb public future liability and debt. Just based on the numbers I’ve mentioned, I’d say it’s very easy to argue that the US is in the hole above 400-500% of GDP using conservative estimates. Post WWII the US was also the world’s biggest industrial power, biggest oil producer, and had a roaring economy due to pent up demand after a decade and a half of misery.
I think it’s very easy to see that we’re in uncharted waters fiscally.
October 25th, 2009 at 5:20 pm
“Instead of worrying about the government’s ability to redistribute wealth, if you in your 20’s and unemployed, you’d be much better off fighting hard in the labor market. Try to enhance your resume. Find your passion and work hard.” -thehova
SHUT. THE. FUCK. UP. YOU. FUCKING. IMBECILE.
Your comment is so wrong-headed it’s hard to say exactly where you’re wrong. If what you’re claiming is “you just need to make prettier cover letters and resumes!” you fail because lots of places barely bother to read any after the first 500 they receive for the job. And if everyone just spends all their time one-upping each other in the signaling department, that doesn’t change the fact that there are still just as few jobs for just as many applicants as before.
If what you’re claiming is that people just need to increase their human capital, you’re still an idiot because the issue is cyclical unemployment. There simply aren’t jobs out there. For instance, I graduated from MIT with a B.S. in Physics with a 3.8 GPA, with a pretty sharp mind and lots of scientific/programming skills, if I may humbly say so. Right now I’m doing technical support work over the phone telling people not to use their CD drive as a drink holder, getting paid $14/hr with no benefits.
And I’m a lucky one, since I’ve actually gotten a job, which is more than I can say for lots of other recent college grads. And by taking that job I’m also preventing someone else from taking it. And if the economy ever recovers, I can look forward to HR looking at my resume, seeing that I’ve had a shitty job for three years, and throwing it away before calling the new fresh college grads who don’t have a resume stain.
October 25th, 2009 at 5:44 pm
I’m glad your not panicking Zephyrus. The whole idea that companies won’t consider difficulties in the job market when they look at resumes seems off to me.
October 25th, 2009 at 8:21 pm
You don’t have to sit down and take it, folks.
Be entrepreneurial.
October 25th, 2009 at 9:56 pm
“If you’re graduating from college this spring, you’ll be sitting around at the age of thirty-five still suffering from the fact that Susan Collins, Olympia Snowe, Ben Nelson, and Kent Conrad decided to make the stimulus bill stingier in order to better bolster their credentials as preening centrists.”
you are out of your mind.
where is the chart that shoes true wage loss with respect to inflation and national debt? The crux of the argument that the Stimulus Package being “stingier” is the cause of our problems is being unable see the forest from the trees.
October 25th, 2009 at 10:12 pm
Maybe you could get some work underground. There are a lot of elderly people and shut-ins out there who could use some personal help with their computers, cell phones, remotes, etc. Don’t make them feel stupid or hint that they ruined everything for you. Be nice. Be patient. Get a little money from a lot of different people.
It is a terrible job market. I’m a bit worried about this generation. Graduating college and not being able to find a job while carrying debt is discouraging, to say the least.
October 25th, 2009 at 11:48 pm
what a bunch of victim crock! Guess that’s what we get for giving all of you trophies in soccer, including the losers!
October 26th, 2009 at 12:46 am
I just found my records. Tuition was $380, not $580, in 1979 and 1980 -per semester- and went up to $390 in 1981,82, and 83. I also called my brother. He went Indiana University. VERY expensive school at the time, compared to New York’s superb SUNY system of the 70’s and 80’s. He paid $3,800 for a year, tuition, room, and board. He came out of college in the black. He took a year off from school, in 1981, and played the French Horn for the Santiago Philharmonic in Chile, and made 22 grand. Came back, paid for school, and banked money.
Max, my parents paid something like $50K+ per annum for my History and Economics degrees.
So, yeah, shit’s gotten a little completely fucking ridiculous.
October 26th, 2009 at 3:44 am
I think we got a few assholes from leaving all those kids at home to fend for themselves in the eighties, too.
October 26th, 2009 at 6:47 pm
[...] If you’re planning on graduating from college during a recession, it might be a good idea to figure out a way to postpone it. Otherwise, you might see significant wage reductions for the first 15 years of your career. [...]
October 27th, 2009 at 9:25 am
Indoctrinated Left-wing progressive college students are ignorant!
October 28th, 2009 at 2:37 am
[...] if I needed more bad news: graduating during the recession has long-lasting negative [...]
October 28th, 2009 at 9:32 pm
[...] For all the disheartening specific quantitative data points – both short- and long-term – regarding the tenuous state of youth employment, the vague and impersonal nature of modern [...]
October 28th, 2009 at 10:32 pm
I graduated in 2007 as a mechanical engineer worked for 2 years and let go, because my company is moving its divisions to china and idia. They are not moving for a short term. No one moves countries for a year or two. They move for a decade or so. I have been un-employed for seven months and no luck even with more than 300 applications and followups.
I believe that the new grads are screwed big time and they will be for years to come because of jobs leaving North America for a long time.
I also believe that problems do not just appear but they grow and grow. Baby boomers are to blame a lot because they could have been less gready and think more in long term. But also that is how the times where back than. The country needed to be build and therefore jobs were aboundant. Now days the country is build, infrastructure is good. There is not so much need for a lot of work.
I am in 50$ debt from school tuition at the age of 27 and jobless. Is this the future that we should expect for the average educated americans?
Something is radically wrong and its roots come from the Baby Boomer times. Boomers please retire and let the young work as well. We need to create families and have kids as well, and without a job or money how are we going to do that. Baby Boomers are now day new family and dream killers.
Do the young people a favor and retire already to your sweet nice detached homes, so the young people can suffer in peace while paying the rent on shitty apartments that probably you own anyway.
October 28th, 2009 at 10:33 pm
I meant $50,000 .