The Kids Are (Not) Alright

Tyler Durden's picture

While the U.S. student loan debt “crisis” might be the primary concern associated with the youth population here, this morning's dreadful European data confirms that 15-24 year olds around the world are struggling with a more widespread and pressing issue: high unemployment. In 2012, the youth unemployment rate was 12.4%, projected to grow to 12.6% in 2013 – nearly 3 times the rate of adult unemployment, which stood at 4.5% in 2012. Developed economies, along with the Middle East and North Africa, have some of the worst youth unemployment rates in the world: the US’s unemployment rate for 15-24 year olds in 2012 was 15.4%, according to the Current Population Survey, more than 3 percentage points above the world average. ConvergEx's Nick Colas notes there is one exception to the U.S.’s high rates, though: for all the talk about how student loan debt has crippled young adults in the U.S., we actually have one of the lower unemployment rates for young adults with a tertiary (college) education – better, even, than many countries with free or low-cost universities (though the 'type' of jobs may be questionable).


Via ConvergEx's Nick Colas:

Many of the dire unemployment numbers we hear around the world rest almost entirely on the shoulders of the youngest demographic cohorts.

Over the past and next few weeks in the U.S., more than 5 million teens and young 20-somethings walk across the stages at schools across the country to receive their high school and college diplomas. Many, undoubtedly, are headed to college or graduate school for higher education. More, meanwhile, are entering the workforce, looking for jobs ranging from analysts on Wall Street to cashiers at the local grocery store. Outside the U.S., too, young people will be seeking employment as they leave school or home, searching for a job. Any job.

Unfortunately, employment prospects are generally dismal for young people (15-24) around the world; particularly in developed nations such as the United States. 72.9 million persons aged 15-24 were unemployed in 2012 worldwide, according to the International Labor Organization, accounting for a full 12.4% of the youth workforce. For comparison’s sake, 122.5 million adults were unemployed worldwide last year, and the adult unemployment rate stood at 4.5%. And if that wasn’t bad enough, the ILO projects that youth employment will growth to 12.6% this year, and to 12.7% by 2014.  By these numbers, it becomes clear that the worldwide jobs recession is primarily one of youth unemployment, an underappreciated fact with implications for policymakers around the globe.

And while youth unemployment is uncomfortably high in every corner of the world, some areas have it worse than others. Consider the following points, based on data from the ILO’s “Global Employment Trends for Youth 2013” report:

  • For starters, the global youth unemployment rate has grown almost a full percentage point since 2007, up from 11.5% (69.9 million people) to 12.4% (72.9 million). Each year, unemployed youths account for nearly 25% of the global unemployment rate and make up nearly 40% of the unemployed. This despite the fact that they make up about 17.5% of the world’s population.
  • The single most unemployed region for younger adults in the world is the Middle East, which had a 28.3% unemployment rate for youths in 2012. Women in the region were almost twice as likely to be unemployed as men with a 43.5% unemployment rate – the highest rate by gender, followed by females in North Africa who face a 36.7% unemployment rate. The highest unemployment rate for young males is also in the Middle East, at 25.2%.
  • The highest participation rate for youths is in East Asia, where 59.8% of 15-24 year-olds consider themselves part of the labor force. The region also has one of the lowest unemployment rates for youths across the world, clocking in at 9.5% for 2012. The lowest participation rates, meanwhile, are found in the Middle East and North Africa. Not surprisingly, there is a fairly strong (r²=0.67) correlation between participation rates and unemployment rates for youths around the world: the lower the unemployment, the higher the participation, and vice versa.
  • The average youth is 2.8x more likely to be unemployed than the average adult, but youths in Southeast Asia and the Pacific are unemployed at 5.2x the rate of the adult workforce. The lowest youth-to-adult unemployment ratio is in Sub-Saharan Africa, where youths are only twice as likely to be unemployed.
  • According to the OECD, 37.6% of youths in OECD countries have been unemployed for 6 months or longer. Mexico and Korea have the lowest instances of long-term unemployment for youths with only 3.3% and 3.4% of the unemployed remaining without work for 6+ months, respectively. On the other end of the spectrum, more than 50% of the youth unemployed in Eastern and Southern European countries – the PIIGS in particular – have been so for 6+ months. Slovakia has the highest rate at 70.7%.
  • Similarly, the OECD reports that an average of 27.1% of youth workers in 2011 (the latest data available) were working part-time. Somewhat surprisingly, the countries clocking in with the highest percentages of part-time workers are not where you might expect: the Netherlands, Denmark, and Norway had the highest rates of part-time employment for youths in 2011 with rates of 65.8%, 59.7%, and 49.3% each. These high rates of part-time employment, though, may also help explain generally lower youth unemployment rates in these countries.
  • Temporary work also accounts for a good portion of youth “employment”, according to the OECD, with member countries reporting that 36.1% of youth employees are only temporary workers. Slovenia reports the highest rate with 74.5%, while North America and the UK are the lowest at 14.5% and 13.5%.

Where does the U.S. all fit in this? Well, we certainly can’t boast the lowest unemployment rate for youths in the world, and our youth participation rate (55.2%) isn’t anything to write home about, we do have lower incidences of 6+ month unemployment, part-time work, and a lower ratio of youth-to-adult unemployment. Youths in the US also have a better chance of finding a job than their counterparts in other developed economies and the EU, according to the ILO: the unemployment rate for 15-24 year olds here is 15.4%, while the “developed economies and EU” region had an average of 18.1%. Only Asia and Sub-Saharan Africa, in fact, have lower unemployment rates.

What really sets the US apart from most other nations is the unemployment rate for college-educated youths: we have one of the lowest in the world, with only 4.9% of young college grads (under 24) currently unemployed. The highest rate, according to the OECD, is in Greece, where 48.6% of young college-grads are currently unemployed. Spain follows with 35.0%, and Romania comes in third with 29.3%. The Netherlands, Germany, and Norway are the only OECD countries with similar rates at 4.4%, 4.5%, and 5.4%, respectively. It is worth noting again, though, that these countries also have some of the highest rates of part-time work for young people.

The important thing here is not necessarily that a college education yields better employment prospects – we already knew that. This fact applies around the world, even in countries where the unemployment rate for young college grads is 50%+: even in Greece the college-educated are still better off than their less-educated peers.

Even the U.S. isn’t exactly the “Utopia” for jobs for young college grads: only about half of 2013 grads have a job offer, according to the National Association of Colleges and Employers. Many will also be stuck with part-time jobs as they seek full-time employment, if they are able to find a job: 7.8% of 15-24 year olds in the U.S. (not distinguished by educational attainment) are working part-time for economic reasons. And most importantly, the majority of recent grads (60%, according to College Board) are laden with student loan debt, at an average of $26,000 a pop: most part-time and some full-time salaries will not be enough to pay back these debts on time, if at all.

If we take a closer look at recent graduates’ employment and earnings, though, the employment and student loan situation for these young adults becomes a bit more optimistic. Here are a few data points to paint the picture:

  • According to the NACE, employers plan to hire 2.1% more new college graduates this year than they did in 2012. That indicates a slightly better job market for college grads compared to prior years. Though only 49.5% had been offered jobs at the time of the report, it is likely that most job-seekers will find a job over the next 3 years, given that the unemployment rate for 15-24 year-old college grads is only 4.9%.
  • The average salary for the class of 2012 was $44,455, according to the NACE, 3.4% above the starting salaries for the class of 2011. It’s also the best starting salary since 2008.
  • Based on this income and employment prospects, a recent college graduate could easily pay off his or her student loans in full. If we assume a $27,000 average debt with a 10-year loan term, the college grad would owe $311 per month: less than 1% of their post-tax salary.  

What is important to recognize here is that student loans may serve a purpose in terms of the labor force and unemployment – if the borrower completes his or her degree. It’s obvious that the degree is hugely advantageous to a young American in terms of employment: with a 4.9% unemployment rate, they are three times less likely to be unemployed than the average person their age (15.4%). With better employment prospects and better earnings than non-college-degree-earning peers, these young adults are also more likely to pay off their student loan debts without a problem. True, many student loans go unpaid in the case of incompletion or unemployment. But for a large portion the nearly 2 million students that graduate from college each yeah in the U.S., student loans were instrumental to the completion of their education and, consequently, their employment. In this case, then, student loans – and student loan debt – is actually advantageous to the labor market.

Perhaps the most tangible argument for the benefit of student loans is the comparison of U.S. youth unemployment current youth unemployment rates in Europe. The average 4-year college cost in Europe is not even half the price of a similar institution in the US, and many public universities charge no tuition at all. Student loans are few and far between – as is student loan debt. And yet the average young college graduate in France, Sweden or the UK is more than twice as likely to be unemployed as an American graduate. Certainly, current economic conditions – as well as employment policies, standards, and practices – in Europe are quite different from those in the U.S., making a direct comparison of youth unemployment rates a bit blurry. But it is hard to ignore the implication that a lower-than-average youth unemployment rate in the U.S. for college grads is somewhat attributable to student loans.

As we’ve said before, student loan debt growth is definitely concerning and its disadvantages are numerous. Almost 12% of outstanding loans are delinquent, and the average outstanding debt continues to grow every year along with college costs. But if this expanding debt, even if some of it goes unpaid, helps young U.S. college grads to enter the workforce more easily and remain employed, then perhaps student loans could be considered somewhat advantageous to the labor market.

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I am Jobe's picture

Need more education they say.

BKbroiler's picture

But if this expanding debt, even if some of it goes unpaid, helps young U.S. college grads to enter the workforce more easily and remain employed, then perhaps student loans could be considered somewhat advantageous to the labor market.


...aaaaand close with tacit approval.

Ghordius's picture

a quite expensive "somewhat advantageous" imho - and does not answer WHY the private/market/capitalist US University complex compares this way with the european ones, which differ from each other but generally speaking don't produce the "US debt peon" phenomenon

noless's picture

Because the American system is idiotic and worships useless "titles" like college degrees? Want to be a secretary? Are you my niece, no? Then you better have at least an associates, because typing and taking phone calls requires that you take at least three botany classes to flesh out your science requirements.

Fake_nation's picture

Not to mention all the time people that would actually be doing botany or any kind of theoretical study waste trying to get a degree that doesn't distinguish them at all from people that have no interest in the subject and were always pre-professional. 

No place for excellence. 

max2205's picture

I call BS on all statistics from here on out

I am Jobe's picture

Bureau of Lies and  Statistics does not   like competition.

houserich's picture

Not only are statistics questionable, the conclusions drawn from them can be dangerous.

"Employment is better for those with a college degree" - implies the college degree is the reason. Suppose it is because a high school drop out and a college grad are completely different people. Generally speaking, those who pursue a degree are more ambitious and have less drama than those who drop out of high school. Yet the statistic drives the studen loan bubble, because "everyone needs a college degree".


noless's picture

Although i generally agree, a college degree =! Ambition, more along the lines of complacency in many cases, a lazy societal proof someone can hold up to say "i am a certified adult capable of being a useful done"

GoldenTool's picture

Nobody else has so...


scio me nihil scire

The Gold Theory's picture

damnit u beat me by 3 minutes.... offspring were great before they beacme commercial.....


newengland's picture

The video exploits young angst, and sexualises children...for the commercialists, the corporatists.

Typical of the '60s generation, now worried about their failing statist ways.


Monedas's picture

Without Capitalist visionaries .... Socialists are lost in their own grinding poverty of thought !

newworldorder's picture

Another article on youth unemployment in the advanced economies. Some would call this a disaster but not our economic or political overlorrds.

This does not represent the enormity of the problem however. It does not reflect the youth unemployment rate of some of the most populous countries in the world. Where are the stats on Russia, China, India, Indonesia, Nigeria and Pakistan. This is where most of the migration movement is occuring into Europe. Without knowing these unemployment statisctics, you can't begin to address the unemploymet problems in the advanced economies.

sitenine's picture

Hate to say it, but this is as it should be. I have been teaching college courses for 10+ years, and from what I can tell, these 'kids' are over-employed. Seriously, and without hyperbole, these 'kids' are dumb. Shit, some of them are downright stupid. Sure, you have a few outstandings, and a small group of 'average'. Bottom line here though, IMHO, is that the majority of these 'kids' shouldn't be working AT ALL except maybe to dig a ditch, lay a road, or maybe throw up some sheetrock!

Monedas's picture

What an elitist shitty thing to say about tradesmen .... I think a lot of teachers and professors are as dumb as dirt .... that's why they're socialists !

sitenine's picture

Elitist? Because one has to know what exactly to do those tasks? Yeah. Fuck off.

Monedas's picture

There you go again .... good timing .... I rest my case !

Monedas's picture

Sitenine .... you once sent me a vile, hateful, almost threatening private message  .... that wasn't very classy .... professor ?

sitenine's picture

Private? You are confused. I say what I have to say right fucking here for the World to see. You know, like a man. I never derided the tradesmen either, I only said that's all some of these students are qualified for. Check yourself, before you look like an idiot. Oh, too late.. Furthermore, we're talking about COLLEGE students here, moron. They SHOULD fucking KNOW something!

Monedas's picture

It was one of those zchat messages .... only message I ever got .... I dismissed it as someone whose head was below my humour .... and it's good to know .... I can still get your goat .... but please .... keep talking .... you seem quite capable of getting your own goat  ?

Totentänzerlied's picture

Take it you haven't had the unique 'pleasure' of working with many so-called "adults", who judging by similar criteria, are *gasp* the same idiots they were 10, 20, 30, ... Years ago. Perhaps this speaks to a problem with society at large... You don't get to pick you adults, but your adults do get to determine how their kids turn out... Even if that comprises signing your kids' lives away to, and as a consequence of, statist indoctrination camps run by ... Other adults. Gee, with child-rearing like THAT, what could possibly go wrong.

Totentänzerlied's picture

Yes, ditch diggers, to bury the generations which made the world this way.

Cabreado's picture

So now...

who will we blame for this near saturation of bad decision-making, one that continues to compound guaranteed misery and lost expectations first, and nothing beyond?

Could it be false leadership leading the charge of the unaware, for personal gain?

Could it be the end game of the Self-Absorbed, in full display?

Monedas's picture

Gloria Allred and Bill Press had a kid .... and they named him Red Press !

newengland's picture

The '60s generation fucked up their own kids, all so they could Party on.

Cabreado's picture

Perhaps you could provide an equally concise explanation for the motivations of the current generation of parents who council, encourage or otherwise support their own kids to continue the charade (per the article).

newengland's picture

The sins of the father are visited upon the son. That is my opinion.

Not fact. Opinion.

Totentänzerlied's picture

The apple doesn't fall far from the rotten tree.

Cabreado's picture

So then, in your opinion, you suggest it's not a "generation" thing, but rather is passed down, intergenerational?

noless's picture

This text should be about American citizenism, but apparently he's on break.

ziggy59's picture

If our kids never worked but EUs kids did, would they show up as unemployed if they went only to school and had never entered job market?
US UE figures are based on those that collect UE benefits..although BLS(one letter too many) states other info too.

prains's picture

the seeds of discontent will one day bloom

q99x2's picture

Even if the youth aren't able to get employment that matches their educations the education makes them able to reason which in turn allows their individuality to unfold. With the maturation of the personality moral decisions are more likely to enter society.

Although in any large organization the seeds of morality that develop out of coming to consciousness are easily extinguished within collective submission to go along. In these particular days of collectivism and lawlessness it is very important to have a youthful population prepared to make a difference. The price paid shall be small.

tornado_watch's picture

errr, how about some math education for the author... If grads are making $44k / yr, that's $3666 / mo pre-tax. Last time I dragged out the ol' abacus $311 would be nearer 10% of the after tax take and not the 1% # in optimistic bullet # 3.

newengland's picture

Basic math is most disliked by tax funded bureaucrats, and the school system in particular which produces more dummies per $ than its overpaid staff can manage, but they do so like their wasteful ways and words of no practical or intellectual use to those who pay for them.

ebworthen's picture

So my Son is working at a fast food joint.

Two week pay period.  I saw his hours printout on the counter this week:  59 hours 45 minutes.

That means they are getting him as close as possible to 29.95 hours per week as possible so they can avoid Obummer care.  He kind of laughed and said "Yeah".

Fuck these government and corporate clowns.  There is such a huge shit-storm coming in the next five years it isn't funny; for our children or anyone else.

He and his friends are determined to not pay for any bullshit insurance in a state exchange, they know they are being screwed.

And I can't blame them one little bit.




newengland's picture

The '60s generation Party on, and blame others for their hangover.

Fearful that the young will blame them, not pay for them, fight them.

jack stephan's picture

Because you get Indian burns.
But I prefer noogies.

Take time and relax, you can't read about soulless power addicts that will stab their grandmother for a tic tac.....and not even an orange one too, to top it all off.

AurorusBorealus's picture

This article is a disaster.  Now I was a history guy (history of science and technology), but my math is still better than this.  For example..

"2.9 million persons aged 15-24 were unemployed in 2012 worldwide, according to the International Labor Organization, accounting for a full 12.4% of the youth workforce. For comparison’s sake, 122.5 million adults were unemployed worldwide last year"

2.9 Million... worldwide... seems like everyone is working... given that there are 6 billion people in the world.  Only 122.5 million adults unemployed... Worldwide.

as someone else pointed out,

"the college grad would owe $311 per month: less than 1% of their post-tax salary."

These college grads are getting paid more than $373,200 per year!  I want to be 24 again.  I wonder how much the Nick of ConvergEx is getting paid... whatever it is, it is too much.  Every time I read something absolutely absurd on here, it is by ConvergEx's Nick Colas.  What an idiot!!!

bunnyswanson's picture

The majority of the global population lives in developing nations.  Comparing 1st world nation numbers on the scale of the universe is perhaps too large of a scale.

Your generalization about what a college grad makes is a hoot.  I won't even go any farther, 

There is no surprise to hear the workforce is idle.  Tax revenues are down.  The fed is buying the debt and checks are so far in the mail.  But that's not fairytale and it will not have a happy ending.

A deindustrialized nation with a blue collar work force making up the small town America source of "money flowing through Main Street" is a nation without a means of earning a living for the working class.

The cost of an education was irrelevant when loans were issued hand-over-fist to whoever the fuck wanted one.  Jobs were everywhere.  Overtime?  Sure, Why Not!  I made twice my usual income during the Great Credit Extension because evern employers were living it up.  New cars, new homes, fabulous new stores open 24/7, credit cards with a smile and guaranteed acceptance. 

The circus has left town.  And some will pay more than others.  Some will not be able to participate in life any longer.  Stores are closing.  Parking lots are empty.  So are restaurants.  You must be blind or living on someone else's sweaty dime.

mendigo's picture

My son is 15 works hard in school and has good attitude.
A couple of weeks ago he saw hiring sign at nearby mcdonalds and went in and submited application (never having worked before) and was interviewed and they hired him. Now they are training him as he works and gets paid - after school.
Point is not everything sucks.
There are still some good companies and some positives.
Basically our governments sucks and we elected them so what are we going to do about it - more of the same?

bunnyswanson's picture

No.  You are going to sit back and watch the currency of your country lose its purchasing power in the global arena.  High taxes will be just ahead..  Make sure No 1 Son learns Mandarin.

Heroic Couplet's picture

If the poll taken last 06Nov2012 is any indication, they don't vote Republican.

Richard Whiskey's picture

I'm 22 years old, been working since I was 16. Never went to college and make $33.25 an hour.

I learned at a young age in life it doesn't matter what you know.
Rather who you know.

Monedas's picture

You don't have to get cynical about it .... in any organization .... networking skills ARE skills .... use all you got to find your place in the sun !

HulkHogan's picture

haha. My mom works from home, part-time, and earns $7500 a week. /s

Richard Whiskey's picture

I'm Generation Y and read ZH, plenty of reason to be cynical.

Son of Loki's picture

A number of studies, including one by the Center for American Progress, anticipate that millennials will be the first American generation to do less well economically than their parents.

Millennials, an abbreviation for millennial generation, is a term used by demographers to describe a segment of the population born between 1980 and 2000 (approximately). Sometimes referred to in the media as "Generation Y," millennials are the children of the post-WWII baby boomer generation.