kitchen table math, the sequel: Happy Anniversary

Sunday, September 15, 2013

Happy Anniversary

The US economy in 2000 had really, really full employment — it was an era when labor was so scarce that McDonald’s was actively trying to recruit senior citizens, when the joke was that you could get a job as long as your breath would fog a mirror, that is, as long as you were actually alive.
Slackers at the Fed


Like so many young Americans, Derek Wetherell is stuck.

At 23 years old, he has a job, but not a career, and little prospect for advancement. He has tens of thousands of dollars in student debt, but no college degree. He says he is more likely to move back in with his parents than to buy a home, and he doesn't know what he will do if his car—a 2001 Chrysler Sebring with well over 100,000 miles—breaks down.

"I'm kind of spinning my wheels," Mr. Wetherell says. "We can wishfully think that eventually it's going to get better, but we don't really know, and that doesn't really help us now."

Mr. Wetherell is a member of a lost generation, a group that is only now beginning to gain attention of many economists and employment experts. From Oakland to Orlando—and across the ocean in Birmingham and Barcelona—young people have come of age amid the most prolonged period of economic distress since the Great Depression.

Most, like Mr. Wetherell, have little memory of the financial crisis itself, which struck while they were still in high school. But they are all too familiar with its aftermath: the crippling recession, which made it all but impossible for many young people to get a first foothold in the job market, and the achingly slow recovery that has left the prosperity of their parents' generation out of reach—perhaps.

"This has been for quite a while now a hostile environment for young people," said Paul Taylor, executive vice president of the Pew Research Center, which has studied the impact of the recession on young people. "This is all they've really known."

The financial crisis that struck five years ago this month opened up a sinkhole in the U.S. economy that swallowed Americans of all ages and backgrounds. Retirees lost life savings. Families lost homes. Millions of Americans lost their jobs.

Wanted: Jobs for the New 'Lost' Generation By BEN CASSELMAN and MARCUS WALKER
Five years after the 2008 crisis, younger adults still struggle to find work | Updated September 14, 2013, 4:26 p.m. ET

Employment-Population Ratio Ages 25-54
Data extracted on: September 15, 2013 (5:46:00 PM)

Ed says he remembers McDonald's recruiting seniors and, come to think of it, I have a vague memory of McDonald's scrambling to find workers, too. I certainly recall jokes about elderly greeters at Walmart. In fact, I recall the elderly greeters themselves.

Most of all, though, I remember reading scores of articles expressing panic over the coming mass retirement of baby boomers -- not because baby boomers would be so expensive to support but because who would replace them?

That was the horror story circa 2000.

Where will we find people to fill all the jobs?

Last spring Ed ran into an an Irvington parent who complained that the high school was still telling students SAT scores don't matter. She told Ed that when she graduated from college, with a B.A. in English, I believe, she got a good job on Wall Street "walking in off the street." No M.B.A., no training, no experience of any kind. She was alive, she was intelligent, she had a college degree, so--bam--she had a job. A good one.

That's the way things work in a thriving economy.

How a Market Crisis Unfolded


Anonymous said...

Also in 2000, we weren't importing hundreds of thousands of H1b workers in engineering and computer sciences and L visa's to take over Summer or Winter seasonal employment traditionally filled by teens and college students. When Immigration reforms pass, these limits will be increased and more jobs will be lost for the LostGeneration.

Anonymous said...

Also in 2000 the tech industry had hundreds of companies(*) that had no plans on becoming profitable. These companies employed a LOT of people in my area at very good wages (I know because I was interviewing folks at the time ...).

Unfortunately, when these companies ran out of money (one of the downsides of losing lots of money every quarter is that eventually you go out of business) these people became unemployed.

I remember thinking that 2000 was great for employees, too, but also remember thinking that working for a company that had no real chance of avoiding bankruptcy wasn't sustainable. It wasn't.

I'd be happier with an example of a thriving economy that didn't require either:

(a) lots bubble companies heading towards bankruptcy, or

(b) lots of bombed out competitors (think post-WWII).

The 1920s might be the closest (the bubble showed up at the end ... the earlier parts were built on fairly solid economic improvement). But that's a long time ago.

The 1980s were pretty good ... as long as you weren't in a blue-collar industry like steel. Or a farmer.


-Mark Roulo
I had a front row seat, but didn't work for a dot-com.

But consider:
(1) Lets sell dry dog food over the internet and ship it to people FedEx!
(2) I don't think anyone ever figured out what they were trying to do. But they blew through several hundred million dollars.
(3) At one point had a market capitalization higher than Toys-R-Us. On only $30M of *revenue*, not profit.
(4) My sister worked for a dot-com that blew through almost $47M in venture capital. They spent almost $0.5M on designing a corporate logo.
(5) My wife worked for Red Hat for a bit. At one point, Red Hat had a market capitalization higher than Chrysler. On about $100M in annual revenue.

Good times, but not really built to last.

Allan Folz said...

Also in 2000, there was legitimate "concern" the national debt was going to be completely extinguished. Supposedly pension funds, insurance companies, and foreign exchange would not be able to function without a completely unassailable debt instrument.