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Economic uncertainy forces older workers to stay longer, reducing job chances for young

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Saturday, Sept. 28, 2013, 9:00 p.m.
 

Home prices, gross domestic product and stock indexes are rising. Unemployment has fallen to 7.3 percent, at least officially.

When those who have given up searching or have accepted part-time work are included, however, the unemployed total around 11 million, or 13.7 percent of the potential workforce.

Labor Department statistics show a worse picture for young workers: a steep decline from 16.4 percent to 10 percent in the share of the labor force held by those 20-24. The drop for those 16 to 19 is worse, from 11.2 percent to 3.8 percent.

Temporary jobs and low interest rates magnify insecurity, discouraging retirement. Fewer retirees means fewer job openings for younger workers and implies the creation of a bias against young workers. A solution to this discouraging and politically dangerous problem likely will require a revolution in thinking about jobs and education.

The end of the Cold War heralded greatly increased competition for low-paying jobs. There followed a huge export of jobs, to China and Japan especially. The ingenuity of American business eventually countered by major investments in information technology, including robotics, to boost productivity and cut costs.

Though good-paying jobs have mushroomed in IT and robotics, many low-paid workers were replaced. Recent examples include 3D printing, which enables the production of titanium fuselage and wing parts. This increased reliability and lowered costs and production times. But it reduced skilled, high-wage employment in production.

High-paying sales jobs have decreased. By putting sellers in direct contact with buyers, the Internet reduced “transaction costs” dramatically. Wall Street's vast earnings illustrate vividly the size of middleman's fees or commissions. Jobs have eroded among all manner of transaction facilitators, including home, used vehicle and vacation salespeople.

Information technology and robotics have increased productivity and the return of manufacturing jobs, bringing production close to its vast consumer market. Yet the number of jobs involved in production and sales has fallen dramatically.

More government regulation further delayed job increases. The implementation of the Patient Privacy and Affordable Care Act, or Obamacare, encourages the reduction of the traditional 40-hour work week, encouraging more part-time employment.

By definition, part-time work is temporary, pays less and carries few benefits or promotion prospects. It breeds job insecurity and encourages people to stay in school to obtain qualifications for which demand is falling.

One effect of low interest rates is the reduced earning of fixed income-based retirement accounts, creating financial insecurity.

That insecurity forces older workers to remain on the job rather than retire. Employers may retain a known, skilled worker rather than hire an unknown, untrained worker.

A solution demands creative thinking and difficult political decisions, such as encouraging job-sharing, adapting education and reducing regulations and taxation.

John Browne, a former member of Britain's Parliament, is a financial and economics columnist for Trib Total Media. Contact him at johnbrowne70@yahoo.com.

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