WorldNetDaily gives us a breakdown of American unemployment by age group with some trustworthy sources to add commentary.
What’s happening is a bit complicated.
- ZIRP means older workers can’t earn interest on savings, so they must remain in the workforce longer than they might otherwise
- These older, more experienced workers out-compete younger workers for management positions — more of the youth find themselves stalled in place
- Younger people take advantage of low interest rates and minimal credit checks to remain in school as long as possible to add to their certifications, but staying out of the labor force
There is no real easy way out of this situation given that governments around the world have committed themselves to a destructive monetary policy. Old workers, in more ordinary times, would be essentially lending banks the money that they would then, in turn, lend out to younger people to finance their living expenses and business projects. What instead happens is that old workers remain in their incumbency, because it’s less attractive for them to lend money to the banks (save and live off the interest) than it is for them to remain in the workforce drawing a salary and out-competing younger workers.
There’s also the issue of most academic education being completely disconnected from the needs of industry:
But beyond the issues of a sluggish economy, a 2014 study by Bentley University illustrates an enormous gap between what employers want and what Millennials give on the job. Companies report a lack of work ethic, lack of hard skills, and lack of preparedness as some of the reasons behind the high employment rate for young people. “Among the perceptions from the survey were that recent college graduates are harder to retain, lack a strong work ethic and aren’t as willing to pay their dues as previous generations were.”
Younger workers in turn are additionally squeezed by immigration, which tends to consist of younger people also going after less skilled positions. In Japan, where there is no open immigration, there are nonetheless similar issues with youth unemployment (by conventional metrics) outpacing that of the older people, and younger people having trouble attaining all the typical stages of life development which would be ordinarily expected.
Many of these issues are broadly understood — even across the political spectrum in some cases — but democratic states tend to struggle to reform themselves, instead hoping to muddle through without challenging fundamental assumptions. Under popular democracy, it’s necessary to establish a broad and enthusiastic consensus on major policy changes in most situations. This process is necessarily expensive and sometimes impossible, particularly on complex issues which involve significant trade-offs for large and influential portions of society. This is why democracies tend to lurch from crisis to crisis — because only the crisis can provide the impetus for the creation of a new consensus.
“Old workers, in more ordinary times, would be essentially lending banks the money that they would then, in turn, lend out to younger people” – Allow me to be a bit autistic for a moment and say that is a very, very inaccurate and misleading statement. Banks do not – and did not in “more ordinary times” – loan out their deposits. That is a falsehood perpetuated by the American education system and media. As I am sure you are very aware, banks make loans by using the money multiplier effect to employ their reserves as a fractional basis to create credit deposit accounts which can be drawn on by the borrower. I know this might be considered nitpicking and that cash deposits indeed are used as the partial basis for loans, but strictly speaking that is not at all the same saying that banks lend the money they take in on deposit.
Yes, deposits are an accounting fiction. It is nonetheless a rough description of what happens in an indirect fashion.
I don’t really see it as nitpicking on your part but normal people will sometimes freak out if you start talking about fractional reserve lending and how that works. This is supposed to be accessible to people who don’t know anything about money and banking.
Even that is a fiction. Banks don’t use the multiplier effect. They can create as much money out of thin air as they want, because (approx.) all credit comes back into the system as deposits, so the fraction is close to 1. The imbalances are straightened out by buying and selling deposits. The constraint is not deposits * multiplier, it’s how much money people are willing to borrow. (In more prudent times, the constraint would be how much collateral people hold, but that’s so outdated.)