Tuesday, September 04, 2012

Cause and Effect: The Dearth of Young Workers

Perspective helps.  Let's remember, too that the ~Zero Interest Rate Program was initiated to "help" Goldman Sachs, Citibank, and Bank of America, among others who genuinely deserve the help and sympathy of US citizens.  /sarcasm 

Also worthy of note:  those with fixed-benefit pension plans (AFSCME, UAW anyone?) don't have to worry about 1% rates.  Taxpayers simply cough up the difference.)

I’ve witnessed two of the most radical developments in my lifetime the last four years — changes far greater than those brought on by the massive new increases in the national debt, the soaring gas costs, the radical decrease in average family income, the insolvent Medicare and Social Security trajectories, or the flat housing market.

One is the fact of less than 1% interest rates on most savings (well below the rate of inflation), and the other is an epidemic of 20-something unemployment.

For that matter, 'under 20-something' unemployment is out there, too.

...The hallmark advice of retirement planning was always to scrimp, save, and put away enough money to make up for retirement’s lost salary, increasing medical bills, and the supposed good life of the “golden years.” If a couple had saved, say, $300,000 over a lifetime (again, say, putting $500 away each month for 30 years at modest compounded interest), then they might expect a so-so annual return at 5% of about $15,000 a year on their stash, or about $1,250 per month....

Yah, so?

...there is no 5% any more on anything, not even 2% or  in most cases 1%Saving money means nothing really in terms of return, only the realization that inflation eats away the principal each year....

Yah, so?

........Few seem to note that those who receive nothing on their retirement savings don’t retire so easily. And when they don’t retire, jobs don’t open up — which brings us to my next observation: the lost generation of those between 21 and 30, who at various ages and periods came into the workplace the last four years. Many have 8% plus student loans. I doubt half of those will ever be paid off, given the epidemic of unemployment in this cohort.

Unemployment rates of those 16-24 are now officially over 50%. Even the cohort between 16 and 29 suffers from 45% unemployment.

Let's hope that VDH's conclusion is only temporarily true:

The new model for the next generation is to cobble part-time work together, intern, occasionally draw on unemployment, send out resumes hourly, and hope for something to turn up (preferably in government, state or federal). We all witness the reality behind these statistics firsthand. When we travel we see more and more older people at work, often well into their 70s. I know 50 or so young offspring of friends, relatives, and associates who are desperately trying to find work.

Yup.  But the Orwell aphorism that 'some animals are more equal than others' remains operative.

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