- By Bill Bonner
Old age and treachery will always triumph over youth and skill. At least, that is the way it looks.
Our speech to the Class of '15 left out some important points.
The jobs picture, for example, is darker than we told them. And depriving young people of jobs is like depriving pandas of bamboo shoots; it's all they have. Older people can watch their stocks, real estate and bonds go up in price. A young person can only look at the help-wanted ads...and hope for a break.
In 2000, the ratio of people with jobs to the working-age population hit a high of 56%. It has fallen ever since and is now down to 46%. Since the working age population is roughly 200 million people, that suggests that there are about 20 million fewer people with jobs today than there were at the beginning of the century.
Guess who those people are? People with all their teeth, all their hair, and all their wits.
Since the bottom of the crisis of '09, only one group has added jobs - people 55 and older. Every other age group has lost them.
Why? New businesses hire young people. Old businesses hire old ones. Imagine a new company - Uber, Snapchat or Pinterest - recruiting grey haired workers. They won't. Because the older generation won't understand. They'll be out of place.
But the rate of new business start -ups has fallen sharply. And fewer new businesses means fewer places for new workers to get work.
Also, older workers might like to retire and give their jobs to younger workers, but they can't afford to. They are squeezed by their own economy. Now they must hang on to their jobs as long as they can.
This leaves young people with no way to get on the bottom rungs of the ladder. In order to get ahead in the business/employment world, you have to get started. Then, you work hard...you learn...and you climb up.
But today, young people mill around, wasting their time in college, flipping burgers and parking cars while they wait for a real job opening.
And then it is too late. They go for a job interview at 25, 30, or 35 and employers want to know what the heck they've been doing for the last few years. In short, they may never get onto the bottom rung, never learn a real trade or profession, and never be able to play their part in the adult, debt-soaked, middle class economy.
The Atlantic magazine looked at the situation and concluded that "there is nothing uniquely wrong with the youth job market."
But something is very wrong. It is not nearly as bad in America as it is in France, for example, but every labor rule drives employers to protect themselves. Hire a young person and who knows what you get? He has no work experience; he cannot prove that he won't cause trouble. Instead, you look for a resume with familiar assurances: "Oh, he worked for 10 years for the Ford Motor Company," you tell yourself. "Then, he'll be fine here.'
Callow youths entering the workforce have few skills. They should be cheap. But as the costs of hiring these new people goes up - costs imposed by the older generation - the price of older workers, relatively, goes down. Entry level jobs are scarce partly because old people - using the police power of their government - have made them more expensive.
But the declining availability of income opportunities is just one way the older generation has stacked the deck against the young. You have no doubt heard about how today's financialized US economy favors the rich over the poor. You might just as well say it favors the old over the young. Assets have gained value. Jobs have not. Incomes have been flat for an entire generation, while capital gains have soared. The old have gotten richer; the young have gotten poorer.
In 2013, for example, there were 50 million people in the US who earned an average of just $6,000. Who were they? Disproportionately young people.
This is where it gets interesting. The 'financial economy' - roughly the value of stocks and bonds - has gone up 15 times in the last generation, an increase from $6 trillion to $95 trillion. Who owns stocks and bonds? Young people?
Financial assets are what old, well-connected, skilled and successful people have. Young people have little but their own time.
When you are starting out in life you need to trade your time and energy for money and gradually accumulate financial assets. You need an economy where you can work...and earn money. But that economy - the economy of work and wages - grew only 5 times during the same period (as measured by GDP).
"The financial sphere," explains David Stockman, "occupied 212% of GDP in 1981. ..now, [it] weighs in at 537%."
In short, the geezers have done much better than the under-30 crowd. While labor rates have barely risen at all, the value of America's corporate equities has gone up 28 times since Jimmy Carter was president.
Was this just an accident? Was this just an honest, market economy at work?
No, the fix was in...as we'll show you tomorrow.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.