About half of college grads underemployed => disaster?

[FallenApple]

Do people not see how dire this situation is? Hundreds of billions are burned without any return. Sure, plenty of people profit. But with such a big portion that doesn't, it's scary. That's 4 extra years that these grads could have spent contributing to the workforce. That's also billions of dollars wasted by government investment.

It also shows that a large amount of people are easily willing to gamble on 50/50 chances, which might be more telling than the dollar amount lost. Is this a bubble waiting to burst?

What would resolve this situation? I'm thinking that borderline students(those that are not already great academically) should probably just wait out the storm and go to college at the right time when a profit appears to be highly probable; certainly better than just a coin flip, actually, they should go when it's much better. Well, we wouldn't even know if this is a viable solution since people's tendency to overreach mean that not enough would listen. The advice is probably already out there.

 

[jedishrfu]

These are things you can never know for sure and so you must go with the flow. If you like learning you should learn. At some point, you will get to use what you learned no matter how terrible you were in taking the course or how much you detested the subject (I'm thinking English class was the most frustrating for me but now we have computers to blame for our bad sentences).

There is also no guarantee of getting a decent paying job. You must still compete with other qualified folks and education is the best tool to do that. The other option is to create a new business or your own independent job.

It's naive to think that we are wasting money or resources on education or that we are dropping money in the dumpster with no return. Only the prepared make the discoveries or come up with the new ideas and only education can prepare you. I do believe the for profit schools have soured education by marketing false promises and getting students to go into debt but that's another problem we have to deal with.

 

[FallenApple]

These are things you can never know for sure and so you must go with the flow. If you like learning you should learn. At some point, you will get to use what you learned no matter how terrible you were in taking the course or how much you detested the subject (I'm thinking English class was the most frustrating for me but now we have computers to blame for our bad sentences).

There is also no guarantee of getting a decent paying job, I agree. You must still compete with other qualified folks and education is the best tool to do that. The other option is to create a new business or your own independent job.

It's naive to think that we are wasting money or resources on education or that we are dropping money in the dumpster with no return. Only the prepared make the discoveries or come up with the new ideas and only education can prepare you. I do believe the for profit schools have soured education by marketing false promises and getting students to go into debt but that's another problem we have to deal with.

The money is not completely wasted as we are still making headway, both technologically and scientifically. The true issue lies in the fact that there is a significant proportion of prospective grads who will end up taking jobs that they would have gotten anyways without a college degree. With that many people who do not profit, the economy will buckle at some point sooner or later.

There is no guarantee of getting a decent paying job, I agree. It's ok if a few people gamble despite this. But it quite another when millions systematically gamble.

I understand that education is needed in order for society to keep advancing technologically; education needs to stay. But something needs to be done about the odds of success and the fact that too many blindly go without a really good plan on what they want to do.

 

[FallenApple]

Admittedly, I'm prideful and a bit stubborn, and so I personally find it more philosophically correct to go all-in in an attempt to better myself. In a sense, it's more honorable that way.

But when way too many people do that, at the wrong time, I can't say objectively that society would be better off for it.

 

[Vanadium 50]

Underemployment is a mismatch between what a person thinks he is worth to a business, and what the job market thinks he is worth to a business.

We had a person not too long ago complain that he wasn't earning enough to drive a Porsche, was doing work that could easily be outsourced at a third the cost, and eight hours working a day was just too much for him. If this is typical, it seems like there is more mismatch on the supply side than the demand side.

 

[StatGuy2000]

Underemployment is a mismatch between what a person thinks he is worth to a business, and what the job market thinks he is worth to a business.

We had a person not too long ago complain that he wasn't earning enough to drive a Porsche, was doing work that could easily be outsourced at a third the cost, and eight hours working a day was just too much for him. If this is typical, it seems like there is more mismatch on the supply side than the demand side.

Oh, so you're blaming the students now for graduating with a BS or BA expecting it to be a path to fulfilling employment or a route out of poverty, only to be unemployed or only able to find work at Starbucks or Walmart for minimum wage?

If there is a mismatch between what a person thinks he/she is worth and what the job market thinks he/she is worth, then couldn't you conclude that the problem lies in as much in how the job market thinks people are worth? That nations should think clearly about ensuring that people can earn decent, livable wages? That we should be thinking about encouraging unions so that workers can better negotiate with employers?

IMHO, it seems to me that you are just as much out of touch with the realities facing students these days as are the students graduating.

 

[russ_watters]

Do people not see how dire this situation is? Hundreds of billions are burned without any return. Sure, plenty of people profit. But with such a big portion that doesn't, it's scary. That's 4 extra years that these grads could have spent contributing to the workforce. That's also billions of dollars wasted by government investment.

Oh, so you're blaming the students now for graduating with a BS or BA expecting it to be a path to fulfilling employment or a route out of poverty, only to be unemployed or only able to find work at Starbucks or Walmart for minimum wage?

I do. Far too many kids go to college with no plan or a bad plan and end up wasting their time and money. What is most needed IMO is for parents to ensure their kids don't waste their time in college but instead get marketable degrees. And if they aren't cut out for marketable degrees, then they shouldn't be going to college.

Note, however, that worthless degrees are only mostly worthless in that they are still prerequisites for some types of jobs. A buddy of mine smoked and snorted his way to a 6 year liberal studies degree, meandered through his late 20s to a paralegal certificate and 15 years later is a high level manager at a law firm.

If there is a mismatch between what a person thinks he/she is worth and what the job market thinks he/she is worth, then couldn't you conclude that the problem lies in as much in how the job market thinks people are worth?

No. That's like arguing against the weather.

That nations should think clearly about ensuring that people can earn decent, livable wages?

No. It is *my* responsibility to ensure *I* earn a decent wage. It is not *my* responsibility to ensure *you* earn a decent wage: that's *your* responsibility.

That we should be thinking about encouraging unions so that workers can better negotiate with employers?

No. Artificially pumping-up wages beyond what they are worth is a recipe for destroying the industries you pump-up wages on. The car industry is the perfect example.

IMHO, it seems to me that you are just as much out of touch with the realities facing students these days as are the students graduating.

I know the realities -- IMHO, it seems to me like you would like others to change your reality for you when you could easier change it for yourself.

It also shows that a large amount of people are easily willing to gamble on 50/50 chances, which might be more telling than the dollar amount lost.

Agreed. That's why we're in this situation! [caveat below about the true nature of the gamble]

Is this a bubble waiting to burst?

I can't see how that constitutes a "bubble". Can you explain what you mean?
[edit] Oh, are you referring to college costs and over-attendance? Maybe.

What would resolve this situation?

Better parenting, better guidance from teachers/administration.

...just a coin flip...

College is not a coin flip. It is a coin, sitting on the ground heads-up that students look at and then choose to bet tails.

 

[StatGuy2000]

No. That's like arguing against the weather.

Intrinsic in your statement is that the job market is somehow impervious to change by the actions of individuals and governments, which is far from the case.

No. It is *my* responsibility to ensure *I* earn a decent wage. It is not *my* responsibility to ensure *you* earn a decent wage: that's *your* responsibility.

I respectfully disagree. I feel that it is everyone's responsibility to ensure that all citizens have access to a livable wage (note my term "livable wage" i.e. wages that are the minimum that people can survive on, not "decent wages"). That's why I support (in the case of the US) a $15/hour minimum wage. And why I am also open to the idea of a guaranteed minimum income (with caveats in terms of how it can be implemented).

No. Artificially pumping-up wages beyond what they are worth is a recipe for destroying the industries you pump-up wages on. The car industry is the perfect example.

I again respectfully disagree. There has been a number of studies looking at the effects of unionization in terms of the productivity of firms, and have found that, contrary to common beliefs, "a positive association [of unions on productivity] is established for the United States in general and for US manufacturing in particular".

http://www.epi.org/publication/webfeatures_snapshots_20070620/

It's worth noting that many European countries have maintained strong unions and most of their employees are covered by collective bargaining agreements, from 68% in Germany to over 90% in Belgium, France, and Sweden.

As for your example about the car industry, the problems there have little do with unions, and has almost entirely to do with poor management that failed to respond appropriately to competition from Japanese car manufacturers.

I know the realities -- IMHO, it seems to me like you would like others to change your reality for you when you could easier change it for yourself.

My quote was directed at @Vanadium 50 , not to you (I was questioning how he seemed in his post was blaming students for their own underemployment, and my post was a response to him).

 

[Mark44]

No. It is *my* responsibility to ensure *I* earn a decent wage. It is not *my* responsibility to ensure *you* earn a decent wage: that's *your* responsibility.

I respectfully disagree. I feel that it is everyone's responsibility to ensure that all citizens have access to a livable wage (note my term "livable wage" i.e. wages that are the minimum that people can survive on, not "decent wages"). That's why I support (in the case of the US) a $15/hour minimum wage. And why I am also open to the idea of a guaranteed minimum income (with caveats in terms of how it can be implemented).

I am opposed to the $15/hour min. wage (which I believe started out in Seattle, near where I live) and very opposed to a guaranteed minimum income. I've seen some studies that show the effects on some businesses laying off employees as a result of this new law. A very real effect of a forced minimum wage is that it prices people with few skills out of the market. For example, while the overall unemployment rate in the US decreased from 4.8% to 4.2% from 2nd Qtr 2016 to 2nd Qtr 2017, but for black teenagers 16 to 19, the unemployment rate decreased from 30.0% to 25.9%, and for HIspanics in the same age group, it decreased from 17.7% to 14.0%. (US Bureau of Labor Statistics - https://www.bls.gov/web/empsit/cpsee_e16.htm)

Lacking an opportunity to "get one's foot in the door" in an entry-level job at an entry-level pay rate makes it nearly impossible for such people to ever work up to a real job.

No. Artificially pumping-up wages beyond what they are worth is a recipe for destroying the industries you pump-up wages on. The car industry is the perfect example.

I again respectfully disagree. There has been a number of studies looking at the effects of unionization in terms of the productivity of firms, and have found that, contrary to common beliefs, "a positive association [of unions on productivity] is established for the United States in general and for US manufacturing in particular".

History in the US in 2008 contradicts this. Two of the largest auto firms in the US, GM and Chrysler, fared so badly in the Great Recession that they needed large transfusions of cash from US taxpayers. The $81 Billion invested in GM, GMAC, and Chrysler ended up costing US taxpayers about $10 Billion after the shares bought by the government were resold (https://www.thebalance.com/auto-industry-bailout-gm-ford-chrysler-3305670). Ford didn't need to be bailed out by TARP, as it had already cut costs prior to the recession, but did accept some help from a different plan so as to not have to compete against government subsidized corporations. A big factor in the near demise of the auto firms was the cost of union labor, and in particular, the cost of pensions.

Speaking of pensions, the cost of pensions is having a grave effect on such cities as Detroit (the auto manufacturing capitol) and even states, with Illinois's bond status reduced to one step above "junk" status (with Forbes opining that this rating is a farce https://www.forbes.com/sites/invest...d-despite-what-the-agencies-say/#7020036e3191).

 

[QuantumQuest]

Do people not see how dire this situation is? Hundreds of billions are burned without any return. Sure, plenty of people profit. But with such a big portion that doesn't, it's scary. That's 4 extra years that these grads could have spent contributing to the workforce. That's also billions of dollars wasted by government investment.

It also shows that a large amount of people are easily willing to gamble on 50/50 chances, which might be more telling than the dollar amount lost. Is this a bubble waiting to burst?

What would resolve this situation? I'm thinking that borderline students(those that are not already great academically) should probably just wait out the storm and go to college at the right time when a profit appears to be highly probable; certainly better than just a coin flip, actually, they should go when it's much better. Well, we wouldn't even know if this is a viable solution since people's tendency to overreach mean that not enough would listen. The advice is probably already out there.

I think that the problem is multidimensional and multi leveled. On the one hand, everyone willing and having the ability to be educated, should think seriously and carefully about what he / she really wants to pursue, what are his / her strengths and weaknesses and what are the pains to be taken in order to reach his / her goal(s). This would eliminate gambling - regarding what to pursue and leave no room for overlooking the final result. But in real life there is a multitude of factors that influence the whole thing (like age, sociopolitical situation and this varies heavily regarding different countries and cultures, economy and last but not least the human nature itself). On the other hand, job market being part of the wider market for a specific country is subject to influence from some of the above factors and a crucial part of the economy of a country itself and of course while it should have more clear and fair rules, that is not the case and won't be (at least in the foreseeable future) but equally importantly it can't be. So the situation is distorted on both sides and in my opinion the best bet for anyone wanting to be well educated is strong determination and after graduating obeying the rules of the market in order to get a job. Things were never perfect and won't be. But this can in no way stop the right for education for anyone, no matter where he / she lives.

These are things you can never know for sure and so you must go with the flow. If you like learning you should learn. At some point, you will get to use what you learned no matter how terrible you were in taking the course or how much you detested the subject (I'm thinking English class was the most frustrating for me but now we have computers to blame for our bad sentences).

There is also no guarantee of getting a decent paying job. You must still compete with other qualified folks and education is the best tool to do that. The other option is to create a new business or your own independent job.

It's naive to think that we are wasting money or resources on education or that we are dropping money in the dumpster with no return. Only the prepared make the discoveries or come up with the new ideas and only education can prepare you. I do believe the for profit schools have soured education by marketing false promises and getting students to go into debt but that's another problem we have to deal with.

I'll totally agree to this. Additionally, there is no waste of money for education but every person after graduation has to land on reality. Clearly, there can't be any time, anywhere so many jobs in a specific field / technical sector or whatever else regarding higher education, as there are people applying. Only the best survive and for the rest there are other jobs to deal with. Also, in my opinion Vanadium 50 makes an absolutely fair point because there is a lot of people that overestimate their skills and think that they are underpaid while in fact they are overpaid for what they really give to the company they work for, worldwide. On the other hand, there is also the opposite thing in many cases - I have long experience in this in my country, that many people get heavily underpaid for what they worth (knowledge / expertise) but I think - as I am already a little more than middle-aged, that everyone should pursue better payments no matter in what place of the world, provided that he / she is consistent with his /her field / job and not gambling with real knowledge / expertise and real goals. After all, life is not a fairy tale.

 

[StatGuy2000]

I am opposed to the $15/hour min. wage (which I believe started out in Seattle, near where I live) and very opposed to a guaranteed minimum income. I've seen some studies that show the effects on some businesses laying off employees as a result of this new law.

Please quote which studies you are referring to. I've seen other studies which indicate that a raise in the minimum wage have little impact on unemployment rates.

A very real effect of a forced minimum wage is that it prices people with few skills out of the market. For example, while the overall unemployment rate in the US decreased from 4.8% to 4.2% from 2nd Qtr 2016 to 2nd Qtr 2017, but for black teenagers 16 to 19, the unemployment rate decreased from 30.0% to 25.9%, and for HIspanics in the same age group, it decreased from 17.7% to 14.0%. (US Bureau of Labor Statistics - https://www.bls.gov/web/empsit/cpsee_e16.htm)

Lacking an opportunity to "get one's foot in the door" in an entry-level job at an entry-level pay rate makes it nearly impossible for such people to ever work up to a real job.

Again, you have not presented any empirical evidence that raising the minimum wage would price low-skilled workers out of the market. As for unemployment rates for black teenagers and Hispanics in the same age group between the quarters you speak of -- how much of this can be attributed to more low-skilled employment available, or the fact that fewer people of that age group are actively seeking? Remember, unemployment rates only measure those who are unemployed and actively seeking employment (using whatever metric is used to measure this).

It's just as conceivable that more black and Hispanic teenagers are back in school finishing their studies rather than seeking employment, which would reduce the employment. (another, much more negative explanation could be that more black and Hispanic teenagers are being incarcerated due to discriminatory policing, and thus are being pulled out of the labour market -- admittedly, I don't have evidence for this, but just putting it out there as speculation).

History in the US in 2008 contradicts this. Two of the largest auto firms in the US, GM and Chrysler, fared so badly in the Great Recession that they needed large transfusions of cash from US taxpayers. The $81 Billion invested in GM, GMAC, and Chrysler ended up costing US taxpayers about $10 Billion after the shares bought by the government were resold (https://www.thebalance.com/auto-industry-bailout-gm-ford-chrysler-3305670). Ford didn't need to be bailed out by TARP, as it had already cut costs prior to the recession, but did accept some help from a different plan so as to not have to compete against government subsidized corporations. A big factor in the near demise of the auto firms was the cost of union labor, and in particular, the cost of pensions.

Speaking of pensions, the cost of pensions is having a grave effect on such cities as Detroit (the auto manufacturing capitol) and even states, with Illinois's bond status reduced to one step above "junk" status (with Forbes opining that this rating is a farce https://www.forbes.com/sites/invest...d-despite-what-the-agencies-say/#7020036e3191).

The problem with looking at the US auto industry as an example of problems with unionization is that the US auto industry faced multiple series of problems prior to and immediately after the Great Recession of 2008, which had very little to do with unionized workers. For example, GM and Chrysler have faced decades of mismanagement and poor decision making at the very top of the company for years which prevented the firms from adapting to the needs of consumers (for years, GM and Chrysler stood for poor quality cars, with poor service to boot from the dealerships).

How representative are the US auto industry in terms of unionized US or international employers? That's a question that needs examining.

 

[russ_watters]

Intrinsic in your statement is that the job market is somehow impervious to change by the actions of individuals and governments, which is far from the case.

You're getting warmer. It isn't impervious to change, it is self-correcting. So when you try to change it it will make a correction and you'd better understand what that correction is going to be when making the change.

I respectfully disagree. I feel that it is everyone's responsibility to ensure that all citizens have access to a livable wage (note my term "livable wage" i.e. wages that are the minimum that people can survive on, not "decent wages"). That's why I support (in the case of the US) a $15/hour minimum wage. And why I am also open to the idea of a guaranteed minimum income (with caveats in terms of how it can be implemented).

Fair enough. You're entitled to have and support your own vision. But what you can't have is to automatically make your vision work. It might work or it might not. And unfortunately, this vision doesn't work. Cities experimenting on it are learning that you can't ignore those "corrections" I referred to above.

I again respectfully disagree. There has been a number of studies looking at the effects of unionization in terms of the productivity of firms, and have found that, contrary to common beliefs, "a positive association [of unions on productivity] is established for the United States in general and for US manufacturing in particular".

@Mark44 expanded on my point for me. However:

http://www.epi.org/publication/webfeatures_snapshots_20070620/

That article is a red-herring: it doesn't discuss what we are discussing, probably because the authors recognize that the answer on the issue were're discussing is that unions hurt, not help. This is about pay and profit, not productivity. You [they] don't support unions because they increase productivity, you support them because they increase worker pay.

As for your example about the car industry, the problems there have little do with unions, and has almost entirely to do with poor management that failed to respond appropriately to competition from Japanese car manufacturers.

Ehem: that competition was in large part driven by lower cost of labor due to non-unionized manufacturing.

My quote was directed at @Vanadium 50 , not to you (I was questioning how he seemed in his post was blaming students for their own underemployment, and my post was a response to him).

Well sure - that was my first post in the thread. But I'm free to respond to any post I want! That's how discussion forums work! Besides, I suspect my thoughts and his are in alignment.

What so irritates me about this issue - what so reduces my sympathy and G.A.S. factor is that the answers are so obvious and easy, but people don't want to do things that can actually help because it is more fun to reward people after the the fact for bad behavior rather than try to fix the bad behavior. But you're right: the government can help. Not by fighting against capitalism, but by harnessing it. We've done it before:

With smoking.

Yep, that's right, liberal arts classes are like cigarettes. And here is what you (and many others) are suggesting we do:
1. Subsidize the smokers by paying them free money to use to buy cigarettes.
2. Paying to treat them and improving their quality of life.
3. Funding that by charging non-smokers a tax.
That is a sure recipe for making the problem worse.

Here's what we actually did to crush smoking/lung cancer:
1. Put giant warning labels on cigarette packs and fund aggressive anti-smoking advertising campaigns.
2. Tax cigarettes heavily to discourage smoking.
3. Use those taxes to fund their own care.

You can apply this almost literally to liberal arts:
1. Giant warning labels on applications and tests. Aggressive public advocacy campaigns warning of the dangers of liberal arts classes/degrees.
2. Tax liberal arts classes to discourage people from taking them.
3. Use the taxes to fund recovery programs for young liberal arts graduates to go back to school and gain more marketable skills.

 

[Mark44]

Regarding the studies on the effects of $15/hr min. wage, I'lll do some searching later today.

It's just as conceivable that more black and Hispanic teenagers are back in school finishing their studies rather than seeking employment, which would reduce the employment.

"Back in school" -- have you seen any statistics on high school completion rates by these groups? It would be difficult to justify your assertion here.

(another, much more negative explanation could be that more black and Hispanic teenagers are being incarcerated due to discriminatory policing, and thus are being pulled out of the labour market

"discriminatory policing" -- Another explanation is that these groups are committing crimes at much higher rates. Give me some time and I'll dig up some statistics.

 

[russ_watters]

By the way, I feel like this thread's premise should be supported:

The New York Fed, in a blog post authored by researchers Jaison Abel and Richard Deitz, examined the plight of those who graduated between 2009 and 2013. The study found that some 45% of college grads worked in a “non-college job,” which is defined as a position in which fewer than 50% of the workers in that job need a bachelor’s degree.

The low-skilled jobs — including baristas, bartenders, and cashiers — accounted for 19.3% of underemployed recent college graduates, paying $23,584 on average.

The largest plurality, at 25.2%, of the underemployed were in office and administrative positions paying an average of $37,207. The highest-paying cohort of the underemployed were in information processing and business support, where 11.4% were earning an average of $59,059.

That’s still below the average pay for a job requiring a college degree, which is about $78,500, the report says. (That number is for all graduates, not just young graduates.)

http://www.marketwatch.com/story/th...ith-college-degrees-research-finds-2016-01-11

And unemployment rate and median salary by college major:
https://www.wallstreetprep.com/blog/salary-and-unemployment-rate-by-college-major/

 

[russ_watters]

Please quote which studies you are referring to. I've seen other studies which indicate that a raise in the minimum wage have little impact on unemployment rates.

Again, you have not presented any empirical evidence that raising the minimum wage would price low-skilled workers out of the market.

It's been all over the news lately due to the recent experiments in it from a number of cities:
https://fivethirtyeight.com/features/seattles-minimum-wage-hike-may-have-gone-too-far/

Most of these experiments are just starting, so the picture will become clearer over the next few years.
The thing is, even proponents must acknowledge that money isn't free, right? If you increase people's wages, the extra money has to come from somewhere, doesn't it? You can't just ignore the market corrections when promoting a policy: you have to look at both sides of the coin openly/honestly.

The problem with looking at the US auto industry as an example of problems with unionization is that the US auto industry faced multiple series of problems prior to and immediately after the Great Recession of 2008, which had very little to do with unionized workers. For example, GM and Chrysler have faced decades of mismanagement and poor decision making at the very top of the company for years which prevented the firms from adapting to the needs of consumers (for years, GM and Chrysler stood for poor quality cars, with poor service to boot from the dealerships).

Again, you're only looking at half the equation. Japanese cars rose in the '80s when they were inferior to American cars. What matters isn't the quality, it's the value: the cost vs quality. Japanese (and Korean) cars provide a better value primarily due to cheaper labor costs. Yes, that is in large part "mismanagement": it's a failure by management to keep the unions in check. See:

The problem for GM was that when the sales slowed down, they had trouble cutting costs because most of their costs were fixed. In other words, a lot of their costs did not go down as their sales went down. In most manufacturing companies, when sales go down, some of the bigger costs go down as well (if you aren’t selling as much of your product, then you cut back on manufacturing through layoffs, through reductions in material purchases, and so on). GM has tremendous fixed costs related to their union contract. Closing a plant, for example, did not necessarily mean the workers lost their jobs. Company pensions and legacy health care costs were fixed as well. So when sales went down, many costs stayed fairly constant. And that led to losses.

https://hbr.org/2009/06/why-gm-failed

And:

For a company that perpetually faced a roughly $2,000-a-car cost disadvantage for most of the last few decades versus its Japanese rivals, the turnabout is monumental. More than anything else ensure that the company not only is surviving but thriving again as an independent entity within a few years...

"It means the curse they've been carrying for 20-some years is gone," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., and a long-time student of GM. His outfit recently estimated that GM and Chrysler each has cut the cost of making each U.S. vehicle by $5,000. "People are going to be surprised. GM is going to be right at the center again of what will be a highly profitable industry."

And among other areas, expect GM's greater cost flexibility to show up in better products. "They're already showing that they're trying to put more content into their vehicles," said Jessica Caldwell, head of U.S. industry analysis for Edmunds.com. "That's the smart thing to do: get future products in line and then worry about everything else."

The reasons for this profound turnabout are simple, of course. By becoming wards of the U.S. government and the United Auto Workers and stiff-arming its bondholders, GM in its restructuring last year wiped out $30-some billion in debt and reduced it to under $10 billion now. And that was after GM earlier had gotten the UAW and other unions to let GM off-load its "legacy" pension and health-care costs onto a new, independent entity whose financial risks mainly fall to the unions, rather than to the company.

http://www.motorwayamerica.com/editorial/gms-slimmer-cost-structure-will-pack-wallop

When you sell cars for $30,000 and spend $5,000 more per car in large part on bloated union contracts, that's a recipe for bankruptcy.

 

[UsableThought]

I see shards of disconnected arguments. The good thing is, it suggests we understand that the OP's question involves many factors. The bad thing is, it suggests blind men arguing about an elephant. Or maybe blind men in a bar over some beers.

Who among those who've commented has actually studied macroeconomics at length, or has a professional/institutional role that involves following & analyzing macroeconomic trends?

 

[russ_watters]

I see shards of disconnected arguments. The good thing is, it suggests we understand that the OP's question involves many factors. The bad thing is, it suggests blind men arguing about an elephant. Or maybe blind men in a bar over some beers.

I do agree, and I find it disheartening that such discussions start with a problem that most people agree is a problem and then lead to discussion about rewarding the mistake instead of trying to fix the mistake. It's mind blowing to me.

Who among those who've commented has actually studied macroeconomics at length...

What is also disheartening about discussions like this is that the economics, at least on the first order, is pretty easy, based on simple, logical truths like "if you charge more money for a product, people will buy less of it."

 

[UsableThought]

economics, at least on the first order, is pretty easy

On the first order - yes. But this doesn't strike me as a first-order issue.

I've read somewhere between a half-dozen and a dozen economics books, e.g. one analyzing banking collapses, a Robert Frank textbook that I don't remember well, a survey book analyzing different schools of modern economic thought, a historical look at the emergence of markets in Europe (some French author), and so forth. But my knowledge is far too sparse & disjointed to be meaningful for talking about an entire economy.

 

[Mark44]

On the first order - yes. But this doesn't strike me as a first-order issue.

Beyond first-order, economics becomes more like soothsaying than an actual science. For example, even to this day economists disagree on whether the programs developed during the Great Depression helped or hindered things.

 

[UsableThought]

Beyond first-order, economics becomes more like soothsaying than an actual science. For example, even to this day economists disagree on whether the programs developed during the Great Depression helped or hindered things.

And yet to argue without looking at the entire scope isn't much help. Nor would you and I have a prayer of making economic policy ourselves; we wouldn't know where to start. It's a soothsaying job, but somebody has to do it.

To say it's soothsaying is merely to say that the problems are very tough problems. For more perspective on why expertise still matters even in very tough problems, even though the rate of successful prediction is crap, see The Death of Expertise, by Tom Nicols; I have posted about this book before, so you can search PF for my username and "expertise" and find the threads.

Now I have to run out and see some theatre. Not sure if it's a comedy or a tragedy I'll be seeing.

 

[russ_watters]

On the first order - yes. But this doesn't strike me as a first-order issue.

Agreed, but when proponents of these policies can't even acknowledge the first order impacts it is tough to get to go deeper. But I'll offer a bite:

Eventually the higher incomes made by some and the adjustments made by business owners will reverberate through the economy. It will have impacts such as increased automation, which will kill low paying jobs and create high paying jobs that the newly unemployed aren't qualified to fill. If instead you educate some of those people better and some of those people worse, the people left in those jobs will have less debt and get paid more and the people who got better skills will fill the jobs created by (for example) the new automation.

Whether an increased minimum wage is a net positive or net negative for the economy in the long run, for the people it is targeted at, you will have winners and losers. But a policy that targets the poor decision making that led this it produces only winners out of that group and in general comes out better for society as a whole.

[Edit] Also, I disagree with your implication that we shouldn't talk about such things because all of us are/were a)In a position to make these mistakes and b)voters.

[Edit2] I also fear that in conjunction with the anti-ai/automation thread, we're seeing a movement toward policies that will create the problem: drowning people under the wave instead of riding it to prosperity, like we always have before.

 

[StatGuy2000]

Regarding the studies on the effects of $15/hr min. wage, I'll do some searching later today.

"Back in school" -- have you seen any statistics on high school completion rates by these groups? It would be difficult to justify your assertion here.

If I'm not mistaken, you were the one who said the following:

"For example, while the overall unemployment rate in the US decreased from 4.8% to 4.2% from 2nd Qtr 2016 to 2nd Qtr 2017, but for black teenagers 16 to 19, the unemployment rate decreased from 30.0% to 25.9%, and for HIspanics in the same age group, it decreased from 17.7% to 14.0%. (US Bureau of Labor Statistics"

Ostensibly, you quoted the above as a means of demonstrating that an increase in the minimum wage would somehow adversely affect black and Hispanic teenagers. As if somehow the fact that the minimum wage is so low somehow contributed to the decrease in unemployment rates among these groups. What I was pointing out is the fallacy of your argument, and pointing out possible explanations.

I don't have the latest data on the high school completion rates by these groups during the particular time period of between 2016 and 2017. However, I do have the following from the National Center for Education Statistics:

https://nces.ed.gov/fastfacts/display.asp?id=16

This covers the period between 2000 and 2015. What is the clear from the graphic is that high school dropout rates have fallen considerably for Hispanic students, and to a lesser degree for black students (dropout rates for whites looks to be fairly steady).

"discriminatory policing" -- Another explanation is that these groups are committing crimes at much higher rates. Give me some time and I'll dig up some statistics.

Since you've addressed this in another post, I will respond there instead.

 

[Vanadium 50]

Oh, so you're blaming the students now for graduating with a BS or BA expecting it to be a path to fulfilling employment or a route out of poverty, only to be unemployed or only able to find work at Starbucks or Walmart for minimum wage?

In some cases, yes. If a student gets a BA in Art History, is it a surprise that he ends up at Starbucks? The number of schools giving degrees in Film Studies has increased by a factor of 30 in the last 30 years. Has the number of jobs gone up by a similar factor? And in the example I gave, if the person in question were to go to his boss and demand more money and fewer hours do you really think he'd get the keys to a Porsche?

And while we're talking about realistic expectations - I spend less than half my day on physics. The larger half is budgets, schedules, reports (reading and writing), requests for funding, and so on. Does that make me underemployed?

I'll discuss minimum wage separately.

 

[Vanadium 50]

I expect the minimum wage part of this thread to be split off, as there are at least three different threads going on.

A union is a labor cartel. It can increase wages (price) by reducing supply. As such, you can reduce unemployment or you can increase wages, but you can't do both simultaneously.

 

[Evo]

Do people not see how dire this situation is? Hundreds of billions are burned without any return. Sure, plenty of people profit. But with such a big portion that doesn't, it's scary. That's 4 extra years that these grads could have spent contributing to the workforce. That's also billions of dollars wasted by government investment.

It also shows that a large amount of people are easily willing to gamble on 50/50 chances, which might be more telling than the dollar amount lost. Is this a bubble waiting to burst?

What would resolve this situation? I'm thinking that borderline students(those that are not already great academically) should probably just wait out the storm and go to college at the right time when a profit appears to be highly probable; certainly better than just a coin flip, actually, they should go when it's much better. Well, we wouldn't even know if this is a viable solution since people's tendency to overreach mean that not enough would listen. The advice is probably already out there.

I'm sorry but you cannot get a degree and think that means you're going to get a job. If you think that, you're a fool. Sorry, but it's true, there are so many factors involved in getting hired, personality is a large factor. I hate to say it but appearance is also a factor, I know that's unfair, but it's true. I don't mean so much physical attractiveness, although that can be part of it, but how you dress, I watched an interview of people in hiring positions and one woman said she based her hiring decisions on people's shoes. There are so many candidates for positions, employers can be that stupid and picky. Sad but true. If all else is equal, she liked your shoes more, so you got the job.

 

[FallenApple]

I'm sorry but you cannot get a degree and think that means you're going to get a job. If you think that, you're a fool. Sorry, but it's true, there are so many factors involved in getting hired, personality is a large factor. I hate to say it but appearance is also a factor, I know that's unfair, but it's true. I don't mean so much physical attractiveness, although that can be part of it, but how you dress, I watched an interview of people in hiring positions and one woman said she based her hiring decisions on people's shoes. There are so many candidates for positions, employers can be that stupid and picky. Sad but true. If all else is equal, she liked your shoes more, so you got the job.

If you actually spent the time to read my post with more care, you would realize that it's discussing something else entirely. You missed the point.

I'm taking about the potential negative ramifications for everyone. Not just for those that lose.

 

[Evo]

I'm taking about the potential negative ramifications for everyone.

I'm sorry who beside the students are you talking about?

 

[FallenApple]

I'm sorry who beside the students are you talking about?

Well, if the students take such a huge financial loss, that damages their purchasing power. If there are too many such students, it could hurt the economy in the long run, which affects everyone.

 

[Evo]

Well, if the students take such a huge financial loss, that damages their purchasing power. If there are too many such students, it could hurt the economy in the long run, which affects everyone.

So colleges should turn down more students from entering?

I would think colleges should give everyone a chance and not turn them down. It's not the college's fault that some graduates are unhireable.

You seem to think that a college degree should be a guarantee of a job, that's ridiculous. A college can only teach, then it's up to the person to find a job. Many will not because they simply aren't someone that an employer wants. Waiving a degree at an employer means nothing now days. And many students are not aware that they lack the skills (outside of academics) required to get a job. And that is not the fault of the college.

 

[russ_watters]

This thread might end up locked, but I'd just like to point out that due in part to the lack of a source/citation in the OP, it was easy to drag off topic. There was an incorrect understanding stated and then run with early on that underemployment is about money (not making enough). It isn't: it is about education. Here are the definitions:

1. "Overqualification" or "overeducation", or the employment of workers with high education, skill levels, or experience in jobs that do not require such abilities.[5] For example, a trained medical doctor with a foreign credential who works as a taxi driver would experience this type of underemployment.
2. "Involuntary part-time" work, where workers who could (and would like to) be working for a full work-week can only find part-time work. By extension, the term is also used in regional planning to describe regions where economic activity rates are unusually low, due to a lack of job opportunities, training opportunities, or due to a lack of services such as childcare and public transportation.

[note: the 3rd definition refers to "labor hoarding" in communism and doesn't apply here.]

https://en.wikipedia.org/wiki/Underemployment

Now it is of course true that a person who is working part time or at a low skill job is likely to also be making less money, but because the definition is an education/skills mismatch, paying people more money for the same job doesn't even address the problem!

There also appears to be an in-built over-simplification in the definitions that assumes value based on education level instead of education type. IE; that all bachelor's degrees are equal in "skill" or "qualification". Does anyone really believe that's true?

 

[NTL2009]

... I feel that it is everyone's responsibility to ensure that all citizens have access to a livable wage ... . And why I am also open to the idea of a guaranteed minimum income (with caveats in terms of how it can be implemented). ...

I actually don't believe that you think that at all. I've heard people say this, but back off when it applies directly to them.

The problem is in those "caveats in terms of how it can be implemented". We end up with someone (who? A bureaucracy far removed from the supplier/consumer?) deciding what something is worth to someone else, instead of two people freely deciding between themselves what something is worth (the free market). Just like a recent discussion on the price of a stock - as long as people are trading a stock at around, say $26, then that stock has been determined to be worth $26. Or should we have someone in an office in a Government position determining what all stock prices should be? Same thing, really.

So I decide that my calling in life is to play electric guitar through a large Marshal Stack, outside your home from 1 AM to 6 AM each day. And I need to be paid a 'living wage' for my work. You'd go along with this?

Of course not, and it is a silly example, but really not so silly when you see what some people think is of value. Where do you draw the line? Who decides what is of value and what isn't and how much? They can do what they want (within the law), but if no one wants to pay them for it, they need to deal with it.

Bottom line, if I have a business and can find workers willing to for the job for $10/hour, and I'm willing to pay them $10/hour, then we both agreed it is 'worth it'. We don't need you or anyone else stepping in and deciding they should be paid $5/hour or $15/hour. If we apply it to wages, we need to apply it to everything, and then you have a centralize government micro-managed situation that can't and doesn't work.

Hey, I think you should be charged $50 for every post! It's what I think, so you must comply! Who am I to say? I'm the centralized planner, you must comply!

Not such an attractive idea, is it?

 

[256bits]

I A union is a labor cartel. It can increase wages (price) by reducing supply. As such, you can reduce unemployment or you can increase wages, but you can't do both simultaneously.

Just an additional comment,
Cartels, or unions, guilds, closed shops, Societies, Colleges do attempt to do both. For their members. If you are not a member then for them you do not exist. Memberships is restricted to those having a certain skill, for example tradespeople, education, for example engineers or lawyers, or labour, for example being in actual employment with an enterprise. They exist not to solve problems in society at large, though in some sense tit can be argued that they provide a means to ensure public confidence, but as a means through which their members, and not others, are guaranteed employment for tasks that are deemed possible to be performed only by their members. Fluidity exists for the in and out movement of members; in other cases membership is permanent. Overlap is possible. Exceptions also possible.

Government decrees and laws back up their existence - doctors can practice medicine, lawyers can practice law, actors can act, pilots can fly. Anyone not designated to be a member of the group can be liable for actions performed as being outside their expertise just by simple non-association. Exclusion by law is accepted,

Blue color unions seem to bear some wrath for society's problems regarding labour. White color unions, societies, including professional, much less so. Reasons varied and at times erroneous and irrational.

 

[Vanadium 50]

Cartels, or unions, guilds, closed shops, Societies, Colleges do attempt to do both. For their members.

Right, but only for their members. Not society as a whole. I can't get a job as a barber without the permission of the state. This is good news for today's barbers, but not for me, an aspiring barber.

 

[Vanadium 50]

Well, if the students take such a huge financial loss, that damages their purchasing power.

But that money didn't just vanish in a puff of smoke. It went into the pockets of professors and school administrators - sadly, more of the latter than the former - where it was presumably spent.

If you are arguing "no, no, I'm not talking about the immediate cost of tuition, I'm talking about lifetime earnings", then you are talking about wealth creation. In that case, the complaint is that a civil engineer creates more wealth than an art history major. I'm not sure I see this as a problem, but even if I did, I don't think the solution is, to borrow Russ' example, to subsidize art history majors.

Now, let me go against the grain and say that I support liberal arts majors. (!) I think there is a great deal of value in a classical liberal arts education, because it exposes the student to a wide variety of ideas, and a student spends four years debating and critiquing these ideas. The successful student is well suited to analyze and create arguments, starting with "why you should give me a job". The problem is that the classical liberal education is going the way of the dodo.

1. The time spent studying in college has fallen a factor of ~2 in the last 50 years.
2. Majors like "philosophy" are becoming less popular, as majors in "film studies" and their ilk are becoming more popular.
3. Postmodernism has infected many colleges' programs, and with it claim that an argument's merit depends on who is making it. This allows the lazy rebuttal to an argument "of course he would say that" rather than a detailed attack on the argument itself.
4. The twin notions of college as a "safe space" and "ideas are violence" together mean that students are no longer subject to a wide variety of ideas.

In 1965, a college degree, even in liberal arts, was seen as a valuable commodity. Once you squeeze out everything of value - something that has been happening over the last 50 years - the sheepskin itself is shown to be worthless.

I was once asked how much my brass rat (MIT class ring) cost. My answer was "more than you could possibly imagine". On the other hand, anyone with $600 can buy one from the manufacturer. Which is the correct answer?

 

[gleem]

About half of college grads underemployed=>disaster?

So where did this stat come from. http://www.epi.org/publication/class-of-2016/
says that only 1 in 8 colleges graduates are underemployed with about 1 in 10 unemployed.

As for the value of a degree College grads College grads are about 28% more employable the HS only grads.and make about 70% more than a HS grads. These are averages and a HS grad can make substantially more that a college grad depending on the occupation.

If young workers are confused/clueless then they haven't spent much time in planning for their future. The internet if full of information on occupations, jobs, qualifications prospects etc. Our educational system is dropping the ball. The counseling services in the HS are not doing a very good job in assisting them or providing resources or guidance in this very important aspect of their life. They should have drummed into their heads that companies are only interested in what you can do for them. Any well motivated HS student can do this on his/her own and if done will have a great advantage over those who wait until college to start thinking about what to do.

College is a great experience even if it does't lead to the job of your dreams and it does give you an advantage in the workplace.whether you take it or not.