Obama and Youth Unemployment

Source: U.S. Bureau of Labor Statistics

In 2008, young adults piled into election booths to vote overwhelmingly for Barack Obama. Their adulation struck me personally as a weird sort of homage to the cult of personality. After all, Obama had no executive experience running any organization of  any substantial size whatsoever up to that point, yet many young people were charmed by Obama’s optimism and charisma. According to MSNBC, young “voters preferred Obama over John McCain by 68 percent to 30 percent — the highest share of the youth vote obtained by any candidate since exit polls began reporting results by age in 1976.”

Fast forward a little over three years later, and the future for Americans between 20 and 24 looks bleak. The unemployment rate for this group has risen to as high as 17.1% during the Obama administration. When President Obama first took office, the unemployment rate for this demographic was 12.4%. As of January 2012, it remains persistently high at 13.3%.

Today, this demographic is so desperate to find employment that employers have taken advantage of this situation by offering more unpaid summer internships. For instance, Stanford University noted that employers “posted 643 unpaid internships on Stanford’s job board” in the 2010 academic year, “more than triple the 174 posted” in 2008.

It is unlikely this state of affairs was the sort of “hope and change” twenty-somethings were looking for when they entered polling booths some three years ago.

Hopefully, they’ve learned a painful lesson about the difference between fantasy and reality. I just hope that Julio (see video below) is not still working at McDonald’s.

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About Sean Patrick Hazlett

Conservative clean energy crusader, national security hawk, financial analyst, engineer, and former military officer.
This entry was posted in Business, Education, Finance and Economics, Media, Policy, Politics and tagged , , , , . Bookmark the permalink.

21 Responses to Obama and Youth Unemployment

  1. Troy says:

    Your ‘insights’ are so easy, and lack intellectual integrity… to say the least. Yet, they play extremely well into your ‘horse blinders reality’.

    Let’s see. If one throws a ball up in the air, the ball continues to rise and then begins to fall to the ground. This concept is used often in economics… if you’ve heard of it. The only way the ball ‘stops’ is if it hits ‘something’ and then returns to the ground. But the ‘natural’ effect is for a ‘peak’ and then the discention.

    If one, namely you, has a memory, our country was at the very beginning of a FINANCIAL MELTDOWN!!! If you remember what happened immediately before Bush left office, there are numerous things to think about.

    Why did Bear Stearns collapse? HMMMM?
    Why did the stock market take almost a 4k nose dive? It lost 33%. Why?? HMMM

    Obviously, a ‘rational mind’ would understand that seldom in economics, do things ‘hit the eve of the house’ but rather have to take the natural course and work themselves out. According to graphs, an economic tool I’m not sure that you are aware, the stock market, economy, unemployment…. have ALL followed this course.

    Today, the stock market is at a high after losing the 3rd largest percentage in HISTORY. It has rebounded. Those pesky graphs again.

    Unemployment, after hitting a ‘high’ has now started to ‘fall’ yet again and continually steers in the right direction. Possibly, by Novemeber, unemployment will be under 8%…. I don’t know.

    Company profits are, for the most part, high again and breaking records. Another positive indicator.

    To propose an ‘argument’ such as yours, seems that you are somehow living in utopia and fail to realize the ‘natural economic cycles’. Never in history, never, has the recovery been immediate. Constantly, it has taken time. In the future, if history holds wisdom, it will react the same.

    Possibly, with a more ‘solid foundation’, this type of collapse will not happen again. If one is honest about the past, we were living in a ‘fake economy’, a ‘house of cards’…. which had to come tumbling down.

    Now, the wise person will search for ‘who caused the house of cards to be built’? The foolish person will blame someone for thier inability to repair the house of cards ‘immediately’. THrough your statements, you’ve shown where you stand.

    Sadly, I have economics on my side. Walk out in the middle of your yard and throw a baseball up in the air, paying close attention to what happens to the ball. In doing so, you just might learn something about ‘economics’. After that, stand under the overhang of your house… called the eve, and throw the ball up. When the ball hits the wood and makes a big bang, and then returns to the ground… that is your economic philosphy. Yet, with all the studying in the world… you will never find that economic principle.

    Good luck though!!

    • Troy,

      I agree that the economy should not have improved immediately, and that it takes time. I also agree that assigning blame to any one President or cause is too simplistic. Yet the Democratic Party is claiming credit for the decline in job losses the moment President Obama stepped into office. Don’t take my word for it, watch this video:

      Secondly, you refer to the standard Democratic talking point that one should not expect an economy to improve immediately. This is a fair point until you consider it has been THREE YEARS since President Obama took office with Democratic majorities for two of those years (i.e., the default response to THREE YEARS tends to be Republican obstructionism, which only really accounts for a single year). Furthermore, you fail to point out that no previous economic recovery has been this slow since the Great Depression, and the Great Recession was no Great Depression.

      “Unemployment, after hitting a ‘high’ has now started to ‘fall’ yet again and continually steers in the right direction. Possibly, by Novemeber, unemployment will be under 8%…. I don’t know.”

      It has indeed fallen over the past few months. However, it is still half a percentage point higher than when President Obama first took office. It also remains higher than the projections the Obama administration threatened if Congress failed to pass the stimulus. The percentage of adults participating in the labor force is 63.7%, which is at least at a 10-year if not all-time low. Furthermore, if you use a more relevant measure of unemployment (U-6 for instance) that takes into account the number of people who are underemployed or simply quit looking for jobs, the number stands at 16.2%.

      “Possibly, with a more ‘solid foundation’, this type of collapse will not happen again. If one is honest about the past, we were living in a ‘fake economy’, a ‘house of cards’…. which had to come tumbling down.”

      If you’d study history, you’d know this type of collapse will always happen, because human beings always get sucked into bubbles. You had the South Sea Bubble, the Tulip Bubble, the Railroad Bubble, the Ponzi scheme, the 2001 stock market bubble, and the housing bubble, and many, many more. People just cannot help themselves. It has happened before and it will have again. No amount of regulation will ever change human behavior.

      “Now, the wise person will search for ‘who caused the house of cards to be built’? The foolish person will blame someone for thier inability to repair the house of cards ‘immediately’.”

      So, in your infinite wisdom, whose fault is it? Who caused the house of cards to be built?

      • Troy says:

        First, thank you for taking time out of your day to respond.

        We appearantly are stuck in a quandry. Where I am somewhat forced to agree with you; “People just cannot help themselves. It has happened before and will happen again”. With that in mind, are we to idly sit back and wait for the inevitable to happen, or, atleast try to put safe gaurds in place to prevent it?? The question for the philosphers and one that may never be answered. Agreed.

        There obviously can be too much regulation, and as I business owner, I don’t want someone telling me how to operate my business. No questions there.

        Yet, and I think this example fits well for quite a few of the problems our ‘capitalist system’ faces. I hate the idea of ‘ignorant until proven innocent’.
        Example:

        I recieve emails about penny stocks. These emails post claims on how the stock is ‘set to soar’ and tell all these wonderful situational occurences taking place within the company and the stock itself.

        Yet, after reading all this AMAZING information, if one dares to read the bottom of the ‘suggestion’ one would find that the company sending the ‘information’ is merely an advertisement company.

        If one digs further, they would find that the company in question has sat stagnant forever and has only moved during the response time of the advertisement letter… only to die and return to its’ original status… in the PITS!!

        People without much knowledge, otherwise considered ignorant, are poised and primed to be taken for a ride by these unscrupulous companies. THey are based strictly on lies and have one intention; to decieve the buyer.

        I whole heartedly think these types of companies are ‘predatory’ and should be regulated out of business.

        Notice I used the word ‘predatory’. I did so on purpose. Many, many, many of the bank practices seldom see the light of day and only come to light when the grievance is so severe that it makes the news.

        Bank of America; my bank, being one of the worst in my own personal view. Barney Fank is not the cause of the banking collapse because he made these banks give loans to unqualified buyers. I have never heard more political BS in my life. The banks, and the banks alone, are responsible for their irresponsible practices and it is magnified by thier ‘loan gathering’ (brain not working yet) where they knowingly were grouping bad loans together and selling them. In the legal world, outside banking that is, it would be called fraud. Even better, they cannot blame that fiasco on Barney Frank or Chris Dodd. The blame is in the mirror.

        I live in Texas and own a small concrete company. I’ve been in the building industry for over 15 years and know the insides and outs fairly well. I am very familiar with the lending practices of the major builders; and safe to say, no politician were in the room causing it to happen. Greed, and greed alone. One candidates application would be manipulated numerous times trying to get it to pass. Once passed, the mortgage was sold and the builder was out of the loop and paid in full, knowing full well he had just commited a massive fraud with the kind eye of ‘trying to help someone live the dream of home ownership’. Doesn’t that sound nice?

        In Texas we have a man by the name of Bob Perry of Perry Homes. He himself, being the largest political donor in the state… the nation at one time… had the ‘arbitration requirement’ put into effect in the state of Texas. After building a crappy product, and the owners trying to sue him for doing so… the were essentially forced into ‘arbitration’. This time it back fired. His hired guns were forced to admit this product was substandard and sided with the plaintiff. Being miffed by the outcome, he then cried foul because they had originally tried to sue and called the arbitration null and void. He lost in court. Then, amazingly I’m sure you’d agree, the man who started the whole ‘arbitration committee’ decided it was a waste of time and disbanded. Hard to believe I’m sure.

        Over regulation is a terrible thing, there is no question about this matter. Yet, in our greedy fallen nature, it has been a requirement of our society in order to inact child labor laws. It was required to pay employees for overtime. It was required to give women a hand up. It has been a ‘requirement’ time and time again because we have proven ourselves unable or unwilling to do the right thing unless we are point blank forced to do it.

        I unfortunately do not have all the answers. Yet I would suggest to you that yes more regulation is necessary in order to build a more solid foundation. Will we ever get there. No, man’s greed has no end. But there are ‘saftey measures’ in place that already protect us from grievances from years past.

        Speculation!! Something only beginning to take place in our lifetime. Nice way of saying ‘artificial inflation’. Being also in the oil business for over 15 years, simultaneously, oil has never ever been able to maintain these levels before Hurrican Katrina. I would suggest to you, a high majority of this situation lies directly on the back of speculators. A farce from the get go.

        Thanks for your time. I wish I could ellaborate more but duty calls.

        Thanks,
        troy

        • Thanks, Troy.

          You have a lot of points to address here. I hope you forgive me if I only address a few of them at a admittedly somewhat high level.

          I agree that some level of regulation is always necessary. However, I would also argue that regulation also is a bit like whack-a-mole. When the government eliminates a profitable opportunity, the market innovates into another unregulated activity. Witness the rise of hedge funds as a response to the regulation of mutual funds. Or the rise of private equity as an alternative to the regulatory burdens of public equities. The rise of derivatives were no different. Sometimes the government doesn’t regulate enough (e.g., the 1996 repeal of Glass Steagull), and sometimes it regulates too much (Dodd-Frank). For instance, one reason banks aren’t lending as much is because Dodd-Frank requires them to maintain high capital ratios. As such, a lot of money that otherwise would be invested in profitable projects, remains on the sidelines to maintain these ratios. The intentions are noble, but the results only serve to keep the current economic recovery anemic.

          I also disagree about speculation regarding oil specifically. The reason oil prices are high is that we’ve extracted all the easy stuff, and it is now much more expensive to extract oil using tertiary recovery techniques like fracking, converting tar sands to oil, etc. It is unlikely that we will ever see $30 per barrel oil again in our lifetime (this is another issue near and dear to my heart – peak oil – but that is for another day.) That said, it does happen from time to time. As I’ve said, you had housing, stocks, tulips, and railroads, among other prior speculating manias.

          “Bank of America; my bank, being one of the worst in my own personal view. ”

          You and are in firm agreement on this one. 😉

          Anyway, thank you for stopping by. I look forward to future discussions.

        • Troy says:

          Good morning yet again:

          The ‘Democratic party taking credit’… I agree, and they are doing so wrongfully. There are no easy answers, which each side claims to have. Both parties essentially want thier members to bow down to them as the ‘all great and wise one’ which neither side is.

          Sadly you and I can play volleyball until the end of time. You are making extemely valid points, and I think I am as well. And… I do like your ‘wack a mole’ analogy!!!

          So, not to continue playing volleyball, but onto another situtation, the Presidency.

          I think the Republican’s have already almost handed Obama another four years in office. I do not think if Romney wins the nomination, that the ‘religious right’ will be able to justify in thier own heads voting for a ‘cult leader Mormon’. I think they will essentially stay home.

          Many independents are more angry at the Tea Party than the Democratic party and feel the Tea Party is responsible, right or wrong, for the gov’t shut down. I think many independents, yet again, will side with the Democrats.

          Sadly, I think the ‘conservative party’ (what does that even mean now a days?) will most likely lose all ground made up in the 2010 election. The house may be in jeporady again???

          The world is going crazy. Both parties, or should I say ‘all three parties’, are leading the parade. We will see what Novemeber means??

          In essense, whomever it ends up being, I think it will be a whole lot more of the same. If the conservative party wins, then it will be the democrats taking the place of ‘the economy is moving fast enough’. Same concept, different side. The madness continues.

          Thanks,
          troy

  2. Scott Erb says:

    Obama will win that demographic again, in part because it was not primarily about the economy. There was a sense after Iraq and way politics in America progressed that people wanted someone different. The GOP message is still too 20th Century (and as I note in my blog, negative in focus). I think the GOP can craft a new, optimistic 21st Century conservatism, but they haven’t done so yet — anger at Obama by the Tea Party wing and over optimism after 2010 is keeping the GOP from seeing that people really want hope and a vision. That doesn’t mean overnight fixing of the economy (though things are finally starting to look up). If you look at this compared to the 1980 recession, the length is similar, though Reagan started to get out of it earlier than Obama — yet Reagan also benefited from dramatically declining oil prices and a massive increase in deficit spending that helped stimulate the economy. Obama has had some increased debt, but oil prices haven’t cooperated.

    People aren’t satisfied, they want change. Obama is part of a long line of unlikely Presidents chosen because Americans are tired of insiders and wanted some kind of new approach. The GOP now reminds me of the Democrats in 1984. That doesn’t mean Romney can’t beat Obama, but the Republicans need to develop their message of hope and “change we can believe in” (with different wording, of course).

    • Scott,

      I agree that the Republicans need to lead with a more positive vision. However, the Democrats took the same tack with Iraq. Senator Reid even aided and abetted the enemy by saying the “war was lost” when Americans were still bravely fighting and dying in it. That said, Republicans also need to offer a viable plan that will juice economic growth. I am confident that Romney will do that. The problem with Obama’s campaign was that it was all hype and no substance. Unfortunately, many people fell for it and now they are suffering because of it. I give Obama full credit for his national security policy, and for passing the stimulus. However, since that point, he’s introduced policies that either dramatically increased entitlements or many have slowed down the economic recovery (e.g., Obamacare falls into both categories).

      But make no mistake, this election is all about the economy. Flare ups like Obama’s imposition of healthcare mandates that stifle religious freedom will harm him, but in the end, the American people will vote based on their economic situation. Despite some modest improvements over the last few months, Obama is a long way from declaring his economic policies a success. In fact, if the election were held today, I believe he would lose based on his economic record.

  3. Tevyeh says:

    I think the sharp increase (40+%) in the federal minimum wage from 2007-2009 has played a significant role in depressing youth employment. The hike seemed timely in early 2007—when national unemployment was under 5% and the minimum wage hadn’t kept pace with inflation—but with 20-20 hindsight, it was probably a bad idea. The political will to postpone the phase-in of the hikes did not exist—although at least President Obama seems to have abandoned his 2008 campaign pledge to pursue a $9.00/ hr. minimum wage, adjusted annually for inflation.

    • Interesting. I never thought of that. Though it is precisely what one would predict using classic economic theory.

      • Tevyeh says:

        Yeah, it’s a classic “price floor.” It’s pretty undeniable that the minimum wage hike is responsible for at least some of our excess unemployment, particularly among young people. The question is “how much.” Personally, I suspect that it accounts for at least one percentage point of our national unemployment rate, more for the data set we’re discussing.

        To any liberals who want to cite studies failing to find a strong relationship between state and federal minimum wages and unemployment rates: a price floor can only be expected to result in a glut (in this case, of unemployed labor) when the floor is above the “equilibrium” price. These circumstances don’t always apply, and the historical data cannot be expected to reflect a causal relationship when the floor is set below the equilibrium price.

        Sorry about that preemptive argument; I’m just increasingly annoyed by liberals who smugly “rebut” conservative arguments by appeal to empirical studies of questionable quality or relevance. Of course, once a liberal has uncritically embraced the conclusions (or what they imagine the conclusions to be) of an empirical study, you’re a flat-earther if you disagree with them…

        Sorry to paint with a broad brush. Rant over.

        • “Sorry about that preemptive argument; I’m just increasingly annoyed by liberals who smugly “rebut” conservative arguments by appeal to empirical studies of questionable quality or relevance. Of course, once a liberal has uncritically embraced the conclusions (or what they imagine the conclusions to be) of an empirical study, you’re a flat-earther if you disagree with them…

          Sorry to paint with a broad brush. Rant over.”

          If you’ve got any rant left in you, I invite you to join the comment thread here.

        • Tevyeh says:

          So tempting, especially since I see Reflectionsephemeral engaging in the exact behavior that I find so annoying. For example (from his link to his own blog):

          “As always happens whenever anyone competent looks at the data, yet another new study finds that the Community Reinvestment Act and the GSEs (Fannie Mae and Freddie Mac) didn’t cause the housing bubble.”

          Contrast this assertion with the closing paragraph of the paper he refers to:

          Since our tests are indirect, it would be inappropriate to conclude that the test results
          prove that the CRA or GSE goals did not cause or contribute to the crisis. The existence of
          “special CRA” programs and “targeted affordable” loans in the GSE portfolios suggests that both regulations led to some loans being underwritten with different prices or terms than might otherwise have taken place. The question is, were such actions enough to materially affect market prices and standards? We do not see evidence of this in our indirect tests. However, direct evidence is potentially available by focusing on the performance of loans originated through these programs. To date, the data to conduct such analysis is not publicly available, and until it is, we may be unable to draw definitive conclusions on the role that the CRA and GSE affordable housing goals played in the subprime crisis.

          Despite this disclaimer by the authors, Reflectionsephemeral holds up their work as a complete exoneration of federal housing policy with regard to the housing bubble.

          Maybe when I have more time I’ll read the Fed paper more thoroughly, to be able to form an opinion on its relevance to the issue. Concluding from the results of this study’s “indirect tests” that Uncle Sam played no role in the housing bubble may be akin to concluding that elephants do not exist when a thorough search of my basement reveals no evidence for their existence.

          Unfortunately, I’ve got midterms right now. Maybe next week!

  4. mpbulletin says:

    Sean, I do not foresee the 20-somethings who voted for Obama shifting to the GOP especially given their dismal views of pretty much everything. This group was inspired by Obama and may well have had some very high expectations but he still inspires much more than anyone in the current GOP field. Plus, many of them will hold back on switching to the Right given their stances on many of the social issues we’ve seen come up especially since the mid-terms. I doubt many in the youth demographic find themselves agreeing with the House’s actions over the last year or so.

    In addtion, they are seeing the trending improvements in the economy and this will factor into their vote.

    • mpbulletin,

      I agree that many of them will not shift right. However, I do think they are disillusioned enough that they won’t show up to the polls, which will also likely favor the Republicans.

      I agree that trending improvements in the economy will factor into their vote, but the economy still needs to improve a lot more for this demographic before it shows any major excitement.

      • mpbulletin says:

        Sure some may not vote but we’ve also seen a lot of discontent on the GOP side as well and we’re only talking the primaries here. If Romney makes it, there’s little to get them excited and independents are shifting to Obama. Santorum…well…hmmm. What can be said about him? Independents will definitely not vote for him and I can’t see many moderate Republicans like yourself voting for him. Given that, it’s quite possible any non-voting from the youth demographic may well be offset by Republican voter disillusionment.

        • I wouldn’t worry about the GOP. When faced with the choice between Obama and Romney, Republicans will vote Romney regardless of their reservations.

          However, your point on Santorum is a fair one. Fortunately, I don’t think he has a snowball’s chance (I hope). 😉

          • mpbulletin says:

            True, those who do turn out to vote will vote for Romney but they are having a unity problem. And if independents are a problem for them, which is starting to appear to be, then there will be a tough fight for them.

            Would ya mind if I hope Santorum wins… it’d be fun seeing a landslide victory for Obama? hee hee 🙂

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