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Economic Reality Check for Younger Americans

Posted by Steve Markowitz on September 2, 2012

Most Americans do not require more economic data to realize the economy is weak five years after the economic meltdown.  At the same time certain granular data offers a broader context for of the long-term implications of the economy’s challenges.

Economists John Mauldin posted an article titled Boomers are Breaking the Deal that offers interesting data on how different segments of society had been affected by the downturn.

  • According to the Associated Press 54% of bachelor degreed Americans under the age of 25 are either unemployed or underemployed.  It is also projected that by 2020 that the majority of largest job opening occupations will not require college degrees.  This will be caused by ongoing computerization that is eliminating the need for highly trained professionals in many jobs.
  • While President Obama promotes class warfare, the real growth in societal inequities is age-based.  The Baby Boomer generation is taking a greater share of wealth through entitlements like Social Security and Medicare.  They now also take a greater bite of the job market.  The chart below shows the employment level of those 55 years and older since 2007, which has continued to rise at a steady pace.  At the same time, the total employed in the United States has dropped by 4 million, as indicated by the red line showing that Baby Boomers are taking a larger percentage of available jobs.
  • As of June, 2012, the total civilian labor force in the United States was 155 million with 111 million being in the private workforce.  There are approximately 56,000,000 Americans either on Social Security or disability benefits equaling a staggering 50% of the private workforce.
  • One in eight households receive food stamps and over 50% a government check of some form.  It doesn’t take a PhD in economics to understand this trend is a train wreck.

While the above are unsustainable, they continue only because of United States ability to borrow and print money.  Believing that this Ponzi scheme can continue is akin to believing in alchemy.

It is remarkable that younger Americans have failed to understand the implications of the massive entitlements going to Baby Boomers.  The government uses handouts, such as subsidized college loans, to keep mollify them.  This sleight-of-hand is running out of steam as young Americans find it increasingly difficult to find jobs.  When they wake up to reality of their plight they will become a powerful political force that will likely be adversarial to the interests of the Baby Boomers.

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