Click to enlarge.
Hurray! We're back at the bottom of the channel again (last seen in November of 2007)! We might therefore expect a huge surge in higher educational services employment from here.
Don't let it concern you that the last two surges were due to the economy falling apart (as many discouraged unemployed workers therefore scrambled to get into college).
Look on the bright side. If this chart's long-term exponential growth trend is any indication, then the best education you can probably get would be to learn how to train other people to train other people. Leverage up!
Put another way, you train two people, and then they train two people, and so on, and so on! Just think of the sustainability! It's a Faberge economy!
It's only a matter of time before everyone is working in the educational services industry! Other than massively growing student debt, what could possibly go wrong? For the sake of argument, what's the worst case scenario? Would it really be so bad to have the most highly educated baristas on the planet?
March 27, 2013
Why a BA is Now a Ticket to A Job in a Coffee Shop
A new paper from Paul Beaudry, David Green, and Benjamin Sand argues that these worried kids--and their worried parents--are not just imagining things. The phenomenon is all too real. Skilled workers with higher degrees are increasingly ending up in lower-skilled jobs that don't really require a degree--and in the process, they're pushing unskilled workers out of the labor force altogether.
Source Data:
St. Louis Fed: Custom Chart
http://i.imgur.com/0DkQhRI.png
ReplyDeleteage 4-22 2012-2060
shows we're in a demographic down cycle until 2015 then it's off to the races next decade as the boomer echo echo arrives.
(boomer echo is age 12-30 now)
plus with all the boomers retiring (age 50-68 now), education doesn't seem that bad an industry to get in.
human capital is best capital!
Troy,
ReplyDeleteOur "service economy" isn't going to generate enough jobs to keep the highly educated employed in fields that require higher education though. :(
That said, if a health care employer has to choose between *many* applicants for boomer bedpan duty, the job will probably go to the one with a college degree.
In a lot of ways, college is simply becoming the new high school.
In the past, you needed a high school degree to get a good job. Now you need a college degree to get that same job.
In the past, you didn't need to rack up massive debt just to get the education "required" for that job either. Sigh.
the beauty of an ideal service economy is that its only limitation is the labor availability of the servers (unlike the other sectors that require hard inputs with real-world limits)
ReplyDeletethe friction within our actual service economy is the cost of the consumables -- massage oil, coffee beans, cups, chalk, tennis balls, hair gel, etc etc -- and the space rent, which is always a significant leak out to the rentiers.
I blew my mind sometime last decade, seeing how services are the core transactional unit of economics, and that even goods provide services -- an automobile's service provision is hauling the driver and stuff where he wants or needs to go, a bookcase provides the service of keeping books organized and undamaged, etc.
all this is a long-winded way of saying that the service sector can be dynamic if there's more wealth input into it than is lost via the parasitical rents and running costs, since services can chain together so well in the ideal economy of tons of money flowing among service providers, trading their services.
I do think the rise of the boomer retirement wave will inject more money into the service economy, via restaurant sector and whatever old people do for recreation. And healthcare!
Troy,
ReplyDeleteI do think the rise of the boomer retirement wave will inject more money into the service economy, via restaurant sector and whatever old people do for recreation...
Do you really think the typical boomer (not the ones with million dollar nest eggs) will eat at restaurants more after retiring than before retiring?
As a retired boomer, my restaurant expenses fell dramatically when I stopped working. Gone were the meals eaten with coworkers. Retired boomers, such as myself, have plenty of extra time to prepare their own meals.
What will happen to asset prices if the retiring herd really does stampede for the investment exits to fund their retirement parties though? Put another way, are retired boomers net buyers of stocks and real estate, or net sellers?
I ask because even if the restaurant industry is a growth industry from here, restaurant jobs are not all that high paying. That's especially true for recent college graduates saddled with debt. So if boomers are selling assets, who will be buying?
I would agree that extra Social Security checks *could* be a boost to this economy, but only if taxes are not raised or there are offsetting cutbacks elsewhere.
I would also agree that retiring boomers *will* free up jobs for the next generations. However, will it be enough to offset jobs lost to automation and outsourcing over full business cycles though? I doubt it.
In any event, I expect the next round of risk asset musical chairs to be the most exciting yet, especially if it happens during ZIRP. I remain mostly seated. I truly hope I'm wrong. Sigh.
I agree that handing the Wilshire 5000 off to the next generation at current valuations is a tricky proposition.
ReplyDeleteThe boomers started investing with the total market cap at 40% to GDP and now it's pushing 120%.
http://advisorperspectives.com/dshort/updates/Market-Cap-to-GDP.php
As for rising taxes canceling rising SSA payouts, I think that can only happen if taxes are raised on FICA payers -- the top 10% of the economy is doing pretty well and wouldn't miss the added burden (+$100B/yr to liquidate the SSTF over 20 years would raise their federal tax burden from 19% to 21% of AGI).
But what the boomers don't spend in retirement they're going to bestow as inheritance, so Gen Y gains either way.
If only the top 10% of boomers spend like drunken sailors, the ratio of big-spending top-10% senior (age 65-89) to age 20-29 population will be 1 to 10 now and fall steadily to 1 to 6 by 2060.
Nice tailwind for the service economy : )
Population of 20yos is pretty flat from now through 2035, too, 44M now and only exceeding 46M in 2035. This is with the Census's dept's 'intermediate' projection, whatever that is.
Senior population age 65-89 is going to rise from 44M now to 74M by 2035.
My big fear TBH is just running out of food. Some people say we need to see the yuan strengthen a lot, maybe double, but a double-strength yuan might mean double the food exports we ship to them!
Alternatively, since $320B of our trade deficit is with China, if we were to balance that with food exports, that's $20/week PER CAPITA of food being pulled from our fat hands.
^ and *we're* going to have 50M more mouths to feed in 2035, 1/6th more than now.
ReplyDeletehttp://object.cato.org/sites/cato.org/files/wp-content/uploads/201212_blog_chip82.jpg
getting 1/6th more corn out of the ground is a tough proposition, though if we stop burning it as ethanol that would give us the supply slack we need.
Troy,
ReplyDeleteBut what the boomers don't spend in retirement they're going to bestow as inheritance, so Gen Y gains either way.
Those that would apply to are already gaining. It isn't an additional boost necessarily. For example, my girlfriend's parents already pump money to her sisters and their families.
My parents had pensions and Social Security. They spent little in retirement. There will be little inheritance. No complaints. It isn't cheap raising kids.
If only the top 10% of boomers spend like drunken sailors...
1. The top 10% didn't get there by spending like drunken sailors. Much of that money will probably continue to sit, just like it has been (velocity of money). How about travel though? I could buy that. Seeing the world seems popular. My siblings keep doing it. Not sure how that creates many jobs here though.
2. Even if the top 10% did spend like drunken sailors, how evenly would it distribute? Is it going to be enough to prevent our malls from dying? Would it be enough to get King Digital and its ~700 employees to go public @ $8 billion? Okay, semi-bad example, lol. ;)
3. Drunken sailors are already spending like drunken sailors. It's not like they wait until retirement. Just saying.
Troy,
ReplyDeleteMy big fear TBH is just running out of food.
Yeah. Every now and then I feel like an individual locust in a swarm.
We continually test our ability to create more food. So far, so good.
Unfortunately, past results are not necessarily indicative of future returns.
When it comes to food, there's no borrowing our way out of trend failure problems. If we're wrong even once, the "Fed" isn't going to be able to offer us up much of a fake recovery. People really tend to notice hunger.
You just need to hang in there.
ReplyDeleteHowever, other evidence shows that the young gentleman may be doing it wrong.
Luke The Debtor,
ReplyDeleteHahaha!
If you can't trust America's Finest News Source, then who can you trust? ;)
Unfortunately, I often find that good satire has to be at least partially based on the truth. Your two links are no exception. Sigh.