Tag Archives: economic recession

State of economy for less-educated young people compounds growing Opportunity Gap

Pell City 2007 HS graduation; Flick/kwsanders

Pell City 2007 HS graduation; Flick/kwsanders

While parts of the economy have rebounded since the Great Recession of 2008, the effects have been much worse for the poor, and especially the less-educated young Americans, and those not fortunate enough to graduate from college.

Since 2008, the housing market has started to bounce back.

The stock market, for those fortunate enough to have net savings rather than a negative net worth has more than recovered its recessionary losses (pictured is the S&P500 index).

Recovery in S&P500 since 2009 recession

The economy has created 6.15 million jobs from March 2010 through April 2013 (based on provisional numbers for March/April 2013), enough to lower unemployment but only through many people giving up on finding jobs.  The  percentage of Americans employed in the population hasn’t budged over the last 3.5 years and remains fixed at between 58% and 59%. Larry Summers thinks that the numbers of long-term unemployed is the biggest problem facing this country and is at historically unprecedented in the period since the Great Recession of the 1920s and 1930s.

Put this together with the data that David Leonardt released (“The Idled Young Americans“) showing that the impact has disproportionately fallen on young folks.  Moreover, levels of employment among 16-24 year olds, even as recent as May 2013 remain stubbornly at 45%, at levels not seen in the US since the early 1960s.

Our own research on the fact that children born to less educated families are facing a growing opportunity gap.  American young adults from the bottom socioeconomic quarter are graduating from high school or dropping out with less of the hard academic skills or soft non-cognitive skills necessary for life success.  [We find significantly growing gaps between children from the top third or quarter of socioeconomic families and the bottom third or quarter on measures as diverse as involvement in extra-curriculars, involvement in sports, K-12 test scores, obesity, social trust, involvement with religion, social connectedness, volunteering, college attendance, and college completion.]

And the intersection of these two trends — consequences of the current lackluster economy being borne by the young adults and the growing opportunity gap — means that these gaps are borne disproportionately by less educated young adults.

For example, if one looks at employment to population ratios for 25-34 year olds in 2012, it was only 69.8% for those with a high-school degree (but no college), whereas it was 84.4% for those with 4-year college degrees or more.  Another way of putting this is that only 16% of college-educated 25-34 year olds were out of the labor market versus 30% of those with only a high school degree.

And if that were not enough, there is growing body of literature suggesting that experiences of unemployment or involuntarily being terminated from jobs create long-term scarring effects both on the lifetime earnings of these young people, but also their civic and social connectedness throughout their lives.  [See for example Davis/von Wachter or Gregg/Tominey or Brand/Burgard.]

[There is also unpublished data on this scarring effect in: Laurence, James, and Chaeyoon Lim. “The Long-Term and Deepening Scars of Job  Displacement on Civic Participation over the Life-course: A Cross-National Comparative  Study between the UK and the US.”]

We are brewing a recipe for long-term adverse consequences for these young Americans, especially the less educated ones, and our government ought to be POUND-wise, even if it is “PENNY-foolish” in the eyes of others and invest in jobs for these young 16-25 year olds to avoid the much longer long-term adverse effects.

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The Hormones of Governmental Trust?

Oxytocin configuration

There was an interesting segment on NPR with Paul Zak (neuroscientist at Claremont)  and Margaret Levi (political scientist at U. Washington).

I’ve written earlier about the role of oxytocin in trust of strangers, but Zak has recently done some research that he believes explains how  oxytocin produces higher trust in strangers which then produces higher trust in government.  A “two-step” process.

Margaret Levi said Zak’s finding is consistent with Robert Putnam’s bottom-up hypothesis of trust that he highlighted in Bowling Alone.

“Putnam argues that the way in which trust in government is generated is basically bottom up. It’s from the relationships that we form with others through various kinds of neighborhood and local organizations – soccer clubs, choir groups. And we come to have confidence and trust in each other. And that trust in people leads to a trust in the institutions of government and the institutions of the economy.”

Both Levi and Putnam recognize that if the government in turn is dishonest, trust in government evaporates.

Zak notes in his controversial work that the connection between lower trust in government and harder economic times may be that economic recessions are stressful and stress is a toxin for oxytocin.

The piece also is interesting in describing a girl (“Isabelle”) with Williams syndrome where due to a hormonal imbalance and an excess of oxytocin, she trusts everyone, in a world where only some can be trusted.  Her mom is incapable of teaching her to be less trusting since she is fighting Isabelle’s biology.

When The ‘Trust Hormone’ Is Out Of Balance” (4/22/10, NPR)