Young workers feel a different kind of pain. Too young to have lost jobs in the recession, they reached adulthood in a labor market that doesn’t want them. That is especially true for those without college degrees.
The April jobs report showed a staggering 16.0% unemployment rate for teenagers ages16–19. This sample includes only those who were actively looking for jobs, so these aren’t full-time students. They have either dropped out, or they want to work while in school. They probably aren’t happy with the situation, and their parents aren’t, either.
Inflation Lives
While central bankers try to create inflation, for the unprotected inflation never disappeared. Last week in Outside the Box, I quoted Rob Arnott’s study that found inflation for most Americans has been running around 3% annually since 1995. That figure includes the four categories that typical workers are most keenly affected by: rent, food, energy, and medical care. (See “Where’s the Beef?”)
I ran across another shocking data point after sharing Rob’s story. It was in a May 8 Wall Street Journal story called “Rising US Rents Squeeze the Middle Class.” It looks at data that shows middle-income renters have it worse than those above or below them. Buried in the middle of the article was this sentence:
In Boston, median asking rents have increased at an annual rate of 13.2% since 2010, far outstripping the 2.4% average annual increase in income.
If Boston reflects other cities, we can see why people complain about rent and sleep on each other’s couches. This kind of steep climb in the cost of living is very hard on people who have little income to spare.
The following chart comes from Sentier Research (via Doug Short). The blue line is real median household income, which now stands at $57,263. That is, half of US households earn less than that. The picture is actually even worse since, as we saw above, the Consumer Price Index understates inflation for low-end households. Nominal wages may be growing – for those who have jobs – but in real terms the unprotected are falling farther behind every year.