Opinion

The Edgy Optimist

The youth unemployment crisis may not be a crisis

Zachary Karabell
Nov 22, 2013 21:49 UTC

“Youth Unemployment is the Next Global Crisis”

“America’s 10 Million Unemployed Youth Spell Danger for Future Economic Growth”

“Relentlessly high youth unemployment is a global time bomb”

There’s no doubting that worldwide, kids are out of work. In the United States alone, the unemployment rate for 15 to 24-year-olds is about 16 percent, nearly twice the national average. In parts of Europe, the figures are much worse, with a whopping 56 percent youth unemployment rate in Spain alone — representing about 900,000 people.

But do these high numbers represent a global labor market crisis that imperils future growth, as the headlines warn? Maybe not. Maybe instead, they’re evidence of a generation of college graduates determined not to settle, which bodes well for our future.

To understand why, it’s worth a quick detour through history. Until the early 20th century, there was no clear concept of “unemployment.” Classical economics emerged in the late 19th century at a time when there was an ample supply of labor to feed the relentless maw of industrial production in both Europe and America. Because there was no social safety net, people worked in order to generate essentials such as food, clothing and shelter. You had to work to survive, and there was always work to be done and need for bodies to do it. Many believed that “unemployment” was only an option for vagrants, who were in turn viewed as immoral.

The Great Depression threw those views into question. Millions found themselves unable to find jobs, even when they wanted to. The Bureau of Labor Statistics began to create an unemployment rate in the 1930s, and with it a definition of what qualified as “the workforce” and of what it meant to be unemployed. A key aspect of the definition was not that you were “out of work” but rather that you were actively looking for a job, yet unable to find one. It pointed to a flaw — either temporary and cyclical, or longer-lasting and structural — with the labor market and, by extension, with the economy as a whole.

Tweeting our way forward

Zachary Karabell
Nov 11, 2013 18:21 UTC

Twitter’s initial public offering last week was everything that Facebook’s botched offering a year and a half ago was not: the stock was reasonably priced; management wooed investors; and the company neither promised the moon nor the stars, and was rewarded with a substantial amount of cash raised, a stock that went up more than 75 percent, and a valuation of $25 billion.

Though shares pulled back sharply — and predictably — the day after its IPO, Twitter has now joined the pantheon of leading social media companies. It has yet to make a profit, but unlike the 1990s Internet comets it is routinely compared to, it is making substantial revenue (on pace for just under $600 million this year). That is substantially less than Facebook was making when it went public ($3.7 billion), but more than LinkedIn was generating when it went public in 2011 (estimated at $220 million).

That said, at its IPO Twitter was valued higher than either Facebook or LinkedIn at the time of their public offerings. In that sense, Twitter’s reception does raise a vital question: are these companies doing more than making their founders and investors rich? Are they doing more than satisfying some nice need of their customers? Are they, in short, changing the world the way they claim? Or is that claim just a useful marketing device that makes otherwise pedestrian businesses appear to be something far grander, convincing investors to pay more than they would for equivalent businesses in more prosaic industries?

Healthcare.gov is just the beginning

Zachary Karabell
Nov 1, 2013 20:52 UTC

The Obamacare blame game is in full swing, and without other news to fill pages and airtime, it’s likely to continue for some time. Attention is shifting from the myriad problems with the official website Healthcare.gov, and toward the health plans that are being canceled, even though President Obama promised that they would not be.

But the longer-term story isn’t the rollout and its many severe glitches. No one recalls whether the first batch of Social Security checks was sent on time in the late 1930s. The story that will matter, and linger, is that the Affordable Care Act was the first major law implemented almost entirely online. It’s the template for the future, and rather than using its launch as an excuse to renew attacks on the law, we need to learn what we can because, like this bill or not, it is part of the next wave of government.

The past two weeks have been filled with various individuals testifying to Congress about the design and implementation of Healthcare.gov, the web portal that allows individuals to access the new health plans and exchanges. The tenor of these hearings, convened by the Republican-controlled House, is that the design of the website exposed the fundamental failings of the law and government incompetence. But what’s actually been exposed is that the U.S. government has not yet made the transition to a digital age. While the administration could have and should have done far better, the reasons for its failure are less about a flawed process than a system currently ill-designed for this type of legislation.

  •