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Gen Y out of work: What is corporate America doing about it?

Highly educated, sometimes entitled and incredibly humbled by the current labor market, Generation Y is hungry for work. But do employers understand this enormous and grossly underemployed demographic?

Nearly eighty million strong, Gen Y is loosely defined as those born between 1980 and 1994 (or 2005 depending on who you talk to). Raised in a kid-centric time, many continue to be coddled by helicopter parents not willing to wean their precious lot from the proverbial financial teat. As a result, Gen Y’s expectations of the workforce are vastly different from baby boomers and even the closely-related Generation X.

“When they get to the workplace, they have a sense of entitlement, a need for validation, difficulty in really discerning what to do because their whole lives were managed,” says Christine Hassler, a Gen Y career expert and consultant to American Express on Millennials. “They have challenges with making decisions and have expectations of work-life balance. They want their opinion to matter and [want to work] for a company that is really making a difference.”

Major employers are struggling to understand this often fickle demographic, choosing instead to focus on candidates familiar with the corporate structure. And in this fragile economy, a new employee who can hit the ground running is an asset. ”I’m seeing a lot of corporations saying they know they need to engage Gen Y and hire young employers because it costs less, but they don’t want to take the risk of hiring someone without work experience,” says Hassler.

Corporate America is also waiting for this demographic to conform to the old playbook, something completely foreign to Generation Y, says Garrison Wynn, CEO of career management website Wynn Solutions and author of “The Real Truth About Success.” They were told they could have everything they wanted and could be whatever they wanted to be. ”They’ve come to collect on that,” Wynn says. “That’s what they expect. So, when they get in a job interview and it looks like the path isn’t going to be good enough or fast enough, then they’re not interested.”

Volatility in global markets, weak domestic growth and persistent economic concerns in Europe are also complicating an organization’s willingness to expand, despite high corporate profits. “The pain of downsizing and the destruction of the organization is so difficult that companies are playing it safe,” says Jackie Greaner, North America practice leader, talent management and organization alignment for Towers Watson. “It’s hard in this type of market, where it goes up and down to such a degree; it leaves everyone feeling less than confident about the state of the economy.”

Would Obama’s payroll tax cut hurt Social Security?

The Congressional Super Committee hasn’t even started cutting Social Security, but advocates are already expressing concern on a different front: the payroll tax cut extension proposed last night by President Obama as part of his jobs plan. Those payroll taxes fund the Social Security program.

The President asked for a $175 billion one-year extension and expansion of the employee payroll tax holiday now in place, halving the tax rate to 3.1 percent in 2012. He also proposed halving employer payroll taxes to 3.1 percent for the first $5 million of payrolls in 2012. The president also wants a complete payroll tax holiday that would apply when companies grew their payrolls by up to $50 million in a year by hiring  new workers or raising the salaries of existing workers.

These cuts in the Federal Insurance Contributions Act tax (FICA) may be one of the best available stimulus options in the current political climate, and they will have a positive economic impact. An analysis by The Center for Budget and Policy Priorities notes that the cuts already in place make a substantial difference in the spending power of middle class families, and that allowing them to expire at this time would be very negative for growth:

Failure by Congress to extend the temporary payroll tax cut enacted last December would reduce all paychecks starting on January 1, withdrawing needed support from the still-weak economy. The measure, part of the tax cut-unemployment insurance deal between President Obama and Republican leaders, reduces the employee share of the Social Security payroll tax, boosting workers’ take-home pay by an estimated $120 billion in 2011. The tax cut is worth $934 to the average worker.

And Moody’s Analytics estimates that allowing the payroll tax cuts to expire would reduce GDP growth by one percentage point in 2012, translating into one million fewer jobs by the end of next year.

But Social Security advocates worry that these temporary payroll tax cuts will never be restored. “The problem is, it is very easy in our current political climate to cut revenue and very hard to increase it,” says Nancy Altman, co-director of the Strengthen Social Security coalition and author of The Battle for Social Security, an excellent history of the program and its politics.

“Look at the controversy over ending the Bush tax cuts, which would only affect a small portion of taxpayers,” Altman says. “In this case, if you propose restoring the payroll tax down the road, you’d have to double the rates on workers making minimum wage. This is being sold as temporary, but it’s not likely to work out that way.”

Where is the real U.S. jobs plan?

Jobs, justice and peace. Have three themes ever been so intimately intertwined since Dr. Martin Luther King, Jr., championed this tri-partite campaign in his 1967 March on Washington?

Unemployment is ravaging the country, especially among urban minorities. Yet Congress has yet to put forward a comprehensive jobs plan to create employment. We’re still fighting two wars and garrisoning troops in Europe and Japan as the jobless rate soars at home. Debt reduction is still a priority over job creation.

The current economic downturn has put the brakes on economic progress for most of the American working class. They shared in widespread growth during the 1990s, but have been falling behind during the latest recession.

The pain has been uneven and most punishing in the inner city and among the young. For white men and women, the jobless rate for those 20 years and older was around 8 percent as of July. For white teenagers (age 16 to 19), the rate was 23 percent.

Unemployment for African-American adults is twice as high as white adults at 16 percent. For African-American teenagers, the rate soars to nearly 40 percent.

Much of the reason that decent-paying jobs have evaporated is that inner cities and suburbs have been de-populated and businesses have left — many of them to wealthy suburbs or overseas. Unionized industrial jobs have also fled.

There’s been great progress made since the end of World War II to create a broad base of high-paying jobs, although the bulk of those positions were in unionized manufacturing companies, nearly all of which have cut back, shut down or outsourced. High-wage jobs left urban manufacturing districts to be replaced by low-wage service jobs or occupational deserts.

Job creation: Fixing America with an infrastructure bank

We have iPhones, iPods and iPads. Why not an “iBank?”

This wouldn’t be an electronic gizmo that’s obsolete in a year, though. It would be a public-private partnership to bolster America’s infrastructure. It will create jobs, cut the deficit and repair what needs to be fixed all over the country.

An infrastructure bank, or iBank, solves a lot of problems without busting the budget. Instead of providing direct government grants or earmarks for specific projects, loans are made by a government-banking entity.

The U.S. is inexcusably late to the game on this time-tested idea. The European Investment Bank has financed some $350 billion in projects from 2005 through 2009. China spent 9 percent of its gross domestic product — also roughly $350 billion — to build subways, highways and high-speed rail in 2009 alone. Brazil invested $240 billion over the past three years.

The idea is not without high-level support. President Obama recently called for the creation of an iBank. In backing a U.S. iBank, Senator John Kerry of Massachusetts testified last year that “a national infrastructure bank will make Americans builders again.”

If the iBank became reality — and really it’s a necessity to compete in a globalized economy — there’s no shortage of projects. According to the American Society of Civil Engineers, more than $2 trillion is needed to fix U.S. bridges, dams, waterways and wastewater plants.

The sheer scale of a big fix is staggering: Some 69,000 bridges need to be repaired. The outdated electrical grid needs to be modernized everywhere. You can build solar plants and windmills all you want, but if you have no power lines to transport the electrons from the deserts and plains, you’re whistling in the wind.

Overworked Americans don’t take all their vacation time

Getting a lot of out-of-office emails and feeling some vacation envy? You may feel like you’re the only one left in town during these dog days of summer, but that’s not the case.

Paid vacation leave is the most widely available perk for employees, accessible to 91 percent of full-time workers, according to a new study on employee benefits from the Labor Department. But a new infographic on “The Overworked American” by the web magazine Good (click here or on the image at left to get the whole infographic) points out that despite these benefits, 36 percent of workers don’t use all of their allotted vacation days and a similar number take less than a seven-day vacation when they do step away from their office.

How do you stack up? Take our poll:

Do you plan to take all your vacation time in 2011?

• Yes
• No

Pirates of the Caribbean alert: Offshore corporate cash hoard

Paging Captain Jack Sparrow. The modern equivalent of pirate treasure islands is holding some $1 trillion of corporate cash by U.S. corporations.

The reason is simple: U.S. corporations don’t have to pay U.S. taxes on the money when it’s sitting in offshore banks. They can defer taxes indefinitely.

While domestic corporations are free to enjoy the many benefits of American infrastructure, the money they offshore isn’t doing North Americans any good. Bring the money back to create jobs and give corporations a reduced tax rate if they do so. It will also trim the U.S. budget deficit.

One tack that doesn’t work for the middle class is to give corporations another no-strings-attached break for just bringing the money back. Companies shouldn’t be rewarded for being forced to do the right thing. It’s like paying a bonus to get a driver’s license.

Besides, the repatriation break has been tried and was a bust. “A `tax holiday’ on repatriated funds is a proven failure,” writes William Gale and Benjamin Harris of the non-partisan Tax Policy Center. “It was already tried in 2004 and it didn’t work.”

The last $312 billion tax holiday was a bonanza for corporate shareholders that resulted in little or no North American investment and almost no job creation.   “Even firms that showed some evidence of being financially constrained or that explicitly lobbied for the tax holiday did not increase domestic investment, domestic employment or R&D,” wrote three researchers for the National Bureau for Economic Research last year.

Of course, the concept of offshoring capital is nothing new in the world of multi-national corporations. For years they have trundled their money where the taxes and transparency are the lowest.

Perma-interns: Is working for free a good career bet?

When he isn’t hitting the books at Northwestern University this summer, Mike Boyle of Chicago dreams of making it in the music industry. And why not? With his ready smile, tousled hair and laid-back demeanor, Boyle comes across as sharp and affable, a hipster with heart. And he grasps the fine points of the business like few 21-year-olds you’ll meet.

Yet this organizational behavior major — who hopes to attend Northwestern’s prestigious Kellogg Graduate School of Management — is taking a calculated risk. Following a summer 2010 internship at Jeff McClusky and Associates, Boyle stayed on, although not stepping up to full-time work. Boyle instead works for the independent radio promoter 16 hours a week, earning the hourly equivalent of a well-paid babysitter. But if you ask him, this internship extension is a sure bet, even it doesn’t morph into a full-time job. “I don’t consider the experience risky whatsoever,” Boyle says.

“I’m learning a lot about the inner workings of the industry … And Jeff McClusky is a phenomenal mentor figure. He’s provided me with a sense of where I want to go and who I want to be.” (McClusky has helped break acts from U2 to Mumford & Sons.)

Boyle belongs to a growing class — some call them “perma-interns”— who’ve stretched the traditional bounds of the one-semester internship, where non-paid labor is traded for college credit. If you listen to those who know the internship game well, Boyle’s doing it right. After working for free in 2010, his modest pay entitles him to key tax deductions as an independent contractor. (CDs and downloads? Check. Concert tickets? Check.)

Perma-interns may be at the bottom of the office pecking order, but there are ways to benefit financially from the arrangement. The experts weighed in with these five tips.

1. See what your employer will reimburse. If you’re using your cellphone, taking public transit to work, or buy your own office supplies, ask your employer to foot the bill, says Jennifer Halperin, the internship and special projects coordinator for Columbia College Chicago’s journalism department. “Once they’re in place, even unpaid interns sometimes successfully negotiate for some sort of compensation for expenses,” Halperin says.

2. Consult an accountant who knows your field to see what’s deductible. “Interns in journalism would do well to seek advice from an accountant who works with freelance writers to learn what expenses can be legitimately deducted come tax time,” Halperin says. In media, these range from pens and pads to laptops. As for finding an ace accountant, Halperin suggests talking to co-workers.

Economy revival? Bond barons say spending is the answer

When bond gurus speak, they don’t mince words.

The message from two influential bond traders is unambiguous: Instead of cutting government spending now, Congress should be spending to create jobs.

Employed people pay taxes, contribute to communities and buy homes, vehicles and appliances. This kind of stimulus is undeniable. Job creation is the ballgame now. Interest rates really can’t go any lower. The Fed did all it can do.

I know this runs counter to what you’re hearing from the Beltway and Tea Party circles, but the logic is simple: Without tackling long-term structural unemployment, there will be no broad economic revival. The middle-class could dip further into despair, feeding a millennial malaise that morphs into a depression.

Nearly lost in a week of relentless deficit yammering and President Obama’s Afghanistan withdrawal plan was a compelling commentary by Bill Gross, the leading bond fund manager by assets.

Starting out as a rant on why a college education isn’t worth the price — a view reflected in this column a few weeks ago — Gross eventually gets to the point. Cutting government spending alone will not create jobs.

“But fiscal balance alone will not likely produce 20 million jobs over the next decade,” Gross writes, “government must take a leading role in job creation.”

50+ job seeker? Tweet your way to a new career

Most older job hunters are comfortable with basic business technology— computers, the Web, email and smart phones. But we still have some Luddites out there – you know who you are – trying to squeak by, hoping to finish their working years without getting fluent in technology.

That’s especially true of social media tools like LinkedIn and Twitter, which can play a big role in helping job hunters find new work in a hard-times economy.

“The first time I looked at Twitter, I thought ‘what is this thing?’,” says Lee Silverstein, who is transitioning to a new career at age 50, following 29 years in management jobs with major department stores — most recently Macy’s, where he focused on training and leadership development.

Silverstein didn’t think of himself as a writer with something to say online, but he jumped in anyway with a blog and Twitter account.

“When I started the blog, I saw that I did have something to say, and I started sharing my thoughts,” he says. In a short time, Silverstein has built an audience of 600 followers for his tweets and blog posts on leadership development and mentoring. “It’s about making yourself findable,” he says. “Just sitting and going through the job boards won’t get you where you want to be. You’ve got to give people a reason to discover you.”

In a tough job market, it’s hard to overstate the importance of networking, differentiating yourself and highlighting the value you can bring to an employer. Social media platforms offer some important means to those ends through sharing expertise and making new connections. But older job hunters can be at a competitive disadvantage.

“I dont think it’s a factor of age alone – it’s a comfort level using the tools,” says Miriam Salpeter, a job search and social media coach, and author of Social Networking for Career Success: Using Online Tools to Create a Personal Brand. “People who don’t enjoy social media don’t want to feel they will be sucked in, and tied down by it all the time. And with Twitter, some just don’t think they can communicate a full thought in 140 characters. I find that it helps to have targets and goals to use these things well.”

4 retirement tips for twentysomethings

By Yesha Shah

In today’s dismal job market, it’s no wonder college grads are focused on finding a job instead of socking away money for the future. Unfortunately, young people aren’t the only ones befuddled by their post-career plan: 55 percent of Americans say they don’t know how to achieve their retirement goals, an ING survey finds.

But saving early is the key to building up a nest egg. A panel of experts brought together by Merrill Lynch Wealth Management last month offers twentysomethings this advice for getting started on reaching their retirement goals:

Get out of debt

It’s common for students to graduate with thousands of dollars in student loan debt, and thousands more in high-interest credit card bills. “Don’t forget that paying down debt is … the financial equivalent of saving. So if you have some debt, be focused on paying that down,” says Andrew Sieg, head of retirement services at Bank of American Merrill Lynch.

Be flexible

Don’t count on working at the same place for your entire life. Traditional jobs — where you work one place for your entire career — are gone; pensions, gone, says ABC host and panel moderator Charles Gibson. “You really are responsible in 401(k)s for yourself, in effect, in retirement. Social Security is a little iffy. You can work yourself into a panic about this,” Gibson says.