Youth Unemployment Hits 52-Year Low

Data suggest more opportunities are available to some groups that historically struggled to find jobs

See By Andrew Duehren of The WSJ.

I post something every month about the percentage of 25-54 year olds employed, since those are people in prime working years. That has been going up for the most part since November 2011. But things are getting better for even younger workers. That is good news, of course. But maybe even better that as they age this experience they are getting now will benefit them.

Excerpts:

"Of Americans between 16 and 24 years old actively looking for work this summer, 9.2% were unemployed in July, the Labor Department said Thursday, a drop from the 9.6% youth unemployment rate in July 2017. It was the lowest midsummer joblessness rate for youth since July 1966."

"Low unemployment among young people shows that in a tight labor market more opportunities are opening to groups that historically have struggled to find jobs.

Similarly, the unemployment rate among older Americans who don’t have a high-school diploma fell to a record low this year. The jobless rate also fell sharply for those who completed high school but never attended college. Among racial groups, the unemployment rate for Latinos fell to 4.5% in July, the lowest rate on records back to the 1970s.

The jobless rate for black Americans touched a record low this year before rising in the past two months. For black youth, the jobless rate ticked up this summer to 16.5% from 16.2% in 2017, meaning this segment of the population hasn’t benefited as much as many others looking for work.

While millions of young people continue to enter the labor force in the summer months, the labor-force participation rate among young Americans—a measure of how many people are actively seeking employment—is still low by historical standards.

In July, the labor-force participation rate was 60.6% among young Americans, the same rate as last year and the highest since 2009. In 1989, the summer youth labor-force participation rate was 77.5%, and it has declined since.

Paul Harrington, an economist at Drexel University who studies the labor market for young people, said one reason for the decrease in the share of teenagers and young adults seeking summer work is the popularity of extracurricular activities and unpaid internships."

Experiences might make us happier than material things but are Americans losing their connection to the idea of private ownership that gives individuals a stake in the system?

We don't own so many books anymore. We read them on our Kindles. We don't own as many cars, we just call Uber. We don't have to buy CDs anymore since we have sites like Pandora. George Mason University economics professor Tyler Cowen recently wrote:

"I worry that Americans are, slowly but surely, losing their connection to the idea of private ownership. The nation was based on the notion that property ownership gives individuals a stake in the system. It set Americans apart from feudal peasants, taught us how property rights and incentives operate, and was a kind of training for future entrepreneurship. Do we not, as parents, often give our children pets or other valuable possessions to teach them basic lessons of life and stewardship?

We’re hardly at a point where American property has been abolished, but I am still nervous that we are finding ownership to be so inconvenient. The notion of “possessive individualism” is sometimes mocked, but in fact it is a significant source of autonomy and initiative. Perhaps we are becoming more communal and caring in positive ways, but it also seems to be more conformist and to generate fewer empire builders and entrepreneurs."

"The libertarian political theorist might tell you that arrangement is simply freedom of contract in action. But the more commonsensical, broad libertarian intuitions of the American public encapsulate a more brutish and direct sense that some things we simply own and hold the rights to.

Those are intuitions which are growing increasingly disconnected from reality, and no one knows what lies on the other side of this social experiment."

See Americans Own Less Stuff, and That’s Reason to Be Nervous: What happens when a nation built on the concept of individual property ownership starts to give that up?

But there is research that says spending money on experiences makes you happier than buying (owning) things. See The Secret to Happiness? Spend Money on Experiences, Not Things by Ilya Pozin of Forbes. Excerpts:

"Recent research from San Francisco State University found that people who spent money on experiences rather than material items were happier and felt the money was better spent. The thrill of purchasing things fades quickly but the joy and memories of experiences, from epic adventures to minute encounters, can last a lifetime. Next time you're feeling a bit down or lacking in some way, before you go out and buy things remember these five tips for evaluating your spending and decide to have experiences instead of just accumulating stuff."

"Why buy a vacation home when you can rent 10? Most people's dream of buying a vacation home in Hawaii or owning a sailboat centers mostly around fantasies of laying in the sand or being out on the open water. Very seldom does the fantasy include remembering to pay the utilities or ensuring that a bilge pump is functioning properly. Resist the urge to spend huge sums of money on anything that you can rent. “Exotic items” like vacation houses, RVs, cars, boats, horses and even high end designer clothes can all be rented. The money you would spend to own any one of these things could be used to rent all of them and the benefit to renting is that you aren’t responsible for it once you’re done using it. Be honest with yourself, how many times a year can you really afford to fly to Hawaii and stay for weeks at a time? For most people, it’s not nearly enough to justify purchasing a vacation home and the same goes for most other exotic items. When you rent, you just show up and have a great time and when you’re done you head off to your next experience without any of the burdens and responsibilities of ownership and having spent a fraction of the money! Long story short: You don’t really want to own a horse, you want to ride a horse and there is a big difference."

Some studies found that people who chose time over money were happier. See my post What Brings More Happiness, More Time Or More Money?

The trend of renting might grow stronger. See For a Flat Monthly Fee: Subscription businesses are proliferating because billions of digital customers are increasingly favoring access over ownership. Philip Delves Broughton reviews “Subscribed” by Tien Tzuo with Gabe Weisert. Reviewed in The WSJ. Excerpts:

"Owning things is so over. Who wants the hassle of having your own car, lawn mower or tuxedo when, for a small monthly fee, you can just use one whenever you need it? Services such as iTunes and Spotify taught us that all those CDs can finally be consigned to the dump; Netflix cleared out the DVDs; Amazon’s Prime subscription service has 90 million Americans hooked on its bundle of shipping and shows"

"“the world is moving from products to services. Subscriptions are exploding because billions of digital customers are increasingly favoring access over ownership, but most companies are still built to sell products.”

Not all, though. Husqvarna, the Swedish maker of forestry and garden tools, maintains what it calls the Husqvarna Battery Box out of a Stockholm parking lot. The handyman’s hut offers subscribers access to hedge trimmers, chain saws, leaf blowers and other equipment; users pay a flat monthly fee to borrow the tools and return them when they’re done. Husqvarna thus gains a steady income stream, becomes less reliant on seasonal sales fluctuations and acquires insight into its customers’ behavior.

In Europe and on the American West Coast, subscribers to Surf Air, a five-year-old company based in Santa Monica, Calif., can fly on the company’s fleet of small executive aircraft for an annual fee plus a per-flight price; there’s also an all-you-can-fly option. With a subscription model, Surf Air is better able to predict its revenue, so it can take tighter control of its variable costs.

Even major car makers are giving subscriptions a try. With Volvo, a monthly fee covers everything but the gas. The difference between subscriptions and traditional leases is that here you get tax and insurance bundled in. You also get a new car every 24 months. Cadillac has a plan that allows you to swap out your car up to 18 times a year."

"Subscription businesses, which derive important information from their customers’ behavior in real time, are better at fast adaptation than companies dependent on their in-store employees for feedback. Mr. Tzuo quotes Amazon’s Jeff Bezos on the difference between an e-commerce company, constantly dialed into its community of customers, and physical stores: “I don’t know about you, but most of my exchanges with cashiers are not that meaningful.”"

"Apple’s revenue from services, $31 billion in 2017, now represents more than half the company’s growth."

"Even SNCF, France’s state-owned railway company . . . created a monthly plan for 16- to 27-year-olds: all you can travel for €79 ($92) a month. That led to an extra 75,000 young passengers on the network"

Grocery stores try to alter the tastes and preferences of men

One of the factors that can shift (increase or decrease) demand is tastes and preferences. If tastes increase, demand shifts to the right. It is not easy to make this happen, but businesses always try.

See Supermarkets Deploy Sausage Stations, Dad Jokes to Lure Male Shoppers: Many men shop as if on a search-and-retrieve mission, but they are less price-sensitive and health-conscious in stores than women, a study found by Anne Marie Chaker of The WSJ. Excerpts:

"As more men do the grocery shopping, supermarkets are taking note.

Lowes Foods, a chain in North and South Carolina, introduced gourmet sausage stations and “beer dens,” where customers can drink while they shop or get a half-gallon jug filled with a craft beer, in 14 locations four years ago. After they were launched, “there was an immediate, noticeable increase in the number of men shopping in our stores,” says Heather George, senior vice president of brand strategy. The male-focused amenities are now featured in 61 stores."

"Mega Meat sales, where customers earn gas discounts, are particularly popular, Hy-Vee says. “We have found that is a very strong incentive for men,” says Donna Tweeten, Hy-Vee executive vice president and chief marketing officer. The July flier promoting the Mega Meat event suggests beer pairings."

"men like when they can see the exit, even when they are deep in the middle of the store. He is minimizing visual clutter, creating more straight corridors and lowering shelves by 2.5 feet so shoppers can see around them more clearly."

"Signs point to man-centric sections—men’s heart health or men’s facial care—in the beauty aisles, which carry products like beard salves and protein supplements. The meat department offers butchery classes. Stores have even had requests for more-masculine floral arrangements. “Our floral designer has been doing more with willow branches, bark and wood,” Mr. Wall says."

"Men are less price-sensitive and less health-conscious while shopping than women, the Hartman study found. They often conduct “search-and-retrieve missions,” getting in and out of the store as quickly as possible. They tend to load up on treats the household’s main shopper avoids and often buy too much or too little, or forget items."

"At Lucky’s Market, a Boulder, Colo.-based grocery-store chain, co-owner Bo Sharon says stores use traces of Dad humor that resonate with women and men. A sign over the kombucha section reads, “We thought it was weird at first, too.”"

"“I enjoy it way too much,” Mr. Schoenberg says. “Most supermarkets are pastel colors and sell tons of flowers, and the language is merry-merry, happy-happy,” he says. Lucky’s “feels like a hardware store with groceries.”"