Young and Un/Underemployed

The undercurrents of change impact those at life’s transitional edges more than the rest. Older workers whose skills are unsustainable in a global or automated industrial revolution. Younger workers looking for work in a redefined economy. Regardless of the president-elect’s pledge to return America to its employment past, progress and technology cannot be denied. There has been a serious disconnect between the better jobs that are available and training of enough people to do them. So today’s blog is going to focus on those millennials who are struggling in the job market, even when they can find work.

Even the smallest levels of student loans, particularly heavy for those who borrowed but were not able to secure a degree, can tilt life for a bottom-end worker into marginal hell. Despite a few minor income safeguards, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has made it almost impossible to discharge student loans in bankruptcy. Trump-company bankruptcies were not remotely saddled with the same limitations. 2015 college grads carried an average of $35,051 in student loans as they moved into the job marketplace. Whew! Those with advanced degrees, particularly professional training, carried a whole lot more.

Add to this anomaly the unacceptably high formal unemployment rate and staggering underemployment statistic for millennials, and Houston – and every other place in the land – we have a problem.According to the federal Bureau of Labor Statistics, official millennial unemployment stands at 11.5%, nearly triple the total U.S. unemployment rate, which stood at 4.7% in December. As disturbing as that number might be, the millennial underemployment number is tragically worse.

“According to a recent Accenture study, 51% of 2014-2015 graduates are underemployed—holding jobs that don't require the college degrees they've earned—and that number has risen precipitously over the past 15 years. The Economic Policy Institute (EPI) found similar troubles among millennials whose academic careers terminated with high school diplomas; underemployment among that group stood at 33.7% last year, compared with 26.8% in 2007.

“Making matters worse, according to EPI researchers, is the fact that the U.S. workforce used to be much richer in skilled positions (like dental hygienist or electrician) that offered health benefits and some sort of retirement plan to workers without college degrees or even high school diplomas. But these days, many are … working as food servers, cashiers, and in other low-wage jobs without benefits or overtime.” FastCompany.com, January 13^th. Although 59% of millennials have at least some college, their earning potential does not remotely mirror the potential their parents and grandparents had when they were the same age.

Government support, likely to get further cuts under a GOP aversion to social programs, have fallen short in direct education-to-employment efforts, mostly under the aegis of the Department of Labor’s Employment and Training Administration (the ETA, founded during President Lyndon Johnson’s “War on Poverty” program in 1964). With an acceleration of AI-driven automation replacing increasing levels of job skills, the gig-economy, the further evaporation of the lowest levels of manufacturing to cheaper foreign labor, and with retail transactions moving rapidly online, matching training with solidly-paying domestic jobs in demand is hardly simple. Thinking that we can protect and create jobs if we erect trade barriers, without reciprocal barriers, and significantly increase the costs of consumer goods as a result, and this will prove popular, is deeply naïve.

So what is the solution in an era where government programs are unlikely to do the trick? Perhaps a new groundswell in private efforts, notably programs from consulting firms like McKinsey & Company or its competitor, Bain and Company, can fill the void. These programs, some with a touch of government support, have sizeable dollar contributions (for example, McKinsey funded with an initial $70 million plus $15 million from USAID)… a lot for an individual effort but a mere drop in the bucket as to what is really need to restore earning power to present and future generations. Clearly, our publicly-funded educational efforts have fallen woefully short. But these consulting firms did their homework to design programs that really work.

“The [new Generation] program was developed by the McKinsey Social Initiative in 2015 to find and train unemployed or underemployed workers ages 18–29 and place them into better jobs in health care, retail/sales/hospitality management, information technology (IT), and skilled trades like construction or mechanics. The goal is to tackle the twin problems of unemployment and underemployment by putting millennials into the industries with the highest demand for workers…

“Mona Mourshed, Generation’s global executive director and vice president of the McKinsey Social Initiative’s board of directors, says her team evaluated over 150 education-to-employment programs in 25 countries to create the model for its own program. They wanted it to scale rapidly and it has: What started out as a ‘graduating class’ of 1,200 students at the end of 2015 swelled to over 9,300 students across five countries and 14 professions by the end of 2016.

“In the U.S., Generation has served 1,100 students in 10 cities, 61% of whom are female and 85% are African-American or Hispanic/Latino, according to Mourshed. This already makes it one of the largest programs of its kind. However, she points out, ‘given the size of the problem, the solution needs to be able to serve hundreds of thousands, and eventually millions, of young people a year.’…

“To qualify for Generation's assistance, U.S. participants must hold a high school diploma or GED or… have some college courses under their belts. ‘Applicants are then selected based on a mix of intrinsics, effort, and employment standards for the profession,’ Mourshed explains.

“‘There were a lot of interviews,’ [one trainee] says with a laugh, recalling the exercises, including role plays, that Generation uses to test applicants' interpersonal skills relevant to a specific job function. ‘The final step,’ says Mourshed, ‘is to independently complete their pre-work activities’—the remaining paperwork and other small tasks that are part of the application process—‘and arrive on time at our training center.’” FastCompany.com.

The eight-week program (program length varies based on the chosen field) has long hours with some financial support for living expenses along the way, but the results are quite profound: “Generation reports that on average, its U.S. graduates make four times more than they did before the training. Nearly one-third (27%) are parents…, and of those, 99% were previously living in poverty…

“[Using the example of their short course training in certified nursing assistants (CNA) –] With an 84% employment rate overall, Generation's reports show that 90% of its CNA grads earn their certifications, 80% outperform their peers in the field, and 80% are still working six months out. The data shows that they are two to three times cheaper to train and recruit than other CNA graduates, which represents a win for Generation's employer partners.” FastCompany.com

These programs are designed by experts and clearly have produced the desired results. If government were smart, these programs would be expanded and become the national norm, applied not just to millennials but anyone needing to upgrade skills for a competitive future. If you think that it’s something we cannot afford, just think about the long-term benefit of all that extra income will make, not just in putting more buying power into the economy as a whole, but in the massive uptick in the taxes that such successfully-placed trainees will pay to both local, state and federal governments. And the reduction in reliance on governmental social safety nets. Way beyond the cost of the program!

I’m Peter Dekom, and these consulting companies have created and tested the programs at their own expense; government, take it from here!