Behind Occupy: an absence of jobs, and thus of hope
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by L. IAN MacDONALD
The Gazette, Wednesday, October 19, 2011
In a picture on Page 1 of Tuesday's New York Times, a young woman is carrying a cardboard sign with the hand-printed message: "Young, educated and unemployed."
Which pretty much is the central message of the Occupy Wall Street movement. It may have gone global because of social media, but the real driving force is probably youth unemployment worldwide.
Leaving aside the predictable presence of anarchists, truthers and assorted nutbars, there's a lot of authentic anger at the greed and stupidity of the financial-services industry, which caused the worst global recession since the end of the Second World War.
Its effects are still being felt. On Tuesday, Goldman Sachs, once the cash machine of investment banking, reported third-quarter losses of 86 cents a share. Sun Life Financial reported a third-quarter loss of $621 million and expects to take a $500-million hit in the fourth quarter. The company says the U.S. Federal Reserve is partly to blame for pumping too much cheap liquidity into the system. Go figure.
The folly and loathing of Wall St. is brilliantly captured in books like Andrew Sorkin's Too Big to Fail and Michael Lewis's The Big Short. The housing bubble was the first cause of the crash; phoney financial instruments were the second. There's the story of the Lehman Brothers executive whose family maid owned a condo in New York. And then there's the one about the migrant farm worker in California who got a $700,000 mortgage with no down payment. Investment banks bundled this stuff up as collateralized debt, the credit agencies rated junk as Triple-A, and kaboom. Most of these guys still have jobs, and none of them went to jail.
It's the youth in the U.S. and Europe who have primarily borne the brunt of the economic collapse triggered by over-leveraged banks. An absence of jobs has become an absence of hope.
The numbers are eloquent. In the U.S., youth unemployment among 16-to-24-year-olds is 18 per cent. That's only insofar as it's been measured. Privately, U.S. Treasury officials and senior Canadian Finance Department officials put U.S. youth unemployment as high as 25 per cent. Many young people have apparently given up looking for work. And they're not just high-school dropouts; many are collegeeducated, like the young woman on the front page of the Times. It's become all too common to hear of university graduates moving back in with their parents.
Indeed, breaking down the youth cohort, BMO Financial Group puts U.S. youth unemployment at 24.6 per cent among 16-to-19-year-olds, and 14.7 per cent among 20-to-24year olds.
U.S. Labour Department Statistics put unemployment among young whites at 16 per cent, among Hispanics at 20 per cent, and among blacks at 30 per cent. Stated another way, youth employment among whites is 61 per cent, among Hispanics 53 per cent and among African Americans 50 per cent. These numbers could well be a harbinger of social unrest.
The youth-unemployment situation is even worse in Europe. A chart in the Economist tells a scary story of youth unemployment essentially doubling across the European Union since 2008. Through the first quarter of this year, youth unemployment of 18-to-24-year-olds was 44 per cent in Spain, 38 per cent in Greece, 32 per cent in Ireland, 29 per cent in Italy and 23 per cent in France.
No wonder the protests are spreading.
In Canada, unemployment among 15-to-24-year-olds last month was 14 per cent. Overall the Canadian unemployment rate of 7.1 per cent is fully two points lower than that of the U.S., which is 9.1 per cent. Officially there are 14 million unemployed in the U.S., twice as many as before the Great Recession. Unofficially, it could be as high as 20 million.
The toll taken by the recession is evident from a U.S. unemployment chart dating from the birth of the babyboomers in 1948 down to the present day. Over the last 63 years, the average unemployment rate in the U.S. has been 5.7 per cent. Unemployment peaked at 10.8 per cent in 1982. Interestingly, Ronald Reagan was the only president of the modern era to be re-elected with unemployment over 7 per cent. Jimmy Carter and the first George Bush were both defeated coming out of recessions. This does not bode well for Barack Obama.
It is interesting that politicians have been careful not to condemn the protesters in New York and elsewhere. Canada's top two financial figures, Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney, have expressed sympathy for the plight of jobless young people. The question, as Flaherty says, is what the demonstrators want.
The answer may be a tried and true political mantra: jobs, jobs, jobs.