Global Crisis/Innovation Blog

Lost Generation of Youth: Is Entrepreneurship the Solution?

By Shlomo Maital

The phrase “lost generation” appears in the epigraph to Hemingway’s great 1926 novel The Sun Also Rises. The phrase was coined by Gertrude Stein, who got it from a Paris garage mechanic (he called the post WWI generation,  une génération perdue).

A new lost generation is emerging from the 2007-9 Global Crisis – youth unemployed.  In Bloomberg Business Week (“Viewpoint”, Aug. 10) Chris Farrell notes the jobless rate for Americans aged 16-19 has jumped to 26 per cent, part of “the worst job market in 60 years”.  And writing in the Global New York Times, Matthew Saltmarsh (“Global Youth Unemployment Reaches New High”, August 11) paints a much bleaker picture all over the world.

Farrell notes, “…among some minority groups the high school graduation rate is low: about 55 percent for Hispanics and 51 percent for African Americans, vs. the U.S. total of 69 percent, according to 2005-06 data….’You are really creating a society of people who don’t know what work is like,’  says Robert Straits, director of the Employment Management Services Div. at the Upjohn Institute for Employment Research. ‘It’s a generation of people who have never held a real job.’”

Saltmarsh reports:  “…the International Labor Organization, said in a report that of some 620 million young people ages 15 to 24 in the [global] work force, about 81 million were unemployed at the end of 2009 — the highest level in two decades of record-keeping by the organization, which is based in Geneva. … Spain had a jobless rate of 40.5 percent in May for people under 25.  That was the highest level among the 27 members of the European Union, far greater than the 9.4 percent in Germany in May and 19.7 percent in Britain in March.”

What can be done?  What MUST be done?

Part of the problem is geography.  Poorly-educated youths are mostly in inner cities, while entry-level low-skill jobs are far out in the suburbs.  But much of the problem is simply supply and demand – creating a supply of key job skills to match demand.  Germany has low youth unemployment partly because its superb vocational high schools equip youths for manufacturing jobs, and then Germany’s business model produces those jobs through competitive advantage and export success.

I wonder if an experimental program could be attempted, in which youths are taught the fundamentals of starting a business (delivering hot fresh-baked rolls early in the morning to lazy suburbanites), then given some micro-finance to get rolling.  Even one success out of ten that creates ten jobs will overcome the other nine failures.

It is unacceptable  that young people should be doomed even before they truly begin their lives.  It is unacceptable to have a “lost generation”, when Wall St. fat cats are bailed out with government money that could have been used for job creation.  And it is incredibly unacceptable that the world accepts the growing “lost generation” with equanimity, without loud political protests.    Perhaps if we gave the vote to 16-year-olds, they might have a voice.

Here is some food for thought. The heading is “social insanity”.

In the US  it costs $20,000 a year to keep a person in jail.  In Florida, fully 8.5 % of the state budget goes to “corrections” (jails), or $2 billion !   Suppose, just    suppose, one in ten of the unemployed youths ends up in jail.  Suppose he or she serves, during a lifetime, a 10-year sentence.  That’s $200,000 in direct    costs, not counting the huge damage done to victims.  The expected cost, then, is 1/10  times $200,000 or $20,000, not counting human suffering.  Would it    not make sense to invest $20,000 in prevention, for each unemployed youth, to keep the youths out of jail, by giving them skills and a livelihood ?  Is there    any other term for it, other than “social insanity”,  for spending $2 b. on jails instead of  $2 b. on a youth jobs programs?