On a somewhat related note to my recent Kudlow post (that means it’s Invictus here, not BR, boys and girls), I see that in some circles illegal immigrants are now being blamed for the high teen unemployment rate. First it was the minimum wage, now it’s illegals. Yawn. This is exactly the stuff that makes my blood boil — thoughtless, ideologically driven bullcrap that’s presented as fact, usually without any documentary evidence.  Easy, quick sound bites.  (A new post citing the minimum wage was just put up very recently here at Professor Mark Perry’s Carpe Diem blog, and I would welcome his comments.)

What about demographics — an aging boomer population — and a crappy economy that has  the 55+ cohort postponing retirement and consequently crowding out the younger generation (parents keeping their own kids/grandkids out of the job market, as I put it a while back).  The data is there for all who choose to explore it.

Take a good look at the charts at the Blah3 link and in another post over at Bonddad’s place (yes, I’m a promiscuous poster)  — they tell the story, as does the chart immediately below.  I haven’t rerun them since putting up those posts last September (and again in November), but I’d be willing to bet not much has changed.  (The chart below is fresh, and reinforces the theme.)  Our demographics, coupled with a crappy economic environment, are conspiring to wreak havoc on teen employment.  I really don’t think there’s much more to it than that. To be clear:  I know there are some studies — usually authored by partisan think tanks or hacks on either side — that make both sides of  minimum wage/illegals agruments.  But I’d offer up two words: Occam’s Razor.  And we know from the NFIB [.pdf] that “Poor Sales” is the single largest problem facing small businesses, so it’s no surprise they’re not hiring.  Citing demographics — which are exceedingly difficult to spin in a political context (i.e. they are what they are and — unless you’re China — generally free from policy influences) — just doesn’t cut it for many folks who need to find a way to assign blame.  But the various charts I’ve produced elsewhere and below provide actual, numbers-driven evidence that demographics are likely the driving factor here (in addition to the fact that teens suffer disproportionately in any downturn in the first place).

Boomers Are Taking What Jobs There Are

And there’s also this, from an April story that appeared in the WSJ.  It makes perfect sense, given the brutality of the job market:

The share of new high-school graduates enrolled in college reached a record high last year, likely reflecting the weak job market they faced.

Some 70.1% of the 2.9 million new graduates between the ages of 16 and 24 headed to colleges and universities, the Labor Department said Tuesday, based on data from January through October 2009. That percentage was a historical high for the data series, which began in 1959.

But no, instead of doing some thoughtful analysis and a bit of research, it’s just easier to say that rising teen unemployment must — just must! — be the result of “liberal” minimum wage policies and lax immigration enforcement.

As some may believe I’m revealing a liberal bias, I’ll respond by saying that I honestly don’t believe I’m doing any such thing.  What I’m doing is looking at what the numbers are telling me, as evidenced by the chart above and those I produced elsewhere (B3 & Bonddad) on this topic.  I’m open to discussion/debate/refutation of that data, but little has been forthcoming.  And, for the record,  I’ll state here that I think Obama and his team badly misallocated the stimulus in ways that did little to create jobs, unarguably its most important objective.  And that will cost him dearly (as evidenced by yesterday’s third defeat of an unemployment benefits extension?).

Category: Data Analysis, Economy, Employment, Politics, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

73 Responses to “It’s the Minimum Wage. No, It’s Illegals. Or Not.”

  1. Dow says:

    The Tonya Harding defense – blame it on the shoelace.

  2. jz says:

    If you look at demographics, it was obvious that the U.S. was headed for trouble. If American women were not going to have more children, the obvious solution was to open our doors to immigrants. Immigrants particularly those in their 20s have always been an economic boom to nations. One reason Texas is doing so well has been the huge (and young) Latino population.

    Young immigrants stir up demand, and increased consumer demand is the factor that leads to growth. If you can skip the costly and draining financial period of having citizens from age 0 to 19, why not do it?

    You are right. Illegals and the minimum wage are not the cause of our problems. It is that our citizens are aging, and as they age, demand for goods and services fall.

  3. Chief Tomahawk says:

    Just thought I’d point out, that with state and local budgets contracting and thereby the pie shrinking, we’re now seeing the early stages of anti-immigrant sentiment on a legalized level (first Arizona, and now I believe Omaha, Nebraska has made a move in the last few days.) If this becomes more of societal phoenomena, that will just remove that much more demand from rental homes and starter homes, a further deflator for real estate.

  4. I seem to recall reading somewhere (more than 5 years ago) that showed illegal immigration employment actually went down during recessions. The reason for this was because employers had a larger pool of applicants to draw from. Since employers can get into a lot of trouble for hiring undocumented workers (or at least it was that way the last time I checked), it was much more practical for them to hire legal workers.

  5. Mannwich says:

    When all else fails, the oldies but goodies are usually trotted out by the right wing ideologues. Even if those fail too. Who cares about facts. It’s more fun to emote and attack the lowest on the food chain.

  6. ashpelham2 says:

    Yes, it is a secular change in demand, brought on by this particular recession foremost, but also due to the aging of the populace. Those 50 and overs weren’t too frugal until the bell rang back in 2007-2008, and now they are extreme in the other direction, and it’s caused a huge shift in everything from government spending to unemployment calculations, to inventory building.

    The same generation that “changed everything” is doing it all over again. It’s how America reacts and deals with it that will tell the tale for the next 40 years.

  7. NoKidding says:

    Invictus, it does not have to be one or the other. It can be some, both, or all.

    Have zero teens been displaced by illegals?
    Have zero hiring decisions been tipped by minimum wage?
    Are all displacements due to clinging boomers?

    Grab a nuance, they’re on sale.

  8. carleric says:

    All I know is that in the late 70s we hired as many young Mexicans – legal or not – as were available in Camden, Texas for sawmill labor. One reason is that Americans were too damned lazy to do the work and as fas as I know (because my family still lives in East Texas) the situation continues today. If Americans spent as much time working as they do standing in lines for handouts there wouldn’t be any need for immigrant labor. Hell, most of the white trash in East Texas is still parasiting off Katrina. Observations from someone who has been there and and done that.

  9. Invictus says:

    @NoKidding:

    Of course I accept that all three (and more) factors are at play. I’m merely pointing out what the evidence shows versus what’s more politically expedient and asking, “Which factor (of the three mentioned) might we reasonably assume is most relevant?” The answer to your (rhetorical?) questions is, of course, “no,” but I don’t believe that changes the thrust of my argument.

  10. Rikky says:

    i personally know of 4 teens who wanted work in the landscaping business but was told they have a surplus of illegal labor filling the jobs at 20% below peak wages a few years back so please don’t tell me the over 50 crowd are working in such positions longer. liars figure and figures lie.

  11. Invictus says:

    @Rikky

    Generalizing to the broad population from one example is hardly persuasive. Please come back with something more substantive and cut the crap that I’ve somehow “lied.”

  12. Will Up North says:

    In the case of our business, we didn’t hire any kids at all this summer in order to help keep below the 50 employee penalty level in ObamaCare. Last year I sent out over 70 W-2′s of which 6-8 were for summer kids. To keep under 50, we will be using a lot of temp agency workers in addition to not hiring kids in the summer.

    I totally agree with you that minimum wage and illegals are often red herrings. However, it is a fact that action from Washington has directly affected our hiring plans here – to the detriment of local teens.

  13. Mannwich says:

    Ah, the old anecdotal “evidence”. Two words: “sample” “size”. Get some and report back.

  14. beaufou says:

    Here’s an easy answer for those blaming illegals.
    Go take their jobs away.
    http://www.huffingtonpost.com/2010/06/24/colbert-immigrant-farm-wo_n_624875.html

    With high unemployment, it was just a matter of time before populist and nationalistic sentiments came out of the woods.
    A lot of corporations employ them, just ask Walmart who got fined $11 million for employing hundreds of them for years.

    Illegals pay between $5000 and $10000 to mafia criminals to be smuggled into the States.
    If illegal immigration is really a problem, legalize it, just let them walk to the border, charge them $2000 for a 2 year working permit, they would pay taxes, pay for car insurance etc…

    But then their employers would have to give them a decent wage and decent working conditions.
    Not gonna happen.
    As for baby boomers, you can’t expect them to disappear from the active population just because they’re older, they need to make a living too, some have lost quite a bit in the spectacle offered by Wall Street back in 2008.

    Politicians using either illegals or baby boomers to explain younger generations are out of work are proving they are incompetent at creating jobs or simply can’t be bothered.
    They might as well start saying, the problem with unemployment is: we have too many people.

  15. TDL says:

    Ahh the old trope that anecdotal evidence has no relevance. Last time I checked surveys, studies, etc. are a large collection of pieces of anecdotal evidence.

    Regards,
    TDL

  16. flipspiceland says:

    @beaufou

    I don’t believe that politicians actually believe that they can’t create jobs. Of course they can. Right now.
    Good ones, paying well, with decent benefits.

    The possibilities for job creation exist in so many governmental venues that it’s ludicrous to think that they wouldn’t do so UNLESS there is some fundamental, nefarious reason that they do not do so.

    My guess is that current employers, should they have to compete for a million semi-skilled workers who have been hired by the government to, say, put Solar Panels on every house that is able to benefit from the use of them, would scream bloody murder and the result of that would be less campaign donations and outright bribery to prevent it. Less campaign donations meand possible loss of their own soft touch positions.

  17. jyc3 says:

    Invictus,
    You need to review Occam’s Razor. There are several ways it can be expressed but the most common is that the simplest explanation is most often the correct one. Therefore the simplest explanation here is the simplest economic explanation, i.e. the cost of hiring teenagers was raised (higher minimum wage) and therefore fewer of them were hired. Yours is the more complicated answer and therefore does not conform to Occam’s Razor.

    As for the explanation of high teen unemployment I too reject immigration as a cause but would say that at least some portion of the rise is due to higher minimum wages. Some of it is probably due to the demographics as you suggest. How much can be attributed to each? Your guess is as good as mine but certainly raising the minimum wage on the verge of a recession didn’t help matters.

  18. gorobei says:

    The whole minimum wage thing was already a red herring. With around 3% of employees at or below (10% of those at minimum wage, the other 90% in exempt positions,) and even only 4% or so of under-25s at minimum wage, the “at the margin” argument holds almost no water regarding the overall unemployment picture.

    Minimum wage is currently little more than an efficiency regulation: we don’t want courts full of lawsuits over $3.25/hr overtime disputes, 10 page employment agreements signed by people with 8th grade educations, etc. Same reason we don’t let restaurants store rotten food and require people keep junkers out in their yards in some communities: it’s cheap to just put a very low minimum standard in place by law than to adjudicate/arbitrate every case as it happens.

  19. evanhuntington says:

    your statistics are interesting but don’t really support your point. Can you segment the data by the industries where illegal immigrant labor is most prevalant?

  20. Mannwich says:

    @TDL: Key words: a “LARGE COLLECTION”. Last I checked “Large Collection” = “sample size”, no? You just made my point.

  21. TDL says:

    Mannwich,
    I think you are missing mine (which is not surprising because I was not articulating my point.) I am suggesting that a few people negatively affected by certain policies should not be dismissed so quickly. Studies, surveys, etc. are important, but I believe they are often used to gloss over problems. This is why some people are often dismissive of anecdotal evidence, because this type of evidence might contradict what they are attempting to posit. The key here is anecdotal evidence is a type of evidence and has a place in debates concerning human activities.

    Regards,
    TDL

  22. TDL says:

    Ironically enough, here is a Colbert related article that is appropriate for this thread.

    http://news.yahoo.com/s/ap/20100624/ap_on_en_tv/us_immigration_take_our_jobs

    Regards,
    TDL

  23. Invictus says:

    @evanhuntington

    Please elaborate on why the charts “don’t really support [my] point” and maybe we’ll have something to talk about.

    As to your question, I don’t know whether I could or couldn’t do that segmentation, but I’d suggest that if you believe it’s relevant, by all means have a go at it.

  24. Fred C Dobbs says:

    I don’t mind it, if Invictus rolls out of bed and painfully stubs his toe to begin a bad day, but I find it repugnant for Invictus to reach out and take a couple of words someone says, and, because it commits the fallacious sin of over-generaliztion/over-simplification, label it as “ideologically driven bullcrap.”

    If we hold Invictus to the same standard, his explanation is likewise ‘bullcrap.’ Why would higher-priced old, mature workers retire, and lower their standard of living? Why should they? Will Invictus show us the way by example? If they do retire, does anyone seriously think lower-priced immature, unskilled workers will take their place? In Detroit, only one out of three graduate from high school. Would Invictus hire these dummies? Sure, supply and demand influence the level of wages, and supply is influenced heavily by the supply of workers, and illegal immigrants and legal teenagers are merely part of the supply, but there are simply too many variables, which owing to the limitations of generating reliable data, are virtually unknownable and unknown.

    The plain fact is the federal government wears no clothes, and tries (and sometimes succeeds with the help of its surrogate the MEDIA) to convince us it is all-powerful, all-knowing, all-wise, and all-just, when it is none of the above. In general, it is an illusion. Sure, the federal government can come down hard on a few selected individuals to make an example of them, but it can’t come down hard on individuals that come together in well-financed groups, such as labor unions, teacher unions, government employees unions etc., groups that are goring other demographic groups with government backing to redistribute power and money in their direction in the short-term, at the expense of those who currently possess it, and future generations.

    We all would to better to spend our limit of time on something we can do something about, rather than ranting at the weaknesses of others, in an effort to elevate our lowered self-esteem. Invictus – go for a walk, and have a nice day!

  25. Invictus says:

    @jyc3

    Fair enough point about Occam’s Razor; I probably should have given that a bit more thought before working it into the narrative.

    And I’d agree that the timing of the increase in the minimum wage was far from ideal, but in terms of how I’d weight the impact of minimum wage/illegal immigrants/demographics, I’m going with demographics in a cake walk (adding, to be clear, at least in this cycle).

  26. Karen2 says:

    Rikky does make a logical point about the types of jobs baby boomers CAN’T take from young people (at least, not for longer than the week or so it would take for their aging bodies to do the equivalent of throwing a rod).

    Wonder how many unemployed young people will respond this time to the “take our jobs” publicity stunt TDL has kindly shared, above. In 1998 the economy was booming, so the low response rate is unsurprising. This time they may get a bigger response – but not from teenagers except those that already live in the area. Teens’ parents are unlikely to let them leave the house (and school) to go to California for a temp job!

    But overall illegals have been a boon to the U.S. economy. They filled many, many home-construction jobs at low wages and without benefits during the housing boom. Now their employers can let them go without bothering to pay unemployment – except apparently in California they can sue and win (we met a former contractor who went through that experience).

  27. Mannwich says:

    @TDL : I hear you and am not saying illegal immigation is not a problem or doesn’t impact this situation. I just think it’s overplayed for affect by various demogogues with an agenda.

  28. Invictus says:

    @Fred

    Was there an actual rebuttal in there somewhere? If so, please point me to it. Thanks.

  29. gorobei says:

    evanhuntington, my stats? sure:

    From the BLS’ minimum wage 2008 breakdown @ http://www.bls.gov/cps/minwage2008tbls.htm#4

    I assume these are the basic high-illegal alien segments:

    Food service & prep, etc had 83K workers at minimum wage, 1087K below minimum wage.
    Material moving had 22K and 135K.
    Healthcare support had 3K and 54K.
    Grounds maintenance had 19K and 87K.

    Note farming/crop picking does not meet BLS’ data criteria. Self-employed & piecework type jobs are also not included.

    I see little evidence of minimum wage laws having much of an effect in these industry segments, and this is only 3% of total employment, so I am struggling to see much, if any, effect on total employment due to minimum wage laws.

    I didn’t post about immigrant vs citizen employment displacement, so please don’t read anything into this or my previous post about that.

  30. Kort says:

    I’m actually pretty pleased dealing with adults (without tattoos, piercings, chewing gum or talking on their cell phones) at more and more shops in the mall, or at restaurants, etc. Anecdotally speaking (or maybe just because I am getting old), teens today (while more connected and tech savvy than ever before) seem lazier and less skilled (and care less about appearance) then ever before. They are pretty good at IM, Facebook, etc.

  31. ibman says:

    Except in a few areas, it’s very hard to see how 55+ workers and 16-year-old workers are anything like perfect substitutes. I supposed there’s a cascading effect in certain occupations (particularly for the high end of the 16-24 range), but not the traditional teenager summer jobs of lifeguarding, lawn mowing, house painting, etc.

    I’m also not really sure why it’s “ideological bullshit” to say that while the current economic conditions are clearly responsible for the most recent numbers, structural issues like wage floors and an increasing supply of unskilled labor have also had long-term effects. These seem like Econ 101 concepts.

  32. pschaeffer says:

    Folks,

    The decline in teen employment is very real and is related to immigration (legal and illegal). Of course, the current economic downturn has made the situation worse, but it predates the current recession by many, many years. A few data points should show this.

    Teen Labor Force Participation

    1994 64%
    2000 61%
    2007 48%
    2009 45%

    So you can seen that we are not really talking about the current downturn, but a long term trend driven mostly (but not entirely) by immigration. See

    “A Drought of Summer Jobs: Immigration and the Long-Term Decline in Employment Among U.S.-Born Teenagers ”

    http://www.cis.org/teen-unemployment

    Follow the link and you get the details. Note the dialogue between the CIS folks and EPI.

    I quote

    “The share of U.S.-born teenagers (16 to 19) in the labor force — working or looking for work — during the summer has been declining for more than a decade, long before the current recession. In 1994, nearly two-thirds of U.S.-born teenagers were in the summer labor force; by 2007 it was less than half. At the same time, the overall number of immigrants (legal and illegal) holding a job doubled. The evidence indicates that immigration accounts for a significant share of the decline in teen labor force participation. The decline in teen work is worrisome because research shows that those who do not hold jobs as teenagers often fail to develop the work habits necessary to function in the labor market, creating significant negative consequences for them later in life.

    Among the findings:

    * The summer of 2009 was the worst summer ever experienced by U.S.-born teenagers (16-19) since citizenship data was first collected in 1994. Just 45 percent were in the labor force, which means they worked or were looking for work. Only one-third actually held a job.

    * Even before the current recession, the summer labor force participation of U.S.-born teenagers was deteriorating. Between the summers of 1994 and 2000, a period of significant economic expansion, the labor force participation of U.S.-born teens actually declined from 64 percent to 61 percent.

    * After 2000, the summer labor force participation of U.S.-born teenagers declined from 61 percent to 48 percent by 2007. Thus even before the current recession fewer teens were in the labor force.

    * Teen unemployment — the share looking for a job — has also tended to rise somewhat over time. But the big decline has been in the share of teenagers who are looking for work.

    * The number of U.S.-born teenagers not in the labor force increased from 4.7 million in 1994 to 8.1 million in 2007. In the summer of 2009 it stood at 8.8 million.

    * The severity of the decline is similar for U.S.-born black, Hispanic, and white teens. Between 1994 and 2007 the summer labor force participation of black teens declined from 50 to 35 percent; for Hispanic teens from 52 to 37 percent; and for whites it declined 69 to 55 percent.

    * The fall-off is also similar for U.S.-born teenagers from both high- and low-income households.

    * Although a larger share of teens are enrolled in summer school, the fall-off in employment is similar for those in school and those who are not. As a result, the overwhelming majority of the decline in labor force participation would have occurred regardless of the increase in enrollment.

    * Immigrants and teenagers often do the same kind of work. In the summer of 2007, in the 10 occupations employing the most U.S.-born teenagers, one in five workers was an immigrant.

    * Between 1994 and 2007, in occupations where teenage employment declined the most, immigrants made significant job gains.

    * Comparisons across states in 2007 show that in the 10 states where immigrants are the largest share of workers, just 45 percent of U.S.-born teens were in the summer labor force, compared to 58 percent in the 10 states where immigrants are the smallest share of workers.

    * Looking at change over time shows that in the 10 states where immigrants increased the most as a share of workers, labor force participation of U.S.-born teenagers declined 17 percentage points. In the 10 states where immigrants increased the least, teen labor force participation declined 9 percent.

    * We also find that, on average, a 10 percentage-point increase in the immigrant share of a state’s work force from 1994 to 2007 reduced the labor force participation rate of U.S.-born teenagers by 7.9 percentage points.

    * The most likely reason immigrants displace U.S.-born teenagers is that the vast majority of immigrants are fully developed adults — relatively few people migrate before age 20. This gives immigrants a significant advantage over U.S.-born teenagers who typically have much less work experience.

    * The labor force participation of immigrant teenagers has also declined, though it was low even in the early 1990s. This along with the similar decline for U.S.-born teens from all racial and income backgrounds supports the idea that the arrival of so many adult immigrants, who work at the kinds of jobs traditionally done by teenagers, crowds all teenagers out of the labor force, both U.S.-born and foreign-born.

    * Summer is the focus of this report; however, the decline in the employment of U.S.-born teenagers is year-round, including a decline during the other peak period of seasonal employment at Christmas.

    * Although there is good evidence that immigration is reducing teenage labor market participation, other factors have likely also contributed to this problem.

    * One factor that does not explain the decline is an increase in unpaid internships among U.S.-born teenagers.

    * First, 19-year-old high school dropouts show a similar decline as 19-year-olds who attend college — dropouts are very unlikely to be in unpaid internships.

    * Second, 16- and 17-year-olds show the same decline as 18- and 19-year-olds, even though younger teens are much less likely to be in internships.

    * Third, teenagers who come from low-income families show the same decline as teenagers from high-income families. But research shows that unpaid internships are much more common for higher-income teenagers.

    * Fourth, according to Princeton Review’s Internship Bible, there are only about 100,000 internships (paid and unpaid) in the country. The increase in U.S.-born teenagers not in the labor force was 3.4 million between 1994 and 2007.

  33. Invictus says:

    @pschaeffer

    For starters, your numbers do not jibe with what I find at bls.gov. Your use of only one side of the equation is, at best, misleading.

    Labor Force Participation Rates
    YEAR 16-19 55+
    1994 53 30
    2000 52 32
    2007 41 38
    2009 36 40

    This relationship is consistent with the change in our demographics, and is clear in the charts in this post.

  34. Julia Chestnut says:

    I think that there are several forces at work, but that neither the minimum wage nor illegal immigrants (or legal ones, for that matter) are a serious issue for teen jobs. First, most illegals work in jobs that teens wouldn’t be caught dead doing – construction, maid services, working in day care centers – real jobs, not summer employment, that involve a lot of drudgery and no “cool” factor, or a lot of risk. The next time you tell me that teens want shift work at the chicken plant, I’ll believe that illegals are an issue.

    Second, most teens get paid under the table. Not only does that mean that they don’t get into the job statistics as employed, it also means that they are not subject to minimum wage legislation because, well, they are working illegally anyway. The vast majority of teen employment of poor kids migrated into the shadow market over the past decade or so.

    Third, the oldsters really are competing with teens for entry-level and retail spots that teens used to hold. That part is completely documented, and easily seen at your local Wal-Mart.

    Fourth, and finally, kids don’t work any more unless they have to. What most kids do is take on a volunteer spot that will look good on the resume for college applications – and maybe work a job under the table dog walking or babysitting or mowing lawns for spending cash. Increasingly, middle-class parents (or what used to be called same, but are increasingly working poor) see affording their teens freedom from work as an important leg up in getting ahead in life: the kid’s job is to attend summer school, work a volunteer job that looks good on college apps, hone a skill that is supposed to make them look well-rounded on the college apps, etc. Never underestimate the increasing desperation of the former middle class to give its offspring a boost.

  35. dsawy says:

    High minimum wage is part of what fuels employment of illegals.

    There is no “either…” “or…” situation situation here of “minimum wage” or “illegals.”

    The answer is “both.”

    One of the reasons to employ illegals is because employers can pay illegals less than minimum wage, and in cash, meaning that they don’t pay FICA and other payroll taxes. As the minimum wage goes up, so does the payroll taxation that employers have to pay legit employees. That’s Occam’s Razor for you right there. Employers employ illegals because it costs them less to do so. That is all this comes down to: reducing labor costs. Period, full stop, thanks for playing.

    Your demographic charts are far more complicated than any actual reasoning by any employer.

  36. “And, for the record, I’ll state here that I think Obama and his team badly misallocated the stimulus in ways that did little to create jobs, unarguably its most important objective.”– Invictus, above

    “…I’m merely pointing out what the evidence shows versus…”–Invictus @ 10:23

    Invictus,

    w/: “…misallocated the stimulus in ways that did little to create jobs, unarguably its most important objective.”

    esp. “stimulus=to create jobs, unarguably its most important objective.”

    and: “unarguably its most important objective”

    from which POV is that to be accepted from ?

    or, differently, Who ever said that was the Goal of the ‘stimulus’?

  37. gorobei says:

    dsawy,

    You sound like a day trader. Find a good story, throw in a few biases, skip the hard work of sifting through the actual data. Dismiss those not in agreement with a trite phrase or two.

  38. TDL says:

    Mannwich,
    You and I are on the same page then, particularly in respect to immigration. It is overplayed in my opinion as well.

    Regards,
    TDL

  39. dougc says:

    At least we now know that our unemployment problem has nothing to do with the manufacturing and tech service jobs sent to India And China.

  40. Invictus says:

    @Mark Hoffer

    Who ever said that was the Goal of the ’stimulus’?

    I dunno, maybe the president:

    That’s why we’ve put in place a comprehensive strategy designed to attack this crisis on all fronts. It’s a strategy to create jobs, to help responsible homeowners, to restart lending, and to grow our economy over the long term. And we’re beginning to see signs of progress.

    The first step we took was to pass a recovery plan to jumpstart job creation and put money in people’s pockets.

    Note that job creation leads the list of objectives.

    I could look around for more, if you’d like, or we can stipulate that its primary goal was job creation.

  41. ibman says:

    “First, most illegals work in jobs that teens wouldn’t be caught dead doing – construction, maid services, working in day care centers …”

    This is an absurd statement. Walk into many daycares or preschools and you’ll find plenty of young, college-educated women (usually) working there. These aren’t sweatshops.

    What’s so bad about construction? Not everyone wants to sit at a desk and type all day. It’s a good way to get into a skilled trade as well.

    As for maid services, no one wants to clean toilets (except, perhaps, for some individuals with rather odd fetishes), but if the money’s good, people will do it. Heck, I worked as a part-time janitor one summer when I was a teenager. Not my favorite job, but it paid.

    It’s easy for rich people to say, “I don’t have a problem with illegal immigration because I can afford to have my kids not work and I like the cheap lawn care.” It’s a lot harder for the unskilled high school graduate to see why it’s so good for him.

    Also, calling the middle class in 2010 “the working poor” defines poverty down to a ridiculous level. A little historical perspective is in order.

  42. Mannwich says:

    Excellent points, Julia.

  43. Invictus,

    That’s cool, let it be, so, stipulated..

    Though, then, We have a different problem, yes?

    if we were to grant that 44 & Co. are intelligent, and, given, the discrepancy between the ‘Sales Pitch’ and the ‘meat’ of ARRA, then, Someone is being lied to, no?

    here, w/: ““…I’m merely pointing out what the evidence shows versus…”–Invictus @ 10:23″, We should remember that “Good Rules” are Good, only when consistantly applied..

    either 44 & Co. are, truly, incompetent, or, 44′s ‘Sales Pitch’ was a fabrication to cover Campaign-paybacks (i.e. SEIU) and other, unenumerated, Goals ..

  44. pschaeffer says:

    Invictus,

    “For starters, your numbers do not jibe with what I find at bls.gov”

    No. My data was from cis.org (see the link I provided). However, I went back to bls.gov and checked the data myself. They are correct.

    Go to http://www.bls.gov/data/. Under Employment check labor force statistics from the CPS (Current Population Survey)

    Check series LNS11300012Q (Seas) Labor Force Participation Rate – 16-19 yrs.

    Note that the link you provided has nonsense data. Exhibit A shows a more than doubling in the 55+ to teenage ratio from 2000 to present. The actual 55+ population in 2000 was 57.7 million. In 2009 it was 77.67 million. The teen (16-19) population rose from 16 to 17 million. As you can see that ratio was 3.61 in 2000 and 4.57 in 2009. No doubling. Not even close.

  45. dsawy says:

    @gorobei:

    No, I’m not a day trader. I do trade, but not on such short timeframes.

    Unlike most of the posters here and on other financial blogs, I’ve actually been an employer of both short-term and permanent employees, both with and without benefits. I do my own taxes and books.

    It is rather obvious from most of the comments and articles on financial blogs that most of the people reading or writing them know very little about what it is like to actually employ people.

  46. DrungoHazewood says:

    I’ll state here that I think Obama and his team badly misallocated the stimulus in ways that did little to create jobs, unarguably its most important objective.

    Nobody talks about this, but its so glaring maybe it has blinded everyone. That money went somewhere. Also you can’t get anyone to do anything, and when they do, they try to rip you off. Even the Guatemalans are getting Americanized.

  47. Lord says:

    Ran across an interesting comment by a high school teacher on this. The affluent kids work on grades and extracurriculars for college which is more important than work while the less affluent can’t afford the transportation to get to these jobs which are in more affluent neighborhoods. This rings true to me.

  48. gorobei says:

    dsawy,

    Fair enough, but to address your points:

    # High minimum wage is part of what fuels employment of illegals.

    Well, the high cost of everything fuels the employment of illegals. E.g. the high cost of steak does too.

    # There is no “either…” “or…” situation situation here of “minimum wage” or “illegals.” The answer is “both.”

    What is even the question here? these are different things.

    # One of the reasons to employ illegals is because employers can pay illegals less than minimum wage, and in cash, meaning that they don’t pay FICA and other payroll taxes.

    Employers can do the same thing with legals re paying cash. No FICA either. What is your point?

    # As the minimum wage goes up, so does the payroll taxation that employers have to pay legit employees.

    So what? Legitimate sales require sales tax be collected. It’s a standard cost of legal business.

    # That’s Occam’s Razor for you right there.

    No, that’s not what Occam’s razor is. You need at least two theories that explain things equally well, then one of them needs to rely on less moving parts. You don’t even have one theory.

    # Employers employ illegals because it costs them less to do so. That is all this comes down to: reducing labor costs.

    That’s a bold assertion. So harder working illegals do not exist? I’ve employed a lot of people in my life: the absolute reduction of labor costs was not the only thing I was thinking about (e.g. one employee has worked for me for 18+ years.)

    # Period, full stop, thanks for playing.

    This is the real world, not a game.

    # Your demographic charts are far more complicated than any actual reasoning by any employer.

    Wow. I hire and think about charts like that all the time. I probably spend 2% of my time asking people why they made the dumb-ass decision to build a satellite office is some random location where the only employees are substandard.

  49. NeutralObserver says:

    Just a little reality check here. Estimates of the illegal immigrant population vary from 12 million to 30 millon. Let’s assume the low estimate of 12 million. Invictus, are you saying that removing 12 million illegal workers would not significantly improve the overall unemployment problem and would consequently have little or no effect on teen unemployment?

  50. Invictus says:

    @pschaeffer

    You are apparently looking at quarterly data, I look at monthly. Regardless.

    Beyond that, this is not about population (though it well could be). It’s about the Civilian labor force and the changes going on in it. I’m not sure which chart you’re referring to as “nonsense,” but I stand by all of them. The one I believe you’re referring to reflects LNS11024230 and LNS11000012.

    In any event, as far as I can tell, thus far you’ve proven nothing.

  51. Lariat1 says:

    Been in business over 25 years, excavation, have hired college kids to labor over the summer. In the last 10 years you have to send them home to put work boots on and real pants that don’t hang below the crack of their ass. We call it a “safety issue”. If you need to move quick, you can’t and you’re dead. We used to issue work cell phones until I discovered all the porn texting going on during the day to their girlfriends who are at work somewhere. Made for very interesting evening readings. All in all, few are up to physical work and our 70 year old guy would put them to shame, oh wait, they have no shame because they don’t care. Our baby boomer generation has spoiled the hell out of these kids. All of them are destined for Ivy League and six figures upon graduation. yeah right, some of them better start learning some trade skills. Even with all the aggravation we have never hired any illegal immigrants. It’s cost us not to, but we wanted to stay above that. You better believe our 16 year old is learning all that stuff he hates but may be damn glad he knows how to do someday.

  52. olephart says:

    The Democrats get millions of potential voters and Republican businessmen get to keep millions of low wage slaves. The only losers are the 40 million Americans who do those jobs Americans don’t want for the equivalent slave wages. Funny how supply and demand is good for business when its oil they’re talking about but bad when its labor. The additional 10 to 20 million laborers here illegally make wage and benefit pressure non existent or even negative. This is like bringing Guatemala to the United States.

    Traditionally those on the left were supportive of the American worker as opposed to those on the right. The immigration conundrum requires that in order to be a good Liberal one must throw unskilled or semi skilled Americans under the bus. Since most of us don’t see the pain that low wages, no benefits and no chances for advancement bring we can feel good about ourselves in supporting illegal immigration. It is, after all, the Keith Olbermanns of the World who can demagogue on illegal immigration and feel superior about it. Don’t get me wrong, the plight of these people is indeed heart wrenching. This is why heartless Republicans can voice vehement opposition to illegal immigration without remorse.

    I personally support strict enforcement of the laws concerning the hiring of the undocumented including a viable National Social Security checking system and a rewrite of the Fourteenth Amendment to not convey citizenship at birth unless certain criteria are met.

  53. hr says:

    Its basic economics really:
    1. Raise the cost (minimum wage) and the demand for legal employment goes down. Thats Econ 101.

    2. Meanwhile, increase the Supply: You then add 12 to 30 million illegal aliens working for cash, undercutting legal wages, and they fill what is left of the low-end unskilled jobs. Thats Econ 101a. I believe that this is *A* cause of high central city unemployment. Why inner city Democrats says nothing about this has always amazed me.

    3. Now you add welfare, which while trying to be supportive, really reduces incentives to work.

    4. Now add social change: When was the last time a kid had a paper route? Now its all adults. So where do some kids learn about work, even entry-level?

    5. Manufacturing moves overseas for even cheaper labor, etc. reducing employment demand. This hollows out cities even more. We are losing a generation that knows how to build anything.

    So yes, its at least FIVE factors, and even more besides, as other posters have listed.

    Increased prospects for taxation, regulation and litigation aren’t helping either in encouraging businesses to hire.

    Now I’m up to eight factors. Occam?

    Two thought experiments to settle this:
    1. Imagine if 12 to 30 million LAWYERS moved into this country, and passed the bar, if they were even allowed. THEN there would be an uproar. And there would be NO question on this topic of excess labor supply. The trial lawyers would try mightily to protect themselves. But who protects the worker, unions? In an age of global trade? Haha.

    2. Now imagine a minimum wage of $20 per hour, tomorrow. There would be NO question on that topic either, as every job worth$19 or less per hour that CAN be shipped out is guaranteed gone by the end of the quarter, or sooner.

  54. pschaeffer says:

    Invictus,

    “Exhibit A shows a more than doubling in the 55+ to teenage ratio from 2000 to present”

    LNS11024230 is Civilian Labor Force; 55 years and over; Thousands; SA. See http://www.economagic.com/chartg/blsln/LNS11024230.gif

    LNS11000012 is Civilian Labor Force; 16 to 19 years; Thousands; SA. See
    http://www.economagic.com/chartg/blsln/LNS11000012.gif

    Yes, the ratio of LNS11024230 to LNS11000012 has risen from 2000 to 2010. However, that is an effect. Using that ratio to explain declining teen LFP is equivalent to using the unemployment rate to explain the percentage of people unemployed.

    The question is why has the ratio risen so much? Population provides a partial explanation of the shifting ratio. In 2000 we had 3.62 people 55+ for each 16-19. In 2010 the ratio is 4.39 people 55+ for each 16-19 person. However, that doesn’t come close to explaining the doubling of the 55+ labor force versus the 16-19 labor force.

    Note that teen LFP fell dramatically even in periods when overall unemployment does not provide a plausible explanation. In 2000, the overall unemployment rate was 4% and teen LFP was 52.9%. In 2007 unemployment was 4.4% and yet teen LFP had fallen to 41.4%. After 2007 teen LFP falls to 35.6% in 2010. However, the overall economy is clearly an influence after 2007.

    Stated differently, from 2000 to 2007 general growth in jobs handled the growing 55+ population and rising LFP in the 55+ population group without overall unemployment soaring. Yet at the same time, teen LFP fell rapidly.

    What group has is the closest match to teens in terms of skills (actually lack thereof). That would be immigrants (legal and illegal).

    Note that because immigrants are not uniformly distributed across the U.S. we have “natural experiments” to test the impact of immigration on teen employment. I quote

    “Comparisons across states in 2007 show that in the 10 states where immigrants are the largest share of workers, just 45 percent of U.S.-born teens were in the summer labor force, compared to 58 percent in the 10 states where immigrants are the smallest share of worker”

    “Looking at change over time shows that in the 10 states where immigrants increased the most as a share of workers, labor force participation of U.S.-born teenagers declined 17 percentage points. In the 10 states where immigrants increased the least, teen labor force participation declined 9 percent. “

  55. pschaeffer says:

    Invictus,

    I would suggest calling Steven A. Camarota or Karen Jensenius directly. They know the data cold and will (probably) be willing to share their data, regressions, models, etc. The certainly spent some time going over this topic with the folks at the EPI. You might ask whether the rising 55+ population and rising 55+ LFP plausibly accounts for falling 16-19 LFP.

  56. pschaeffer says:

    Invictus,

    All of the numbers in the last post are from May of each year.

  57. NeutralObserver says:

    Invictus,

    Your failure to respond to my question speaks volumes.

    I wrote:
    “Invictus, are you saying that removing 12 million illegal workers would not significantly improve the overall unemployment problem and would consequently have little or no effect on teen unemployment?”

    @pschaeffer has several good points as well. Perhaps you could respond to those points as well.

  58. Invictus says:

    @NeutralObserver

    To answer your question, yes, it would have an effect. But it would not be as great an effect as removing 78 million baby boomers — the pig in the python — that are skewing our demographics. Which of those two groups — 12 million vs. 78 million — would you speculate is having the greater impact?

  59. Jim67545 says:

    Unmentioned is the growing chilling effect of age discrimination litigation on employers. My employer has had to excessively document personnel files to discharge someone in the “protected class.” Quite possibly I have benefitted from this and consequently should reach retirement a week from now.

    Tales of well educated and experienced Boomers getting riffed, being unemployed for years and eventually having to take a job at WalMart abound. To have one’s financial condition collapse, often with loss of health coverage, just as one approaches retirement and the end of one’s ability to work, is terrifying. Makes Boomers cling more desperately to their job, even if they had opportunity to move and would not lose vesting, etc.

  60. NeutralObserver says:

    Invictus, if we are talking about the overall unemployment problem and the deferred advancement of 25-50 year old workers, then clearly the 78 million boomers have a larger effect than 12 million illegal workers. However, if we are talking about teenage workers, as referenced in the first paragraph of your article, then clearly the 12 million illegal workers having roughly the same job skills as teenage workers are having the greatest impact. Wouldn’t you agree that Boomers staying in the work force longer are at the top levels of experience and skill level and do not compete for the same jobs as relatively unskilled teenagers and new immigrants? I am with you though on the deferred advancement of the 25-50 year old workers being largely due to boomers remaining in the work force longer. BTW, I think the end of the Boomer generation is 1960 which would make the end of that group 50 years old now, so the tail of this group (50-54) ends up being lumped together with with the 45-49 year old workers. I imagine the unemployment rate of 45-49 year olds is actually double that of the group (45-54) as they are most impacted by boomers remaining in the workforce longer.

  61. engineerd1 says:

    Barry,

    I really think you have been watching too many episodes of Numbers. Unless we are discussing the height of Mt. Ranier, data is just a rhetorical tool. Nobody makes a graph without first having a point of view, and graphs cannot settle issues related to chaotic systems like the economy.

  62. NeutralObserver says:

    Slightly off topic anecdotal observation from out here in Los Angeles; we are seeing a lot more automobile license plates from Arizona in the last few weeks.

  63. Karen2 says:

    It would definitely be useful to know more about the nature of the jobs the boomers are holding.

    Are they positions that otherwise would have gone to teens? Or are they much higher-level jobs, of the sort that represent a continuation of the boomers’ careers?

    Your graph says nothing about that, so in itself proves nothing.

    In contrast, the report referenced by pschaefer presents much more detail, including stats that show a great deal of overlap in the types of jobs held by immigrants and teens. Still not conclusive as to causation (for whatever reasons, teens could nowadays prefer not to work these jobs that earlier generations did work), but they make a better case than is made by your single graph.

  64. Invictus says:

    @NeutralObserver,

    FYI, I believe the Boomer generation is widely accepted as those born from 1946 – 1964. FWIW.

  65. pschaeffer says:

    Invictus, NeutralObserver,

    It is not 12 million illegals versus 78 million boomers. Of the boomers, 28 million have a job and 30 million are in the labor force.

    Of course, the boomer generation has always been the pig in the python. However, the economy had jobs for them in the 70s, 80s, 90s, 00s, and even now they have a much lower unemployment rate (7.1% in May 2010) than the population as a whole.

    It can be argued what’s different at this point is that we would normally be expecting them to be leaving the labor force and they are not. There is some truth to this. However, the shift isn’t as large as you might think and it appears to be a long term trend.

    The 55-64 LFP ratio bottomed out in 1986 at 54%, rose to 57.2% in 1995, 59.2% in 2000, 62.9% in 2005, and 64.9% in 2009. The 65+ LFP ratio bottoms out in 1985 at 10.8%, rise modestly to 12.9% in 2000, to 16.0% in 2007, and to 17.2% in 2009.

    These are real changes. However, the elephant in the room is the overall lack of job growth. In may of 2010 the U.S. had 139.42 million jobs. At the end of 2000, we had 137.6 million. Even at the peak of the Bush (boom, bubble, debacle, fiasco…) we only had 146.4 million jobs.

    By contrast, the U.S. gained around 20 million jobs in the 1990s, and 19 million jobs in the 1980s.

    All that having been said, teenagers most directly compete with illegals, not well educated (on average) boomers. Indeed, the state level data (cited above) shows this.

    Of course, the key impact isn’t teenage unemployment (which is cyclical) but LFP. Take a look at the actual data. Teen LFP fell strongly in periods when teen unemployment didn’t rise. Teen unemployment was 14.7% in Dec 2006 and has since risen to 26.4% in May of 2010. However, that is a consequence of the downturn.

    In Dec 1988, teen unemployment was 14.8%, but teen LFP was 55.1%. Unemployment in Dec 2006 was essentially identical, but teen LFP was down to 43.2%

  66. pschaeffer says:

    engineerd1,

    “Nobody makes a graph without first having a point of view, and graphs cannot settle issues related to chaotic systems like the economy”

    I disagree, at least with respect to myself. I routinely learn things from graphs I didn’t know and would NEVER have guessed. Just in this thread I learned (from a graph) that 55-64 LFP has been rising steadily for decades.

    Many years ago, I plotted INDPRO (Industrial Production from Fraser) and was amazed to see the profound impact that FDR had. It changed my entire view of the Depression (see below).

    If you have an open mind, reality will surprise you with some frequency.

    I wouldn’t say that the economy is “chaotic”. However, I would say that what is important changes over time in ways that are not expected or understood until after the fact.

    At one time “confidence” was a much talked about and debated topic. The Republicans justified adherence to the Gold Standard in the 1890s using “confidence” as a justification. There is some evidence that they were right.

    Conversely, FDR took the U.S. off the Gold Standard in 1933, destroying “confidence”. However, “confidence” no longer mattered. The economy promptly and massively rebounded.

  67. Rescission says:

    I have run three businesses plus I have three teenage kids who work and here is what I see on the ground.

    * Teenagers today don’t work jobs as much as they did 30 years ago. I am amazed at the number of teenagers who play ball or other activities and are not required to go out and get a part time or full time summer job. Education has been substituted for working. Most all of my kids friends never worked in high school. Amazing. Whereas I was required to work beginning at age 15, as was my wife.
    * Minimum wage is what it is and I can’t see it being a big factor.
    * Illegals have cut into the construction and landscaping jobs for teens looking for those. I am not saying its the major cause of teenage drop in unemployment, but knowing people who run construction and landscaping companies (especially the latter) there is no question about this.
    * Teens and baby boomers over 55 don’t do the same jobs. Older dudes don’t do landscaping, construction nor much fast food, so this is bogus.
    * The bottom line is that a teenager can find a job if they really want one. I always did and so have my kids. When they come back and say it’s too hard, it just means they have to work harder to find one. I just don’t buy the “I can’t find a job argument” when you are talking about minimum wage jobs. They are out there if you are willing to work hard, can speak the language and are dependable.

  68. SymbolicalHead says:

    @Invictus

    You attack one simplistic assertion but replace it with another.

    Your assertion doesn’t even mean what you seem to think it means. It is no refutation of the minimum wage argument at all.

    Job gentrification* is a predictable consequence of a high minimum wage.

    At a low wage all the applicants will be fairly low-skill, low-experience, or unreliable. As the wage is increased, but the job stays the same, it’ll draw in higher skill, higher experience, and more reliable applicants that were not interested at the lower wage. They’ll beat out the unreliable or low-skill workers for the job every time.

    Keep that up and pretty soon you’ve got people with master’s degrees working at the supermarket and low-skill, low-experience [potential] workers are almost entirely displaced.

    This is pretty deceptive in the employment figures, as the higher-skill workers may be inticed out of retirement (as you suggest) or right after college — groups that have some discretion in choosing rather–and how much–to work.

    The higher the wage, the more high-skill workers will be draw in, and the more crowding out of low-skill workers: they just aren’t worth it compared to the other options the employer can hire at the required price.

    A minimum wage isn’t the only possible cause, but it is certainly a possible cause, and everything you said tends to support, rather than refute that it is a factor.

    *Yes, it has its own term.

  69. NeutralObserver says:

    Barry-

    Thanks for the post and all the thought provoking discussions that followed. And thanks to everyone who participated in the discussion, especially Pschaeffer. This caused me to review my assumptions and question/revise some of my thinking about employment between age cohorts and who will do what and for how much. I learned a lot more about teens and boomers and found cause to review boomer data I had not seen in decades. Even the motivation for plotting data and data interpretation was challenged. Thanks again for a refreshingly erudite forum that remained civil, although spirited, throughout.

  70. [...] reiterated that position here at TBP last month when illegal immigrants became the target of choice for stealing teen employment: What [...]

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