The Jobless Generation: How Obama’s State of the Union Address Ignores America’s Young Adults

No, you did not misread the title. After Obama’s State of the Union (SOTU) speech, millennial Democrats on campus (and nationwide) were quick to say how Obama’s proposed policies would help everyone in the nation, including individuals their age. But, if you look a bit deeper, all is not as it seems. In reality, Obama’s policies do not help the job prospects of young Americans who are looking to find their first full-time jobs.

At the moment, job prospects for millennials are quite bleak. According to the Generation Opportunity, in January 2014 the unemployment rate of 19-31 year olds, not including those who have given up on looking for work, is 15.8%, which is nearly triple the national unemployment rate of 6.6%. This is extremely worrying, as a study done by Dr. Meg Jay has found that almost two-thirds of an individual’s lifetime wage growth comes from their 20’s. This means that millennials who are out of work now will face an uphill battle to gain any percentage of the wage they could have earned if they would have found a job earlier. Unfortunately, even in the face of these concerning statistics, Obama has chosen to focus on policies that sound good in theory, but actually further damage, the job prospects of millennials.

Obama has been widely applauded by Democrats on campus for his efforts to raise the Federal minimum wage and, therefore, help upward mobility in the lower classes. In theory, this sounds great for millennials who are just starting to work in, say, a burger joint. However, a study done by Claremont McKenna College Professor Manfred Keil, has shown that an increase in the minimum wage has a negative effect on the employment of workers aged 20-24. Furthermore, Keil has found that increasing minimum wage has no effect on the employment of those aged over 24. These findings suggest that increasing minimum wage encourages firms that employ minimum wage workers to hire millennials on a part-time contract, if they hire them at all, since it is cheaper for firms to only pay the increased minimum wage to the workers they already have (who they cannot easily force into a part-time role).

In his speech, Obama also focused on plans to help the long-term unemployed to get people back to work. Obama spoke about agreements he made with companies such as AT&T and Bank of America, which entailed signing a pledge to not discriminate against the long-term unemployed in their hiring process. While this might not seem to affect younger workers, encouraging firms to hire long-term unemployed individuals just pushes millennials, who presumably have less experience than long-term unemployed workers, further down the list of individuals that firms will hire.

Source: Bureau of Labor Statistics
Source: Bureau of Labor Statistics

There are two other important factors that have been negatively affecting young job seekers that Obama did not address in his speech. Millennial job prospects are currently being hurt by baby boomers working for more years before retiring. While this trend might reduce the current amount of welfare that the state and Federal governments need to pay out to retirees, baby boomers keep millennials out of jobs since firms find it easier and cheaper to keep current employees (who do not need to be trained and already have work experience) and ignore millennials who would like to get into the job market. This crowding out of millennial job seekers has a negative effect on the government’s ability to pay welfare for any social group, since millennials who do not have jobs cannot pay taxes. In addition, Obama’s public healthcare law has encouraged businesses to hire millennials only on a part-time basis in order to avoid having to provide health insurance to them. Since millennials are the most expendable workers with the least bargaining power, there is little that they can do to convince a cost-cutting firm to hire them full-time.

Overall, it is quite worrying to see millennial Democrats blindly believe that what Obama is doing is best for people our age. It would be more beneficial for the country as a whole if Obama, and Congress, were to enact policies that encourage firms to hire new millennial workers, as they will form the foundation of the job force for years to come. If not, the USA will find itself with a generation that lives off welfare checks and their parents’ retirement funds in their parents’ homes. In a country that is already trillions of dollars in debt, the last thing we need is for young, able-bodied individuals to give up on finding a job.

2 thoughts on “The Jobless Generation: How Obama’s State of the Union Address Ignores America’s Young Adults”

  1. If someone could post a link to that study, and specifically indicate the part of the findings where it talks about the employment of young adults, ages 20-24, that’d be much apppreciated

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