THE HIGH COSTS OF THE BOOMERANG

The 2013 poverty data came out in mid-September. It showed the first decrease in poverty since 2007 from 12.7 to 12.4 according to one piece of data. Black poverty went up slightly, from 25.6 to 25.7. Hispanic poverty dropped from 24.6 to 22.3, the largest decrease for any group.

One of the most interesting findings is that so many recent college graduates live with their parents. Described as “boomerang” graduates, a third of them occupy a basement, a spare room, or perhaps their old room, or a floor or couch. Blessedly, they have parents to live with. And, if they are 26 or younger, they have health insurance, thanks to the Affordable Care Act. On the other hand, these boomerang graduates will postpone many adult decisions that affect economic markets. They won’t rent apartments or buy furniture or homes. If they don’t have credit cards from college (and they shouldn’t), they are unlikely to get them as residents of their parents’ homes. They will delay marriage and other decisions, which also has an impact on consumer spending. They are missing out on the low interest that would make the purchase of a car or a home much cheaper. Their inability to fully participate in the economy hurts them, and it hurts the economy too.

African American graduates – the young people experience less of a boom because they have much less to boom back to. Their parents and grandparents will make room for them, but instead of staying in a basement room, they are staying with on the floor. Not only is there pressure to find a job, but also their failure to do so affects younger siblings and neighbors. “Why should I go to college,” they rationalize. “Big brother went and can’t find a job. Or, big brother is working at a fast food restaurant. I could do that without a degree.”

Given the high black unemployment rate and the weaker networks that African Americans have, few relatives can refer them to jobs – they are still looking for jobs of their own. Boomeranging hits African American young people harder and the consequences are greater. Already the recipients of lower wages, they also find that it takes longer to locate employment than their white counterparts.

When young people are out of work, economists refer to the impact as “scarring”. This means that boomerangers will have lower wages for the rest of their lives, unless they go to graduate or professional school, a costly proposition. And those who stay out of the labor market for a year or two are less preferred than graduates who find jobs right after college. The Great Recession had a permanent impact on the graduating classes from 2007 through 2011 or 2012.

The inabilities of recent college graduates are structural, and they are also racial. Efforts to close the unemployment age gap could generate post-graduation outcomes that are similar for young African Americans as they are for whites. But black unemployment has been twice that of whites as long as these data has been counted. The unemployment rate gap is seen as so normal that nothing has been done to reduce it.

President Obama has, by executive order, indicated that veterans should have hiring priority for federal jobs. Such ruling has caused resentment among federal workers, with the allegation that veterans are not qualified for the jobs they hold. Qualifications notwithstanding, human resource specialists at federal departments are required to offer veterans a hiring privilege. Doesn’t this sound like affirmative action to you? Yet affirmative action has been all but forgotten. Veteran preferences are the “new” hiring preference.

The rationale for these preferences is that those who served our country should not be homeless. Yet the overwhelming majority of veterans have homes and, indeed, lower unemployment rates than the general population. While no one begrudges veterans special opportunities, there are other groups that deserve preferences, too. When a college graduate is flipping burgers or assembling sandwiches, we are squandering knowledge and ensuring that graduates without jobs have a permanent disadvantage in the labor market. When African American graduates are sidelined, their very absence from the labor market sends a disturbing signal to others who would apply to college but for their perception that college completion offers them no advantages over the friend or colleague who did not go. Again, we are squandering knowledge, and we are also contributing to the unemployment rate gap.

Why not invest in our nation’s future by giving recent graduates hiring preference ? And why not pay special attention to those groups that much higher unemployment rates than others.

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© 2017 by Dr. J. Malveaux