-Wait, why are young people saying no to work?-

Article: Why young people are saying “no” to the workforce

Author: Steve Hargreaves

Date of article: October 22, 2013

Website: CNN Money

                The title of this article was the first thing that caught my eye. I thought to myself; “why young people are saying no…to work? What? If my parents found out I rejected a well paying job after college, I would be dead meat.” So out of curiosity, I read further into the article and I found some interesting aspects of this issue.

Let’s start off with some concrete facts: “78% of people aged 20 to 34 either have jobs or are looking for work, according to the Bureau of Labor Statistics. That's down from the peak of 83% in 2000, and the lowest since the 1970s.” Once the numbers are on the table, we begin to look at some possible reasons for this drop in number of young people in the work force. The article puts it bluntly; “the biggest thing keeping young people out of work is the weak economy,” which is understandable, after the huge recession and bank failures in 2008, our economy suffered some significant damage and is still recovering from the fall. With that, there are also some other reasons for this shift in workplace demographics which economists call “structural changes.”

One being school and education in general. With college tuition leaping higher and higher in cost each year, students are forced to take longer to graduate as they take fewer classes per semester while scraping enough money for another year. Along with that comes the desire for a higher degree, meaning that since students are paying ridiculous amounts for a college education, they take the opportunity to get more advanced degrees, therefore stay in school longer.

Secondly, young people are just simply staying home more often. “Since 2000, married women between the ages of 25 and 34 have been leaving the labor force at a slightly higher rate than young people at large.” This is also makes sound sense, when a recession hits and money is short, it makes people rethink their priorities and question what they really want in life and for young people the decision is usually to spend time with their children.

Thirdly, one which I didn’t consider, is that people are living longer which means a delay on huge life milestones. This isn’t as bad as the first two; this could help our economy in the long run. Unlike the other two reasons that can’t be changed easily, this doesn’t have to change because it’s not particularly damaging, it just shows that we are inching towards a drastic demographic shift for this upcoming generation.

And lastly, some young people fresh out of college are simply giving up on the workforce, with the baby boom generation’s delaying retirement and the nasty economic situation, the new generation of young workers have lost all hope in the system and just quit. It’s a sad dilemma but it is reality. 

-Oh the National Debt!-

Article: Putting U.S. debt in perspective

Author: Steve Hargreaves

Date of article: October 7, 2013

Website: CNN Money

                As an educated U.S. citizen, I am aware, and almost constantly reminded of, the country’s gigantic national debt.  I chose this article to better understand this debt, in perspective to other countries and the U.S itself. The struggle right now in Congress and the government shutdown basically centers on this elephant in the room, the national debt. The conflict arises as this number begins to climb higher and higher every year and the disagreement lies in whether to raise the debt limit or pay off our debt by adding taxes and such.

                So let’s add some real numbers to this problem; the U.S. debt right now is $16.7 trillion. That’s about $52,681 per person. Now let’s backtrack; in 2003, the national debt rounded off at $4.04 trillion. The national debt quadrupled in ten years. If that doesn’t scary you enough, national debt is predicted to reach $50 trillion by 2030. I wondered how this number got so high so I researched the national debt history year by year and I found that the nation’s debt soars during battles and wars. During the Civil War and World War I national debt was 25% of GDP and it skyrocketed to 112.7% during World War II. Since the economy was in such awful shape, the great depression, the need for borrowed money is quite understandable. So let’s apply this to our economy today; our constant participation in overseas wars and conflicts is one of our biggest expenses. If this was reduced, or better yet, eradicated completely, our debt would drastically shrink.

                Knowing the important details of the situation, now we can take a look at the article which basically puts all these details in perspective. Although the U.S. national debt looks daunting, it’s not as awful as its other worldly powers. Take Japan for example, with a national debt of 238% of GDP, which looks terrible compared to the U.S’s 103%. Even developing countries, like India and Brazil, both in the high sixties percentile, have a hefty national debt.

                These comparisons might prove comforting to some people but not for long. The article goes on to say “the average U.S. household is in worse shape than the government.” The debt-to-income ratio in U.S. households is 137%, more than 30% higher than the national, with household incomes ranging from 51k to 70k. This is very bad news. These numbers prove fetal to us and our economy. If the people of this country are in more debt than the country itself, which isn’t in great shape anyway, the country will fall fast. If the people can’t handle their own debt, the country is not any better off than its people.

-The Conflict-

Article: The Economic Impact of the Conflict on Israelis and Palestinians

Author: Robert Shan

Date of article: October 6, 2011

Website: If Americans Knew

                I was very interested in the presentation that we had of the Creativity for Peace organization. The presentation really helped me understand the conflict that was always in play since the day I was born. I think this generation doesn’t fully understand the history and the conflict between the two Israeli and Palestine people. This presentation truly opened my eyes to the everyday struggles of these people. Usually, especially in economics, we tend to see the bigger picture, how this will affect the economy in ten, twenty years and we forget that we are talking about human being and their lives.

                So I rushed home and started to research both the organization and the conflict. I wanted to find out how I could help these girls and better understand the conflict. In my frantic researching, I found an article about the economic effects of this conflict, so I chose it for my weekly economics blog.

                This article discusses the effect of Israel’s control on the employment of the Palestine people. In the graph there is a distinct gap between the Israeli employment line and the Palestine. The Israeli unemployment rate is 5.6% as opposed to West Bank’s 23% and Gaza’s 30%. The article continues on to say that this “sharp rise in Palestinian unemployment is universally viewed as resulting from Israeli policies of closure and movement restrictions. The economic situation in Gaza has been devastated by an air, sea, and land blockade that Israeli officials say was designed to keep Gaza indefinitely on “the brink of collapse.”

                Now this makes sense, if a government puts strict rules and regulation on its economy, of course the economic output is going to decrease but the drastic decline in Palestine’s economy is harmful to its own and worldwide economies. Most economists believe that “this may be the worst year in the Palestinian economic history. The average Palestinian’s personal income will fall by 40%, and 67% of the population will fall into poverty.”

-Government Shutdown Doesn't Mean Worlds End-

Article: Shutdown Effects on Economy May be Slim

Author: Charles Wilbanks

Date of article: October 3, 2013

News Source: Money Watch (CBS)

                As everyone and their mother knows, the United States government shutdown early Tuesday morning, October 1, 2013, furloughing about 800,000 government employees deemed “unessential” to the system. I had a few questions before reading this article about this whole situation so I researched. First question: why October 1^st? Well the fiscal year is between October 1^st and September 30^th. Second, why the shutdown? The shutdown is basically a way of buying time because the two sides, democrats and republicans, cannot agree on a spending bill to fund the government for this fiscal year. Third, why is this any different from all the other years? Obamacare was to be added to this fiscal year’s bill, obviously making it costlier than previous years. Republicans demand that the new healthcare program be taken out of the bill while the democrats insist its stay.

                So how does all this pertain to and affect the economy? Everyone was dramatizing its effect the first few days, going on about the situation as if it were an apocalyptic event when in all reality, the economy might not be that harmed by this move. Although, it would obviously be better off if the government was fully functional as usual, but this has happened before. In 1995, the government shutdown for 21 days, three weeks later, the economy was back to its health so this shutdown should not be new to us or our economy.

The article put it bluntly “Research firm IHS Global Insight estimates that a one-week shutdown would shave off less than a tenth of a point from fourth-quarter GDP. Roughly 800,000 federal employees went on furlough on Tuesday after Congress failed to pass a bill to fund the government.” It goes on to further prove the point that "The spending habits of government employees probably would not change if the shutdown was short-lived, particularly if they believed that they would receive back," IHS added. "Meanwhile, incomes would be maintained for Social Security beneficiaries. Medicare payments would also continue, so spending on health care services would not be harmed and hospitals and doctors would receive payments."

                This articles argues that the shutdown “hurts consumer confidence, and it doesn't help with cash flow, but in terms of financial impact it's going to be made up when the government reopens.” Instead, the biggest downfall in this situation is not the economic loss, as small as they are, “the biggest problem is people can see what a dysfunctional government we have,” which is somewhat surprising but true. Now, after this hiccup, if the people were so blind to see the imperfections of our government before, now have a clear beautiful picture of the jumble of mess we call our government.