Why is it so hard for young people to find jobs these days? Three broad reasons come to mind.
1. Inappropriate skill sets,
2. Government regulations, and 3. Uncertainty.
Youth unemployment may partially be the result of a mismatch between the skills young adults
possess and the skills employers require of their workers. Younger individuals already
have less experience and training. But even people with college degrees may find that
they do not possess the appropriate skills for the jobs employers are looking to fill.
Government can subsidize education and send more people to school through loans and grants,
but this does not guarantee future employment.
Second, government regulations and taxes may also be part of the problem. Things like minimum
wage laws, overtime pay mandates, payroll taxes, health care regulations and unemployment
insurance all make it more costly to employ labor. When it is more costly for firms to
hire workers, employers hire fewer workers. Some of these costs may not be immediately
obvious. Take, for example, laws that make it more difficult for firms to hire and fire
workers as they see fit. Why could this cause more unemployment?
Compare it to dating. Imagine that any blind date you went on had to result in marriage.
Would you ever go on a blind date? I doubt it. The same goes for a company that's interested
in hiring more workers but worries about not being able to fire a new employee if they're
not working out. They won't want to take chances. So firms are particularly reluctant to hire
young workers who lack experience and do not have an employment record to prove that they're
reliable.
Finally, there are many reasons for employers to feel uncertain about the future. For example,
we're experiencing a slow economic recovery after a major financial crisis. Further, consider
something like health care reform. The recent health care bill is very long and there is
much debate and unanswered questions about what its ultimate impacts on the cost of labor
may be. All this creates uncertainty, which makes employers more cautious in hiring workers.
These three reasons, mismatch of skills, regulation, and uncertainty, are three potential reasons
why many young people are having a hard time finding work right now. Each of these three
reasons has one factor in common: government. Interventions haven't helped things and they
have likely made things worse. The unemployed would be better served if government stepped
out of the picture and allowed economic growth and a free market to create to more jobs and
prosperity.