US grads work as waiters while Italy's remain jobless

Cinzia Oliva may be Devon Wright’s worst nightmare, even though the Italian woman and the American man have never met.

Oliva, 35, hasn’t held a year-round job since she graduated from the University of Naples with an art degree 12 years ago, and now manages a bar near Rome. Wright, 22, who got his BA in history from Middlebury College in Vermont four months ago, moved in with his parents in Queens, New York, because he is unemployed.

“I knew it would be difficult, but I thought I’d have a job by now,” said Wright, who began seeking work in April and says he lost count of how many resumes he’s sent out. “All of these places I’m applying to say they want prior experience, but how am I supposed to gain experience if I can’t get a job?”

 

He’s now put off the hunt for professional work and is seeking a job as a short-order cook or bookseller.

Federal Reserve Chairman Ben S Bernanke last month said persistently high US unemployment was causing “enormous suffering,” even as he expressed confidence that the jobless rate would eventually return to pre-recession levels, as it has in past downturns.

The situation is especially acute among America’s youngest workers, who are battling an unemployment rate that’s remained at or above 16 per cent for the longest period in postwar history.

Some 16.8 per cent of 16-to-24-year-old Americans were without work in August, marking 42 months of 16 per cent or above unemployment. Only in 1975 and 1981-1983 did this age group face such poor job prospects — and those stretches ended in eight months and 23 months, respectively.

Retail clerks
A greater share of university graduates are also working as receptionists, waiters, retail clerks and other positions that use little of the knowledge, skills and abilities they developed by earning a degree.

The ratio of college-educated 25-to-29-year-olds with jobs outside the so-called college labor market positions surged to 31.5 per cent in January through May this year, compared with 26.1 per cent in 2007 and 30.1 per cent in 2010, according to Neeta Fogg and Paul Harrington at the Drexel University Center for Labor Markets and Policy in Philadelphia.

Wright is preparing to join that group. After spending months hunting for a job closer to his field, he’s now looking at positions that don’t require a college degree, such as a part-time customer service position at a book store or a short- order cook at a diner.

“I was more focused on trying to find a serious job over the summer, but I decided I wouldn’t mind doing something as interim work to get by,” he said. “I need the money.”

Stimulus pledge
Persistently high joblessness across all age groups persuaded Bernanke’s Fed to roll out its third round of quantitative easing this month and pledge an even further expansion of its record stimulus if conditions don’t improve.

“The stagnation of the labour market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years,” Bernanke said in a speech in Jackson Hole, Wyoming, on August 31, two weeks before the Fed announced its latest measures.

The economic troubles of Americans ages 16 to 24 are familiar to young Europeans, who, in addition, struggle with labor rules that favour older workers. A study co-authored by former Bank of England policy maker David Blanchflower, now a Dartmouth College professor and a Bloomberg Television contributor, suggests wages for Europe’s young jobless may never catch up with those who have always worked.

What separates the US labour market from Europe’s is the American flexibility to hire and fire. Older, established workers in countries such as Spain, Italy and France enjoy legal protections that make it difficult for their employers to fire them, which impedes businesses from hiring young people entering the labour market.

In Italy, for example, even this year’s overhaul of the 1970 labour code gives fired workers the chance to win their jobs back in court if they can show the dismissal was “patently unfounded.” The government added back the provision after Italy’s biggest union called a general strike and a party allied with Prime Minister Mario Monti vowed to oppose the bill, which became law in June.

“I was counting on the reform of the labour market,” Fiat SpA Chief Executive Officer Sergio Marchionne told la Repubblica in an interview published September 18. “Today I have to deal with more than 70 legal actions” brought by Italy’s main worker union against temporary layoffs and new labor contracts.

He was commenting on one of the reasons that prompted Italy’s biggest manufacturer to scale back its investments in the country. His comments were confirmed by a Fiat spokesman.

In France, companies say the biggest obstacle to hiring is the “Code du Travail,” a 3,200-page labor rulebook that dictates everything from job classifications to leave for training to the ability to fire. President Francois Hollande has called on unions to allow companies greater labor flexibility -- while strengthening worker protections against firing.

That rigidity helps explain why Europe’s ranks of the young and unemployed remained high while America’s stabilized after the early-1980s global recession. The fluidity in the U.S. job market today maintains room for young workers’ prospects to bounce back, said Simon Johnson, a professor at Massachusetts Institute of Technology in Cambridge and a contributor to Bloomberg View.

Jobless Graduates
“It’s still too early to call this a lost generation in the U.S.,” said Johnson, formerly chief economist at the International Monetary Fund in Washington.

Despite those differences, few examples are as foreboding for newly graduated and jobless Americans such as Wright as those in the analysis co-authored by Dartmouth’s Blanchflower in Hanover, New Hampshire.

In a 2011 paper that followed the British who came of age during the 1980s recession, Blanchflower found that people who had been unemployed by the time they were 23 in 1981 continued to report both lower wages and happiness than their counterparts over the decades -- even when they turned 50 in 2008-2009.

“It’s a cautionary tale,” said Blanchflower. “It’s really important for a young person to make the transition from school to work -- and in Europe, what you see is people who never made that transition.”

In Italy, 12 years of rejections have persuaded Oliva to let go of her dream of working in art or tourism. She’s settled on the life she’s had for two years, bartending for the summer, then waiting for the next summer to roll around.

Now that Wright in New York is considering a similar tradeoff, he’s far from alone.

“None of my friends are really comfortable in their positions, doing something they want to do,” said Wright. “I don’t want to say give up your hopes, but you have to resign yourself to the fact that this is how it is.”