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Income inequality
The land of the yobs

Will British and American labour markets doom youth?

WILL America soon be the land of yobs? According to New Geography, yob-ism has reached epic proportions in Britain and America may be next. Joel Kotkin explains:

As you walk through Watford, midday drinkers linger outside the One Bell pub near the center of town. Many of these might be considered "yobs," a term applied to youthful, largely white, working-class youths, many of whom work only occasionally or not at all. In the British press yobs are frequently linked to petty crime and violent behavior--including a recent stabbing outside another Watford pub, and soccer-related hooliganism.

In Britain alcoholism among the disaffected youth has reached epidemic proportions. Britain now suffers among the highest rates of alcohol consumption in the advanced industrial world, and unlike in most countries, boozing is on the upswing.

According to Mr Kotkin, the yob epidemic is a result of the structural shift in Britain from manufacturing jobs to high-skill services. Young workers, who lack adequate skills to compete in the labour market, are shut out. Or, according to Mr Kotkin, they lack motivation to enter it altogether as a result of generous unemployment benefits. They leave immigrants to take the available low-skill jobs, live off the state, suffer long-term unemployment, become disaffected and turn to alcohol. As America faces a similar structural labour shift, will it also face a yob epidemic?

First, it is not so clear that Britons are doomed either. If indeed alcoholism and generous state benefits keep British youth from working, more blue collar work won't cajole them into employment. True, some of the British population has for generations indentified with industrial jobs and have suffered a difficult post-Thatcher transition. But the British labour pool looks very different than it did a generation ago. Since the 1980s the average Bit has earned four more years of education (in the previous 20-year period average education only increased by one year). More education suggests the population is responding to a different labour market and undergoing the necessary training. Before the recession unemployment in Britain hovered around a respectable 5%.

A sizable population of youth unable to work because of alcoholism is indeed a grave problem. But reviving blue-collar manufacturing jobs will not cure them of this affliction. Blaming immigrants for taking available low-skill jobs is also not helpful. There is not much evidence that immigration contributes to unemployment. Immigrants on balance contribute to an economy, by being entrepreneurial and offering low-price services and goods to natives.

Will fewer manufacturing jobs also result in more disaffected American youth? Probably not; the American labour market is very different. The concept of trying for a better or different life than your parents tends to be more acceptable in immigrant societies like America compared to Europe. Also America's welfare state also does not allow people to persist on the dole.

But fundamental challenges do face both countries. As in Britain, not all Americans are suited for post-secondary education and high-skill employment. Low-skill jobs which can provide a comfortable quality of life are elusive. Many low-wage service sector jobs do not offer the same security and benefits that manufacturing jobs once did. The disparity in the skill premium can explain much of the widening income inequality in both countries.

But each economy is still in a transition phase. Younger workers still are able to conform to the demands of the new economy. In the past the labour market has proven resilient and workers of all skill levels have adapted by gaining experience and acquiring firm- or industry-specific know-how. There may be scope for more vocational education programmes. Generally, I worry less about young workers; their unemployment levels may currently exceed 20%, but that is normal during a bad recession. They still have the time, energy, and raw human capital to adapt to the modern labour market. More troubling are older, middle-aged manufacturing workers who've lost their jobs and have several years before retirement. They will have a harder time learning new skills and finding comparable jobs. This leaves them more likely to face long-term unemployment or potential poverty in old-age.

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