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What does it mean to “have” a job these days? What exactly do you actually have? And what’s this have to do with me getting my 22-year-old son out from living in a spare bedroom?
While one wouldn’t seem to follow the other, I promise that both do and each has more to do with the health of the housing market.
Let’s first take a look at the job question. So, what do you have? Well, you might have a paycheck on the first day of the month and the last day. You might have health care. You might have paid vacation. You might have Thanksgiving off. And the day after.
Or you might not have any of that and still have a job. Of sorts.
More than 140,000 people, for example, have a job with Uber. Or more precisely, I should say that is how many people depend on the tech firm for some type of their livelihood.
But fewer than 4,000 are considered employees versus independent contractors.
The definition between the two used to be more precise and easier to discern. But, such is the impact of shedding jobs for so long in the U.S. that labor officials are currently trying to hash out just what that distinction is. In Uber’s case, California labor regulators ruled against the company in a fight that may ultimately move to the court system.
However, there are plenty of businesses that follow the same business model as Uber.
Uber may well be a leader revolutionizing how I can get around town without hailing a cab, but it’s also just another passenger getting a lift down a trend that’s been worn into the economy for so long, it’s probably been repaved a few times.
Uber writ large
As The New York Times put it last month, the U.S. economy has steadily moved into “an Uber economy writ large, with tens of million of Americans involved in some form of freelancing, contracting, temping or outsourcing.”
The article traces this trend back to the 1970s when many companies were all about their core competencies, spinning off out-of-synch business units and outsourcing entire departments, such as human resources and customer service.
The idea of outsourcing only intensified by the 1990s when technology made the job of getting rid of jobs that much easier.
“Companies began to see themselves as thin, Uber-like slivers standing between customers on one side and their work forces on the other,” the article says.
As a result, the numbers of such contingency workers have risen dramatically.
According to the Economic Modeling Specialist International, a labor market analytics firms, the number for the category of jobs mostly performed by part-time workers grew to 32 million from just over 20 million between 2001 and 2014.
It’s no surprise, however, that while this might make sense from an individual business standpoint, it doesn’t give much comfort to the individual workers.
Last year, almost a quarter of the people polled in a Gallup survey said they were worried that their working hours would be cut back, up considerably from the numbers indicated before the Great Recession. An almost equal amount also believed that their wages would be cut, again up from mid- to high-teens before the recession.
No wonder, then, that all these years later when we’re told that the economy is better, many Americans don’t feel better off.
My son, the NEET
But surely this is how people past a certain age think? Not so for the young who are just starting out, right?
Turns out the attitudes are worse among what economists term NEETs.
Ever heard the term before? I hadn’t until The Washington Post Columnist Robert Samuelson wrote about the plight of young people who are, “neither employed nor in education or training.”
Which is where my son comes in. Now he’s had a little some education and some employment. But so I imagine have other NEETs. Some but not per any consistent, formal schedule.
As it turns out, my son is in sizable company. Not just an American problem, the Organization for Economic Co-operation and Development says there are around 39 million NEETs in the world’s most advanced industrial countries.
In Britain and France, for example, NEETs were 16 percent of the 15-to-29-year-old population in 2013 – about the same levels as in the U.S.
Meanwhile, the figure is slightly more than 25 percent in Italy, Spain and Greece, countries particularly hard hurt by economic downturns.
Overall, a quarter of those with jobs had only temporary work. And by the OECD’s estimates, roughly half of the NEET’s aren’t even looking for work.
“That is a somber warning sign of political and personal fatalism,” Samuelson writes. “The 20s are too early in life for people to have abandoned hope.”
Focusing on this country, Samuelson discusses further the demographic we’re more familiar with – the millennial or those born after 1980.
As Samuelson sees it, these Americans may have it the worst of all, if only because their working lives haven’t even had an opportunity to start.
Extended joblessness takes it toll regardless of whether such a state is common among cohorts. This disengagement, however, further corrodes confidence not just in themselves, but in their beliefs in larger social institutions.
“By the millions,” he writes, “they’re living with parents and postponing marriage, children and home-buying.”
Now the housing market
We’ll leave the effects of postponing marriage and not having children until later in life to other commentators.
But that last one sure caught our eye because on the same day here comes The Wall Street Journal to report on further demographic changes that could lead to a decline the rate of home ownership.
Some 20 years ago, President Bill Clinton drummed up a campaign to get Americans to become homeowners. As it turned out, a lot of Americans became homeowners thanks in absolutely no part to the traditional benchmarks of income and savings. No need to rely on dad’s advice and worry about a 20 percent down payment or a 30-year fixed rate loan, anyway, not when the financial industry was dreaming up all sorts of derivatives to feed the urge.
Back then, my best friend got one mortgage for his down payment and another mortgage for the rest with a payment plan akin to a credit card. All he had to do was just pay the minimum due and in another, say, 984 years, the title would be free and clear.
If I remember right, he even had to take out a line of equity to pay his first property tax bill. And, of course, the lenders had no trouble giving him the money.
That easy credit, of course, led to a meltdown on Wall Street that trickled down to the Great Recession. Which led to the anxiety most workers – whether full-time, part-time or some-time – feel about their economic prospects and the numbed NEETs to come along and say, “What economic prospects?”
And after all this, the U.S. homeowner rate is below where it was when Clinton started his push.
And it may go lower and continue to slip for the next 15 years, according to research from the Urban Institute, a D.C. think tank that focuses on economic and social policies.
A big factor in the researcher’s conclusions is demographics of a decidedly different sort from the ones we’ve discussed so far.
According to the institute, minorities will form three in four new households for the rest of this decade and seven out of eight over the next. These new households have lower incomes, less wealth and lower home ownership rates than the U.S. average.
But, so what? This sounds a heck of a lot like my best friend expect for the minority part. Won’t the financial industry just come back with even more exotic creations this time around?
I would never count out Wall Street to figure how to make a buck. But for the moment, tougher rules, regulations and outright laws seem to rule this out, at least for the time frame of the institute’s research on the matter.
No, the one other large concern the institute’s research underscores further is the plight of the millennial generation, which also has less wealth than previous generations.
One concern is that home ownership will simply climb out of reach because of initial home prices, but also because of the carrying cost as interest rates rise.
“A related concern is that qualified households will be unable to move from renting to owning as housing-cost burdens, slow wage growth and student debt make it more difficult to cobble together even a modest down payment,” the article says.
There’s no doubt that the economy is improving. Housing starts are posting relatively solid year-over-year growth. U.S. housing permits rose almost 12 percent in May to a rate of 1.28 million units, the highest marks since August 2007. We’ve even read about bidding wars taking place in some parts of the country for existing homes.
A better economy will improve out spirits. Some day. And on that day, extra bedrooms across the U.S. will stop pretending to be apartments. Until then, I’ll have to get used to my young roommate.