Cities Push Companies to Hire Teens
July 16, 2012
Faced with greater demand but dwindling dollars, cities are leaning more on local employers to hire teens.
Boston, Philadelphia and Baltimore are among the places that have put hundreds more young people in private-sector jobs for the summer thanks to aggressive lobbying by mayors and city officials.
But those efforts are still not meeting all the demand.
Public officials are mourning the loss of $1.2 billion in federal stimulus money for youth employment. Also, they’re being deluged by youngsters, who are being squeezed out of retail and service jobs by unemployed adults.
Cities aren’t simply asking companies to do the right thing. They’re pitching the initiative as a way to identify and cultivate future employees.
“It’s not being marketed as a social program, but as a workforce preparation opportunity,” said Karen Sitnick, director of the Mayor’s Office of Employment Development in Baltimore, which has placed 280 kids with companies this summer as part of the inaugural Hire One Youth campaign.
Only one in four youth age 16 to 19 has a job these days, the lowest share since World War II. Among black youth, the number is as low as one in six.
This not only deprives them of pocket money, but also delays their exposure to the work world and to potential careers, experts said.
“They are not having the opportunity to develop their work ethic, portfolio and resumé,” said Linda Harris, director of youth policy for CLASP, an advocacy group for low-income communities.
It also bodes badly for the next generation of the American workforce since teens are not getting the much-needed skills and experience to prepare them to hold down a job. Employers are already decrying the inability to find capable workers who have soft skills, such as punctuality and customer service.
World’s Most Prestigious Financial Agency – Called the “Central Banks’ Central Bank” – Slams U.S. Economic Policy
The “Central Banks’ Central Bank” Slams the Federal Reserve
The central banks’ central bank, the Bank of International Settlements or “BIS” – which is the world’s most prestigious mainstream financial body – has slammed the policy of America’s economic leaders.
This is especially dramatic given that the banks own the Federal Reserve, and that the Federal Reserve and other central banks – in turn – own BIS. In other words, BIS is criticizing one of its main owners.
Economics professor Michael Hudson notes:
Paul Krugman has urged the Federal Reserve to simply lend banks an amount equal to their bad loans and negative equity (debts in excess of the market price of assets). He urges a “Keynesian” program of spending to re-inflate the economy back to bubble levels. This is the liberal answer: to throw money at the problem, without seeking structural reform.
[BIS] disagreed last week in its annual report. It said – and I believe that it is right – that monetary policy alone cannot solve an insolvency problem. And that is what Europe has now: not merely illiquidity for government bonds and corporate debt, but insolvency when it comes to the ability to pay.
In such circumstances, the BIS explains, it is necessary to write down the debt to the amount that can be paid – and to undertake structural reforms to prevent the Bubble Economy from recurring.
Too Big Has Failed
BIS has also slammed “too big to fail” banks:
The report [by BIS] was particularly scathing in its assessment of governments’ attempts to clean up their banks. “The reluctance of officials to quickly clean up the banks, many of which are now owned in large part by governments, may well delay recovery,” it said, adding that government interventions had ingrained the belief that some banks were too big or too interconnected to fail.
This was dangerous because it reinforced the risks of moral hazard which might lead to an even bigger financial crisis in future.
See this for background.
Interest Rates Have Been Kept Too Low
BIS has also repeatedly criticized the Fed and other central banks for setting interest rates too low.
BIS’ chief economist William White warned against overly lax monetary policy as early as 2003. As Spiegel reported:
White and his team of experts observed the real estate bubble developing in the United States. They criticized the increasingly impenetrable securitization business, vehemently pointed out the perils of risky loans and provided evidence of the lack of credibility of the rating agencies. In their view, the reason for the lack of restraint in the financial markets was that there was simply too much cheap money available on the market. [Low interest rates equal cheap money.] To give all this money somewhere to go, investment bankers invented new financial products that were increasingly sophisticated, imaginative — and hazardous….
The Telegraph noted:
“The fundamental cause of today’s emerging problems was excessive and imprudent credit growth over a long period. Policy interest rates in the advanced industrial countries have been unusually low,” [White] said.
The Fed and fellow central banks instinctively cut rates lower with each cycle to avoid facing the pain. The effect has been to put off the day of reckoning.
“Policymakers interpreted the quiescence in inflation to mean that there was no good reason to raise rates when growth accelerated, and no impediment to lowering them when growth faltered,” said the report.
In 2009, BIS released a paper amplifying on this point:
Easy monetary conditions are a classic ingredient of financial crises: low interest rates may contribute to an excessive expansion of credit, and hence to boom-bust type business fluctuations. In addition, some recent papers find a significant link between low interest rates and banks’ risk-taking ….
The Fed Allowed Destructive Bubbles to be Blown … and then Used “Gimmicks” and “Palliatives” to Try to Paper Over the Mess
BIS also slammed the Fed and other central banks for blowing the bubble, failing to regulate the shadow banking system, and then using gimmicks which will only make things worse.
As the Telegraph noted reported in 2008:
Nor does it exonerate the watchdogs. “How could such a huge shadow banking system emerge without provoking clear statements of official concern?”
“Should governments feel it necessary to take direct actions to alleviate debt burdens, it is crucial that they understand one thing beforehand. If asset prices are unrealistically high, they must fall. If savings rates are unrealistically low, they must rise. If debts cannot be serviced, they must be written off.
“To deny this through the use of gimmicks and palliatives will only make things worse in the end,” he said.
In other words, BIS slammed the easy credit policy of the Fed and other central banks, and the failure to regulate the shadow banking system.
BIS also slammed “the use of gimmicks and palliatives”, and said that anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”.
But Bernanke and the other central bankers (as well as Treasury and the Council of Economic Advisors, the heads of congressional and senate banking committees, and the others in control of American, British, French, Japanese, German and virtually every other country’s economic policy) ignored BIS’ advice in 2007 and 2008, and they are still ignoring it today.
Instead, they are doing everything they can to (2) prop up asset prices by trying to blow a new bubble by giving banks trillions, (2) re-write accounting and reporting rules to let the big banks and other giants keep bad debts on their books (or in sivs or other “second sets of books”) and to hide the fact that they are bad debts, and (3) encourage consumers to spend spend spend!
“The world’s most prestigious financial body”, “the ultimate bank of central bankers” has condemned Bernanke and all of the other G-8 central banks, and stripped bare their false claims that the crash wasn’t their fault or that they are now doing the right thing to turn the economy around.
Comrade Obama’s Doxology: Praise the State, Ungrateful Individualist Heathen!
Addressing a partisan crowd during a campaign stop in Roanoke, Virginia, President Obama hymned the praises of government as the provider of all good things, while rebuking business owners for their supposedly misplaced belief that they “build” wealth as individuals:
If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.
In Obama’s collectivist reading of U.S. history, it was through government intervention — not individual initiative — that “we created the middle class.”
“We rise or fall together as one nation and as one people,” he insisted. “You’re not on your own, we’re in this together.”
Like most people of his ideological bent, Obama either cannot or will not distinguish between society — which is created through peaceful commerce and other forms of private cooperation — and the state — an anti-social artifact built on conquest, coercion, and confiscation of wealth. Government produces nothing; it is an exercise in pure consumption and, usually, the destruction of capital. As Nietzsche famously said, everything the State has is stolen.
Gold Seen Gaining on Speculation Over Further Stimulus
Gold is set to gain in New York amid speculation Federal Reserve Chairman Ben S. Bernanke will hint at additional monetary easing when he delivers testimony today.
An unexpected drop in U.S. retail sales yesterday rekindled speculation the Fed will introduce further steps to shore up the economy. The International Monetary Fund cut its 2013 global growth forecast as Europe’s debt crisis prolongs Spain’s recession and said a U.S. rebound is moderating.
“Many market participants expect the U.S. central bank to initiate another round of quantitative easing given that the momentum of the U.S. economic recovery has been slowing,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote today in a report. Still, “investor interest in gold is far from overwhelming despite ongoing macro uncertainty.”
Gold for August delivery was little changed at $1,592.30 an ounce by 7:46 a.m. on the Comex in New York. Prices are up 1.6 percent this year. Bullion for immediate delivery was 0.2 percent higher at $1,592.85 in London.
Bernanke will deliver his semiannual report on the economy and monetary policy to the Senate Banking Committee today. He will testify to the House Financial Services Committee tomorrow. Bernanke said on June 20 that policy makers will be prepared to take additional steps if necessary, including more asset purchases.
Fed Bank of Kansas City President Esther George said in a speech yesterday the U.S. economy probably won’t grow much faster than 2 percent this year, due to caution among consumers and businesses.
Silver for September delivery was little changed at $27.35 an ounce. Palladium for September delivery gained 1.2 percent to $584.60 an ounce. Platinum for October delivery was up 0.6 percent at $1,426.40 an ounce.
U.S.: Retail sales slump
WASHINGTON — The outlook for the U.S. economy appeared dimmer Monday after a report that Americans spent less at retail businesses for a third straight month in June.
The report led some economists to downgrade their estimates for economic growth in the April-June quarter. Many now think the economy grew even less than in the first quarter of the year, when it expanded at a sluggish 1.9 percent annual rate.
Spending in June fell in nearly every major category — from autos, furniture and appliances to building, garden supplies and department stores. Overall, retail sales slid 0.5 percent from May to June, the Commerce Department said.
Retail sales hadn’t fallen for three straight months since the fall of 2008, at the height of the financial crisis.
The weak U.S. spending figures were released on the same day that the International Monetary Fund slightly lowered its outlook for global growth over the next two years.
Stocks fell after the Commerce report was issued. The Dow Jones industrial average sank 74 points. Broader indexes also declined. Later in the day, stocks regained some of their losses.
“However hard you look, there’s just no good news in this report,” said Paul Ashworth, chief U.S. economist at Capital Economics.
Weakening retail spending could make the Federal Reserve more likely to act further to try to encourage more borrowing and spending by lowering long-term interest rates. The Fed’s policy committee will meet at the end of this month.
Most economists don’t expect new Fed action after that meeting. But some said Monday’s Commerce report, coming after three straight months of tepid hiring, makes some Fed action more likely by year’s end.
Fed Chairman Ben Bernanke will testify to Congress about the economy today and Wednesday.
Despite the lackluster spending in April through June, retail sales were still 4.7 percent higher in the second quarter than in the same period in 2011. And the figures don’t include spending on services, which makes up about two-thirds of consumer purchases. Services range from doctor’s visits and plane tickets to rent payments and utility bills.
Spending figures for services aren’t yet available for June. But consumers have spent more on services each month this year.
Still, Ashworth said economic growth likely slowed to an annual rate of just 1.5 percent in the second quarter. That’s isn’t enough to lower high unemployment. The U.S. unemployment rate is 8.2 percent.
In Monday’s report, Commerce also said Americans spent less in April than previously thought. In part because of that, Michael Feroli, an economist at JPMorgan Chase, lowered his estimate of growth in the April-June quarter from a 1.7 percent annual rate to a 1.4 percent rate. And he lowered his forecast for the July-September quarter to a 1.5 percent growth rate, down from a 2 percent rate.
Chris G. Christopher Jr., senior economist at IHS Global Insight, thinks the economy grew at an annual rate of just 1.3 percent last quarter. He doesn’t see much of a pickup in the second half of 2012: The annual growth rate will likely stay below 2 percent, he said.
Christopher said the biggest problem is meager job growth. Americans have also been rattled by gyrating stock prices stemming from Europe’s debt crisis.
“Consumers are getting hit from all sides,” Christopher said, despite the benefit of sharply lower gas prices since early April.
Lewis Tipograph, owner of Kid’s Closet, a midpriced children’s clothing store in Washington, D.C., said his business has suffered since April. Customers are more uneasy, he said.
“Earlier in the year, people were feeling more optimistic,” Tipograph said. “There was a convergence of a lot of good things. But now, people are feeling nervous.”
Some of the sting of Monday’s retail sales report was eased by a separate Commerce report that U.S. companies added to their stockpiles in May. When businesses step up restocking, they tend to order more goods, leading to more factory production and economic growth.
Some hope also emerged from continued gains in “nonstore”sales — a category that consists mainly of online purchases. E-commerce sales have strengthened in the past year and now account for 9 percent of retail purchases.
“You’re definitely seeing a major shift in spending,” said New York-based retail consultant Walter Loeb.
Benefiting from the shift are online merchants like Wayfair.com. The company, which sells products ranging from baby strollers to decorative pillows, reported sales topping $500 million last year.
“Shoppers are not spending with abandon,” said Steve Conine, chairman of Boston-based privately held Wayfair.com. “But the shopping patterns are in our favor.”
The overall decline in retail sales reflects, in part, falling gas prices. But even excluding sales at gas stations, retail spending fell 0.3 percent from May to June.
Retail sales in June compared to May: -0.5
Retail sales in second quarter of 2012 compared to 2011: +4.7
JPMorgan Chase economist’s forecast of growth for the second quarter: 1.4
Filed Under: ECONOMY
About the Author: