Youth piles into study as jobs market fails them

Craig James has some nice data today but his interpretations are questionable:

 Younger Aussies prefer study over jobs: In the year to July, just 53 per cent of young Aussies between 15- 19 years were in the job market – a record low.

 Record participation: A record 84.4 per cent of those between 35-44 years are in work or looking for work. The demographic data on jobs provides insights on the job market, wages and prices, and ultimately on interest rates. What does it all mean?

 The detailed monthly labour data is useful in getting more insights about what is going on in the job market. And it is clear that younger Australians prefer study over jobs. In the year to July, the proportion of those 15-19 years that were in the job market hit a record low of 53 per cent. In the early 1980s, participation rates of 64 per cent were common, and even in the early noughties, participation in the job market by young Aussies was near 60 per cent.

 Move forward into the 20-24 age bracket and the job market participation rate stands at 78.5 per cent – the lowest rate in two years and heading back towards record lows (78 per cent). In the early 1990s participation rates were closer to 84 per cent

 Overall however, the workforce participation rate is near 65 per cent – actually not far from the record high of 65.8 per cent set around seven years ago in November 2010. And the key reason is because key older worker age categories are fully engaged. A record 84.4 per cent of those between 35-44 years are in work or looking for work.

 Participation rates for other age categories from 45 years to 65 years and even older than 65 years are also at or near record highs.

 Back in 2002, just over 6 per cent of people aged 65 years or above were in the workforce. Now the participation rate stands a smidgen below the record high of 12.62 per cent. And it is by no means clear that the participation rate has peaked.

 At the same time, more than 56.43 per cent of people aged 60-64 years are still in the workforce – a record high.

 Some workers complain that they would like to work full-time rather than part-time or work longer hours. But with key worker groups already fully engaged in the job market and greater participation by senior workers, employers already have the flexibility to do the work that is required. Importantly, senior workers are more likely to work parttime or on a more casual basis, thus providing competition for other job seekers. And that competition for the available work hours would be another factor keeping wage costs under control, together with competition from overseas workplaces and foreign labour. What is the importance of the report?

 While younger Australians prefer study over work, employers have great flexibility with finding staff given that middle-aged and more senior workers are engaged in the job market.

 If there was less choice about hiring options, it is likely there would be more upward pressure on wages. In fact the downtrend in wage growth over the past decade corresponds to the lift in workforce participation, especially by more senior workers.

 The trends in workforce participation are important in gauging wage and price pressures. And ultimately the trends will be important in driving interest rate decisions.

I would put it a little differently.

What it means is the War on Youth is going swimmingly. Youth underemployment is at 29%. Kids are not choosing to study, they are filling in time because there are no jobs, or not enough hours.

That is in part owing to older cohorts hanging on as they trade properties like footy cards. The other big factor is short and long term migration, both of which are providing oodles of cheap foreign labour supply for entry level jobs.

Likewise, the middle age brackets are having to participate ever more fully to service their jumbo mortgages.

It looks like the usual spread for the bubble economy to me.