U.S. 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 B.A. 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 U.S. 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 percent for the longest period in postwar history.

Some 16.8 percent of 16-to-24-year-old Americans were without work in August, marking 42 months of 16 percent 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 percent in January through May this year, compared with 26.1 percent in 2007 and 30.1 percent 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 labor 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 Aug. 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 favor 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.

‘Lost Generation’

Jeffrey Joerres, chief executive officer of ManpowerGroup, a Milwaukee-based temporary staffing company, says he worries about the consequences for the greater U.S. economy as well.

“The result will be the same” in the U.S. as it was in Europe, “which is a lost generation and an inability to get back those earnings,” he said. “You worry about productivity loss and you worry about the social costs associated with it.”

Graduates who don’t find appropriate jobs are “missing out on all that time to learn how to be a good worker,” said Thomas Mroz, a professor of labor economics at Clemson University in South Carolina. “Things like going to an office every day and greeting customers -- those are things you get better at with practice. You don’t learn it in school.”

For U.S. employers, the worry is that they will end up with a dearth of proficient, motivated workers to keep U.S. businesses competitive, according to Joerres. The longer youth remain shut out of training opportunities, the greater this risk, he said.

No Experience

“The current 25-year-old 10 years from now isn’t going to have the right kind of experience in their background” to become the “first-line and second-line managers,” he said. “You need to act quickly to get these young people some job experience.”

In Europe, the euro countries’ debt crisis is eroding young people’s opportunities from Spain to the U.K. Italy’s 15-to-24 year-olds watched the ranks of their jobless rise to 35.3 percent in July, almost doubling over five years and surpassing the highs reached in the 1990s. Youth unemployment in the European Union was 22.5 percent in July, close to 22.6 percent in May. That was the highest since the euro was created in 1999.

Italy’s Oliva, currently in the middle of a six-month contract managing the bar in a campground, will once again be out of work when October rolls around.

“Had I known that all those years of research and CVs, job selections and interviews would lead to nothing, I probably wouldn’t have attended university in the first place,” said Oliva, whose certification last year as a tour guide still didn’t get her into the field. “Every time I failed to get something, it was always the same story: a handful of available positions and thousands of people like me wanting to get them.”

American Flexibility

What separates the U.S. labor 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 labor market.

In Italy, for example, even this year’s overhaul of the 1970 labor 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.

Legal Actions

“I was counting on the reform of the labor market,” Fiat SpA Chief Executive Officer Sergio Marchionne told la Repubblica in an interview published Sept. 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.”

To contact the reporter on this story: Aki Ito in San Francisco at aito16@bloomberg.net; Lorenzo Totaro in Rome at ltotaro@bloomberg.net

To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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