A tough problem that many young people have in their late teens and early- to mid-twenties is “failure to launch.” They have trouble stepping out on their own and taking responsibility, whether it’s about money, jobs, studying, or a few other things. I was talking about that with a friend recently; he has a friend in his late twenties who, in his estimate, is “failing to launch.”
Various government policies have played a role in making it last longer. One is the huge subsidies to college students, along with the expectation that most high-school graduates will go to college. For some, that’s liberation and they take responsibility immediately. That was my case when I started college at age 16. For others, it postpones their taking responsibility, compared to what would happen if, after leaving high school, they got a full-time job.
The expectation that high-school graduates go to college does not, of course, count as a government policy. It’s more something that many prominent members of society push. But there is a government policy aspect, if only in the area of propaganda. President Obama pushed the idea that people should go to college after high school, for instance.
Another policy that would extend failure to launch even more is a universal basic income (UBI). Imagine 4 friends–for some reason, I’m picturing guys–who become friends in college and graduate at about age 22. With an Andrew Yang-type UBI, each would get from the federal government $12,000 tax free. They could then say, “Hey guys, let’s find a 4-bedroom rental house in a low-rent part of the country. We could probably get it for about $1,600 a month. That’s $400 a month per person. We would then each be left $600 a month to spend on food, booze, video games, and occasional drugs.”
At some point, even my hypothetic 4 guys would probably have higher aspirations and would get jobs, thus losing some of the $12,000 per year. But it’s easy to imagine their failure to launch lasting an extra 4 years. And that would be tragic.
Why would it be tragic? For two reasons. First, taking responsibility is good in itself and would make them into better people and better citizen; they would miss out on that. Second, the UBI takes from taxpayers. So other people are forced to subsidize their life style.
Here are some classic failures to launch; the picture at the top is a screen shot of a spectacular failure. There’s one big difference, though: they actually did launch. They just didn’t make it. When you try to launch, you will have failures. I can almost guarantee it.
READER COMMENTS
John Hall
May 28 2021 at 4:44pm
“At some point, even my hypothetic 4 guys would probably have higher aspirations and would get jobs, thus losing some of the $12,000 per year.”
This is not clear. A typical UBI is not conditional on employment or income. A negative income tax is structured basically the same way, but it makes a bit clearer that they are clawing back that income at higher income levels.
David Henderson
May 28 2021 at 4:48pm
Good point. There are two versions. In one those, you’re right. There’s no clawback but overall taxes rise. In the other, there’s a clawback after some threshold.
Of course, to the extent you’re right, that strengthens my point.
AlexR
May 29 2021 at 7:18pm
If a UBI is unconditional, it does not impose an implicit tax on working. Perhaps you mean an income effect, rather than a marginal effect. $48,000 per year to a pod of four guys might be enough to “satisfy their wants” for awhile. I think that’s quite possible for some segments of the population. But the main problem with UBI is that it would be added on top of current welfare programs, rather than in place of them. The current welfare system imposes high marginal taxes on work (in the form of withdrawn benefits). Switching from high marginal tax rates to a lump-sum transfer would tend to heighten incentives to work, and could in principle be done in a roughly “transfer neutral” way, so that there’s no additional income effect from the change. But that’s not on the cards, politically.
Christophe Biocca
May 28 2021 at 8:20pm
Or they find one of the many social programs that would stack with the freedom dividend and use that money too. And those programs are even worse from a failure to launch perspective because they disappear if you start working.
I remember when UBI proposals were meant as replacements for various paying-people-not-to-work programs. Every time it gets closer to a actual policy that might get implemented, another program is claimed to be to important to be replaced by the UBI, so instead it’s made to stack. Public choice in action, I guess.
Alex Lago
May 28 2021 at 10:22pm
As a young person who recently graduated college, many of my friends try desperately to search for jobs but are finding that good opportunities just aren’t out there. Maybe this is anecdotal, but it seems to be an issue for a majority of my friends, many of whom graduated with great GPAs and internships.
At a certain point we have to acknowledge that there are not enough jobs for graduates in professional services. A few friends even find that jobs in accounting and finance offer lower salaries than working at amazon. About 50% of the economy consists of retail and trucking jobs and there is plenty of evidence suggesting that many jobs just don’t exist.
As much as young people gain from finding a path, there are just not very many options available. In this case, do we let people starve or be reliant on their parents? A UBI may be necessary in the future as the labor participation rate continues to decrease due to increased automation and technology.
I don’t think very many people would like to be dependent on UBI and just use it to game and stay around the house all day. Many young people crave responsibility and purpose and will continue to try to carve a path even with UBI. UBI just ensures that we don’t starve and that we use all the gains in productivity and technology that we have amassed over the past 100 years.
Please let me know what you think.
Zeke5123
May 30 2021 at 8:22am
First, the economy is dying for skilled blue collar labor. Those people make good livings. It is a shame we have lower its status — maybe turn it into a college program to make it more high status.
Second, they should take the accounting job that doesn’t pay that much if they went into accounting. They will most certain Alt make less on a per hour basis compared to working at Amazon in probably the first couple of years. But there is some pretty significant run way. That is, college grads should have a long term view and not a short term one.
John hare
May 30 2021 at 8:40am
I think college is part of the problem. Too many college graduates think they are entitled to a better than blue collar job even if it pays better than their degree field. Then when they settle for one of those jobs, they are often not very good at them due to the mindset. Turning blue collar into a college thing might make the problem worse. Or, “when it comes down to it, somebody has to chop the cotton”. I have elementary school dropouts from Mexico making more than many local college graduates Taking a degree without checking jobs before enrolling indicates lack of attention to detail.
Alexander Turok
Jun 5 2021 at 7:08pm
Well maybe they should go work at Amazon? If the jobs on offer don’t match the training, maybe the problem is with the training.
Jerry Brown
May 28 2021 at 11:59pm
LOL!- if my likelihood of a successful launch was captured in that news reel about missiles, I think I would have played it safe and who could blame me.
But yeah- that is a problem with UBI.
Michael Sandifer
May 29 2021 at 1:43am
Who cares? What’s wrong with each generation having it easier than the one before? And UBI isn’t lost when people get jobs, and the fact that it’s universal means everyone gets it. It’s a net transfer from richer to poorer, if funded properly.
Of course, fiscal mismanagement could make funding such a program difficult, and we may surrender some economic growth, but what’s the point of countries getting weathier if it doesn’t make life easier and otherwise more enjoyable for everyone? Ceteris paribus, of GDP/capita is growing, why shouldn’t everyone have easier lives?
Phil H
May 29 2021 at 12:07pm
Yep. “Failure to launch” sounds like a thinly-veiled cover for, “the youth of today are rubbish compared to my generation…”
KevinDC
May 29 2021 at 7:56pm
You said:
and
This doesn’t just miss the point, it gets the point exactly backwards. The whole thrust of David’s argument here isn’t that these programs will make people’s lives too easy. He’s arguing that they’ll actually make people’s lives more difficult. Responding to his argument by suggesting he’s opposed to people’s lives being easier and more enjoyable is a complete straw man.
Jon Murphy
May 30 2021 at 12:34pm
To KevinDC’s point, you’re assuming GDP per capita would continue to rise. But failure to launch would imply GDP per capita stagnates or even falls. In order for GDP per capita to rise, one would need to produce. Failure to launch means no production from those individuals. You have to assume the people who do launch increase their productivity at a quicker pace
Thomas Lee Hutcheson
May 29 2021 at 7:47pm
I’ve never understood why people propose UBI instead of a wage subsidy? Sure it helps only workers and would not substitute for means tested safety net, but it transfers income to low income people while subsidizing work.
Diane Merriam
May 30 2021 at 12:12pm
That’s what the EITC does, although that is also indexed to the number of children in the family as well. No work, no credit. And it does taper off instead of a flat cutoff.
Tom
May 30 2021 at 3:30pm
That is a very specific user persona you have created. What if those same 4 friends moved in together and managed to find the elusive $400 (per person) a month dream home you imagined. They likely have student loans that will eat up most of the remaining money. But at least they are starting to launch themselves by living on their own. They will be looking for jobs that will allow them to travel on their holidays, pay them enough to take someone on a date and maybe even start saving for their futures. The whole time, they are all contributing to society by paying (dream) rent, utility bills, groceries and income taxes on the UBI. In turn, the low-rent community that offers 4 bedroom homes for $1600 a month, will be receiving support from the 4 friends. This will help boost the local communities economy.
Or they can move back home with their parents because they can’t afford to live anywhere. The limited jobs available to them with little to no experience all pay less than livable wages. Their student loans keep incurring interest, which will keep them at their parents place for the next 5 years. Instead of living in a house with 3 other like-minded friends and maybe starting up their own business with their pooled funds, they will stay at home, not contributing to society and unable to launch because the system has targeted them.
Michael
May 31 2021 at 7:18am
Appropriately or or not, this post seems deeply pessimistic.
Whether a UBI is a good idea or not, one thing people receiving it might choose to do is use the money proudctively.
The 4 “friends in the pod” in the example aren’t going to live much of a life – that is probably a lower standard of living than the fairly typical case of the college grad who moves back in with his parents.
Diana Weatherby
Jun 1 2021 at 1:11pm
While I agree with your assessment I have to say child labor laws are pretty defeating for teens who actually want to work. Sometimes I am amazed that anyone wants to hire younger people at all.
David Henderson
Jun 1 2021 at 6:35pm
You wrote:
You’re right. But the good news is that the teens my friend and I have in mind are typically 17 and up and the child labor laws against them are not that strong. Indeed, I think there are no major child labor laws, except laws against serving booze, for people 18 and over.
You wrote:
You didn’t say why. Why?
john hare
Jun 1 2021 at 6:56pm
Sometimes I am amazed that anyone wants to hire younger people at all.
You didn’t say why. Why?
There is some disincentive to hire from a cohort with little to no work ethic in a high percentage. An employer that needs something besides warm bodies must be prepared to do a lot of sorting.
David Henderson
Jun 2 2021 at 11:16am
I get that, but I wonder if that’s what Diana’s reasoning is.
Also, if you just passively wait until younger people show up, they are doing some self-sorting. The kind of person who shows up and applies has a higher probability of working out in the job than the kind of person whom you go out and find.
Another way to hire a young person is to notice young people who are already very productive in other jobs and then hire them away.
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