THE BLOG
09/07/2011 05:41 pm ET Updated Nov 07, 2011

In Anticipation of Your Jobs Speech, Mr. President

Last week, in addition to the grim and disappointing August jobs data, the New York Times fleshed out the numbers by running a story that showcased a 2009 Dartmouth graduate working as a waitress at a Weehawken, New Jersey restaurant for $2.17 an hour plus tips, and CNN Money reported a story about a group of law students suing their law schools for misrepresenting their job prospects after graduation.

There have been widely reported stories of recent college graduates, many of whom are already straddled with enormous student loan debt, qualifying for food stamps as they struggle against poor job prospects and low pay. A large percentage of the graduating class of 2011 -- if they are working at all -- graduated to the same job they had during their summer breaks while still in high school. Not exactly what they were expecting when then entered college, to be sure.

While each demographic has its own set of generation-specific job and career challenges, and people of all ages are feeling the impact of the current economic crisis to one degree or another, recent high school and college grads may face the most long-term impact of this current economic "oppression." From a career standpoint many recent graduates are suffering -- through no fault of their own -- from the effects of a delayed start, which carry a far greater impact than it might seem at a cursory glance. So the question that begs to be answered is, What happens to your economic future if you "start late?"

According to a 2009 study by Lisa Khan of the Yale School of Management, graduates who begin work in times of high unemployment are still earning less, on average, than graduates who enter the marketplace in a better employment environment -- even fifteen years later -- which means that this type of economic oppression has deep roots.

And it gets worse. Consider this: If you save $5,000 a year for ten years starting at age 25 and ending at age 35, then never contribute another penny, you will end up with more than double the retirement funds than someone who starts saving $5,000 a year at age 35 and stops at age 45.

Even if we throw out the now absurdly optimistic eleven percent compounding metric used by Robert Brokamp in the above referenced Motley Fool article, what this means is that a late start can have a lifelong impact. Albert Einstein called this type of compounding "The greatest mathematical discovery of all time," and it's easy to see why. Unfortunately, according to Lisa Khan, compounding of this sort is working against this generation, not just on the saving and investing side, but on the earning side as well. What happens when you start working in a poor economic climate is that you start building your career later. And when you start your career later, you earn less, which means that, more than likely, you will start saving later, and, in turn, save less. And when Albert Einstein steps in with "The greatest mathematical discovery of all time," this manifests rather poorly since it means that you end up behind -- way behind -- quite possibly for life. Those facing an uncertain decade in their twenties may very well be destined for an uncertain retirement as well.

So, as the nation waits for President Obama's long anticipated jobs speech on Thursday night with more than a bit of disillusionment and skepticism, we all have to ask ourselves if what we need to fix the job market isn't a bit more radical than what President Obama is likely to propose. What we need, as Einstein might put it, is "The greatest job program of all time." Something with the impact of compounding interest. Something with the mathematical leverage to create sustainable change.

Let us all hope that President Obama has more to offer than simply a litany of the expected -- maintaining or expanding the payroll tax-cut reduction, a government-spending and deficit-growing job creation plan through public works infrastructure rebuilding, government programs for job training, and the like. Tax cuts for hiring the unemployed and section 179 deductions are great for businesses, but we need to do much more to stimulate sustainable private sector jobs. It may all sound nice when it's packaged-up and wrapped with a bow, but based on the lifelong economic ramifications for a generation of already debt-straddled and financially handicapped young people -- many of whom helped put him into office -- it might feel a bit like he's throwing pennies into the ocean. Our pennies.

And that might leave us, as a generation, looking -- and feeling -- like compounding fools.