We must guard against the tendency of oldsters to get suckered into 'grass is greener on the other side of the mountain.' Otherwise we will tend to romanticize a dream job as an antidote to decades of frustration and disappointment suffered in a real job.
It is easier to say what you wouldn't start off in, if you were 25 today. Manufacturing is ancient history in our post-industrial society, of course. And yet I'll bet colleges still teach useless subjects like math, chemistry, engineering, and physics. But it could be counter-argued that most of the industrial sector's decline has already happened and that it has bottomed out because of government protection, which preserves a sticky post-industrial residue such as military industries, "Government Motors", green energy, and the like.
The last few decades most of the employment growth was in health care, education, debt engineering (aka finance), and law enforcement. But as always, it might be risky to assume that these trends will "grow to the moon." It was amusing to run into this quote from Seneca yesterday:
Yet nothing involves us in greater trouble than the fact that we adapt ourselves to common report in the belief that the best things are those that have met with great approval,--the fact that, having so many to follow, we live after the rule, not of reason, but imitation.
It is the example of other people that is our undoing...
Our 25-year-old must try to do more than merely extrapolate the hot trends of the last few decades; otherwise he will fall into the classic trap of thinking some idea is safe because everybody accepts the idea, which ironically makes the idea past its prime and therefore dangerous. "Conventional" does not mean "safe."
Take health care. Emotion runs high on "government versus private," so much so that it hogs attention from the mathematical fact that, at 18% of the economy, health care increases have to slow down. This might be hard for people to believe since health care has seen inexorable growth for decades now.
Another long-running trend our 25-year-old must be cautious about is becoming a government employee, especially at the local level (school teachers, police, firemen, etc.) This category of workers has evolved into the upper class of the American labor marketplace. In the endlessly downsized private sector, employees live in fear that, when quarterly earnings are announced, the figure will come in at 49 cents per share compared to Wall Street's prior expectation of 50 cents per share, and thus another 5-10% of the jobs will be eliminated or outsourced. In contrast the local-government employees must only worry about a serious recession that erodes the local tax base. If they are even shrewder they have gotten onto the federal payroll; wouldn't that make them virtually layoff-proof? After all, the federal government runs a deficit decade after decade. Apparently it can stay in business by printing unlimited amounts of money to cover any shortfall of funds.
Since these government jobs must be done in the USA they haven't felt competition from China; the jobs have been so safe that strong unions have grown up in the government sector, in contrast to the inexorable decline of unions in the private sector. I remember a unionization drive with university employees around 1980 by -- get this! -- the United Auto Workers. You must give the UAW leaders credit for having the perspicuity to see that their union was doomed in the automobile sector because of competition from Toyota and the rest, and that they needed to move into a quasi-government sector like education, where politicians will see to it that you can borrow yourself blind for inexorably higher education costs.
The recent recall election in Wisconsin and several municipal bankruptcies in California should be a warning to our 25-year-old that (unionized) government employees are about to get their long overdue come-uppance.
The private sector has largely eliminated "defined benefit" pensions in lieu of "defined contribution" plans, such as 401K and IRAs that are the individual's responsibility to manage. Only the government sector still gets "defined benefit" pensions. Politics aside, it is a mathematical impossibility to pay the "defined benefit" pensions that the recipients expect. These pension plans are based on actuarial tables and the assumption of earning 7-8% on the pension fund investments. How do you do that when Bernanke is running a multi-year Zero Interest Rate Policy (ZIRP)?
The construction industries were red hot for many years. Besides the political and financial hangovers from the sub-prime housing bubble, recovery will be held back by demographics: young adults (permanently unmarried) will be forced to live in the basements of their parent's home, as they shuffle from a part-time job at a restaurant to a part-time, benefit-less job at the dollar store until they're middle-aged, at which point they get laid off because they're earning 70 cents per hour more than the minimum wage.
This post is starting to sound like a gloom-and-doom, anti-government, financial newsletter. I've chosen to focus on 'what not to do' first because the negative side of the ledger is usually more tangible and concise. Next post I'll talk about what our frustrated 25-year-old should do.