YOUNG AMERICANS IN THE GREAT RECESSION:

2.8 million young people have lost their jobs

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Introduction

Young people typically have a tough time during recessions, and the current one is no exception. With little time to climb the workplace ladder, they are often the “first-fired-and-last-hired” - causing more of them to lose jobs for longer.  Yet the national unemployment rate often masks this wide disparity in joblessness.  For example, the Department of Labor recently reported that 9.6 percent of the population was unemployed in August of 2010, but that number rises to 12.3 percent for people aged 18-34.[1] 2.8 million jobs have disappeared within this age group alone.[2]

The youngest, minority and male workers face the dimmest prospects.  An astounding 49 percent of young, black men between 16 and 19 are actively looking for a job but cannot find one.[3] As the economy sputters, transitioning into the next stage of life grows more difficult for millions of young adults who need a steady job before they can move out, support a family, pay for college, or buy a home of their own.

Recession Hammers Young Adults

The youngest workers have suffered the effects of the Great Recession more than any other age group. Figure 1 demonstrates the gap in unemployment rates by age over the previous 32 months. The population between ages 25 and 34 tends to mirror the national jobless rate while workers between 35 and 55 do slightly better.  However, the youngest young adults, those 16 to 24, have had the hardest time by far.  Though they began with higher unemployment, the gap has widened disproportionately over the last two and a half years. 18.1 percent of young workers are now unemployed, and this summer, fewer of them found a job than at any other time on record.[4]

The dismal unemployment rate for young people masks an even more negative trend. Because the Department of Labor only counts workers as “unemployed” who have recently looked for work, the unemployment rate does not take into account people who simply get discouraged and stop searching for a job entirely. Since December 2007, 1.8 million people between the ages of 16 and 24 have done exactly that.[5] Meanwhile, the size of the labor force for older workers has remained relatively constant; in other words, the youngest workers are much more likely than their older counterparts to simply stop looking for a job.[6] In fact, right now, only 45% of people aged 16-24 have a job of any kind – lower than at any point since World War II.[7]  

Although more young adults have enrolled in school during the recession, the trend certainly does not account for all those who have left the labor force. 600,000 more students between the ages of 16 and 24 entered school in 2009 than in 2007, far below the 1.8 million who simply stopped looking for work.[8] Moreover, simply enrolling in school does not replace the need for an income; before the recession, the American Council on Education reported that nearly 80 percent of undergraduates worked at least part time during the 2003-04 school year to support themselves and pay for school.[9] Those numbers have almost certainly fallen since then, making it harder for students to finance their educations. The enormous drop in the labor force cannot therefore be accounted for by the small increase in school enrollment.  In other words, well over 1 million young adults have both given up looking for work and are not enrolled in school. 

Unfortunately, both the rise in youth unemployment and fall in labor force threaten to grow the ranks of  “disconnected youth” – a term used to describe young people who disengage from work and school for lengthy periods.  Disconnection often results in severe consequences as young people fail to build the skills and social networks required for future success.[10]  Greater disengagement could entrench the already unprecedented reduction in economic opportunities for young Americans.

Young Minorities, Men Struggle the Most

The recession’s effects have also spread unevenly across demographic groups within the young adult population.  Specifically, young men and minorities have fared worse than young women and whites.  Over one-fifth of young minority men in their early twenties are currently unemployed.  Only one-third of African American men aged 16-24 have a job at all - far underneath the record low of 45 percent for young adults.  Whites in their early 20s have seen a doubling in their unemployment rate to 14 percent, but the number remains well below their Latino and African American peers.[11]

Young adult men and women have also had strikingly different experiences during the recession.  Both sexes began with similar unemployment rates, but men lost far more jobs than women as the months wore on (See Figure 2).  By August of 2010, 20.7 percent of younger adult men (16-24) were unemployed compared to 15.4 percent of women.[12]  The trend is less pronounced, though consistent, for adults in their late 20s.  As a consequence, more young men have left the labor market than women.  The rising unemployment and falling participation rates of young minority men could exacerbate long-term challenges facing those populations.

Conclusion

Though Americans of all ages have struggled through the Great Recession, young adults have had an especially difficult time. The youngest workers, minorities and men in particular exhibited some of the lowest employment rates ever recorded.  Since a job is often the first step to economic independence and security, this generation of young people faces serious challenges as a result of their employment struggles.

Recent research finds long-term wage reductions for people who lose their jobs during a recession.[13] A similar study by Lisa Kahn found that young people who merely graduate during a recession lose 6 to 7 percent in wages for every percentage point increase in unemployment.[14] Though, the effect diminishes over time, 15 years later, graduates earn 2.5 percent less for every percentage point of unemployment. Given the extremely high current jobless rates, we can expect this generation to feel the effects of the great recession for years to come.

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