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Youth Unemployment Continues To Improve While Congress Continues To Falter On Jobs


By: Gurwin Singh Ahuja

Young Americans continue to slowly recover from the recession with the youth (ages 16-24) unemployment rate declining for the sixth month in a row. The unemployment rate for young Americans declined from 14.5 percent in November to 13.5 percent in December.

Nationally, the economy added 74,000 jobs which missed economists’ estimate of 200,000 jobs created in December. Although the economy created less jobs than expected, the national unemployment rate declined from 7.0 percent to 6.7 percent—likely due to a shrinking participation in the workforce.

While, Millennials are broadly doing better on the unemployment front, young people of color are facing almost depression levels of unemployment—particularly African American youth. The unemployment rate for young African Americans in December was 20.7 percent. Although this is a 2.2 percent improvement from the previous month, it is more than triple the national rate. The unemployment rate for young Latinos remained unchanged at 14.4 percent.

The Youth Unemployment Crisis Is Expensive

If young people are unemployed for too long, they miss an opportunity to build skills, as well as face repressed wages, have diminished opportunities, and greater anxiety.

Along with the deep personal costs to the unemployed, we cannot afford the fiscal costs of a youth unemployment crisis. A report recently released by Young Invincibles found that the increased rate of youth unemployment due to the Great Recession costs federal and state governments $25 billion annually.

One unemployed 18 to 24-year-old costs federal and state governments $4,100 annually—93 percent of these losses are due to lost tax revenue from unemployed workers and 7 percent are from social safety net expenditures.

Since the 2010 mid-term elections, Congress, specifically radical conservatives, have zealously focused on reducing government spending for deficit reduction. A blind focus on deficit reduction has cut the very programs that help young Americans get back to work, like YouthBuild and AmeriCorps.  This report clearly shows investments in reducing youth unemployment will save federal and state government billions of dollars. If our country expects to be competitive in the 21st century, we cannot leave an entire generation of Americans behind.

Congress Should Extend Unemployment Benefits 

All indicators suggest that youth unemployment, though it’s improving, remains an urgent issue. The unemployment rate is still too high, costs taxpayers billions of dollars in lost revenue, and is eroding the skills of our workforce.  Unfortunately, Congress is showing signs of complacency. Just before Congress left for the holidays, they allowed an extension of unemployment insurance (UI)—a critical lifeline for the unemployed—to expire. Consequently, over the holidays 1.3 million people working hard to find a job to support their families lost their benefits.

UI provides income support to workers who lost a job and are currently looking for a job. Specifically, Congress did not renew an extension of unemployment insurance called Emergency Unemployment Compensation (EUC) used to combat persistent unemployment.

EUC is crucial to jobseekers because it gives the long-term unemployed  the resources they need to pay for basic needs like groceries, heat, and electricity. The resources provided by UI is critical because long-term unemployed face discrimination in the labor market and need extra time finding a job.

For example, a working group from MIT that studies long-term unemployment found that employers toss out the resumes of the long-term unemployed no matter the qualification.

Since the recession, EUC has been especially crucial for Millennials as they make up more than a quarter of EUC beneficiaries.

Although, the Senate successfully voted this week to begin debate on expanding UI, it still faces significant political hurdles. Conservatives in the Senate are demanding to offset an extension of benefits with spending cuts, even though the program largely pays for itself because employers pay into the program.

What makes these demands even more peculiar is that a spending offset has not been the usual practice in prior extensions of UI including five extensions under President Bush. If a bill passes the Senate, it will likely face more hurdles in the House of Representative, which has a conservative majority.

Conservatives also contend that programs like EUC disincentive people to look for work. This could not be more untrue. A 2011 study by Congress’s Joint Economic Committee found that EUC beneficiaries spend more time looking for a job. According to the report, since Congress enacted EUC, time spent looking for a job has tripled among the long-term unemployed.

North Carolina also provides a good example of the effects of cutting UI. Roughly six months ago, conservatives in North Carolina cut the UI program in the hopes that it would incentivize people to find jobs. Instead, 95,000 North Carolinians left the labor force entirely, and in October they had the lowest labor force participation rate in almost 40 years.

If we fail to extend UI benefits this year, nearly 4 million people will lose their benefits by the end of the year and the subsequent reduction in demand will cost the economy 240,000 jobs. Although, national unemployment and youth unemployment trends are improving, we cannot hamper the progress and cut a crucial lifeline to those that are still unemployed.

According to the Department of Labor, long-term unemployment is defined as someone who has been unemployed 27 weeks or more.