Apr 6, 2013 Employment Number of the Week: Youth Unemployment at 22.9%? By Ben Casselman Wall Street Journal 22.9%: The unemployment rate for Americans under age 25, adjusting for the decline in the labor force since the start of the recession. Perhaps no group has been hit harder by the recession and grinding recovery than the young. The official unemployment rate for those under age 25 is 16.2%, more than double the rate for the population as a whole. In percentage terms, unemployment has fallen far more slowly for young people than for the wider population. Those figures actually understate the severity of the problem, however. The government only considers people “unemployed” if they’re actively looking for work. People who stop looking—whether they’re retired, in school, raising a family or living on friends’ couches — are instead considered “not in the labor force,” even if they would prefer to work given the opportunity. When the recession began in December, 2007, 59.2% of the under-25 population was in the labor force, meaning they were either working or looking for work. Today, that figure has fallen to 54.5%. That may not sound like a big drop, but it makes a huge difference. If the so-called participation rate had remained unchanged, there would be 1.8 million more young people in the labor force today than there actually are. Counting those people as unemployed, rather than out of the labor force, would push the unemployment rate up to 22.9%. That’s only a hair better than the 23.9% youth unemployment rate in the euro zone, and has shown only very modest improvement during the recovery. The decline in the participation rate among the young can’t all be attributed to the recession. Labor force participation among young people peaked at just under 70% in 1989, and has trended downward ever since, primarily due to rising rates of college attendance. The decline accelerated during the recession, as many young people sought refuge in college or other forms of education or training. In a normal cycle, that might have worked out well, leaving a generation of highly educated workers ready to re-enter the job market when the economy recovered. Instead, they have been graduating into a labor market that remains deeply challenged, especially for those without much work experience. To make matters worse, many graduates are carrying hefty debt burdens, and those who can find work are often being forced to low-skill jobs. The youth participation rate has largely flattened out over the past three years, but it fell again in March. Some 236,000 young people left the labor force last month, accounting for nearly half of all drop-outs. That helped push the overall participation rate to a more than 30-year low. It isn’t clear exactly what drove the March decline. Raymond Stone, an economist with Stone & McCarthy Research Associates who dives deeply into the jobs numbers each month, notes that the number of young people saying they’re “discouraged” — meaning they aren’t looking for jobs because they don’t think they can find one — has been trending downward. The number who say they’re in school or training hasn’t fallen much, but it’s no longer rising. The most significant increase has been those citing “other” reasons, a category that includes childcare, which Mr. Stone speculates could suggest the rising cost of childcare “has changed the economics associated with working for many young families.” Whatever the explanation, this much is clear: For young people, the aftershocks of the recession continue to reverberate. Watch: Ben Casselman discusses takeaways from this month’s jobs report.
Posted on: Sun, 07 Dec 2014 13:53:13 +0000