Millennials Aren’t Lazy: Millennials Aren’t Working Because the Economy Isn’t Either
‘Tis the season to be a graduate and members of the class of 2015 may be wondering: what are my chances in this job market?
The class of 2015 is entering an economy still in recovery from the Great Recession. Job prospects for the class of 2015 are better than for the several classes that graduated before them, but young graduates today still face many economic challenges, including stagnant wages and high levels of unemployment and underemployment. The class of 2015 joins the six classes before it in graduating into an acutely weak labor market and competing with more experienced workers for a limited amount of job opportunities.
Although unemployment rates of young graduates have come down in recent years after skyrocketing during the Great Recession, they still remain elevated compared to where they were before the recession began. Underemployment rates for the class of 2015 also remain high. This means that many young graduates either want a job but have recently given up looking for work, or have a job that does not provide the hours they need.
Among young college graduates who are employed, many are working in a job that does not require a college degree at all. This is another sign of continued slack in the labor market, and a sign that young graduates’ high unemployment is not because they lack the right skills, but because of a continued lack of economy-wide demand for workers.
Although conventional wisdom suggests that young people can “ride out” the recession by “sheltering in school” and receiving further education instead of trying their luck in the job market, enrollment rates of young high school and young college graduates have not experienced a significant recession-induced increase. It’s a myth that young graduates are riding out the recession by enrolling in further schooling.
In fact, a large share of young college and high school graduates have been “idled” by the weak economy, which means they are neither employed nor enrolled in additional schooling. The share of idled young people remains greatly elevated compared to its pre-recession levels, especially for young men and for black and Hispanic high school graduates. If young graduates are not receiving further education or getting a job, they are not pursuing the two major paths that usually lead to future career success.
Wages are another indicator we look at when determining the outlook for young graduates. High school seniors graduating this spring can expect to make $10.40 an hour on average. Recent college graduates can expect to make $17.94 an hour. Though these numbers reflect moderate increases in wages over the last year, entry-level wages are still far below what they were prior to the Great Recession in 2007. In fact, high school and college seniors graduating this spring can expect entry-level wages that are actually lower than they were 15 years ago.
As earnings have declined for young college graduates, tuition costs have skyrocketed and student debt is becoming an ever-increasing burden for young workers. Getting a college degree may still be a smart investment, as college grads still have higher lifetime earnings than high school grads on average. However, the rising cost of college combined with the failure of wages to grow for young graduates signals that higher education is becoming an increasingly difficult investment for many families.
When students graduate into a weak economy like the one we have seen over the last eight years, the weak job opportunities and lower wages they face may impact their earnings for up to a decade afterward. The evidence suggests that because of the class of 2015’s unlucky timing—in other words, through absolutely no fault of their own—this group is very likely to fare poorly for at least the next decade.
It doesn’t have to be this way. Although young workers are a unique group, their current higher levels of unemployment do not have a solution unique to them. The most direct way to quickly bring down the unemployment rate and spur wage growth of young workers is to institute measures that would boost aggregate demand and encourage full employment.
We can make the economy work better for young high school and college graduates. EPI’s Agenda to Raise America’s Pay offers a series of policies that would create broad-based prosperity for workers, including those recent graduates from the class of 2015. These policies include prioritizing low rates of unemployment, increasing levels of public investment, strengthening workers’ bargaining rights, raising the minimum wage, and updating and enforcing labor standards.