For Immediate Release: Thursday, May 03, 2012
Contact: Phoebe Silag or Karen Conner, email@example.com 202-775-8810
Class of 2012 faces high unemployment and depressed wages
Young workers are still struggling to overcome the deep crater the Great Recession left in the labor market, a new EPI briefing paper shows. In Class of 2012: Labor market for young graduates remains grim, Heidi Shierholz, Natalie Sabadish and Hilary Wething find that 2012 graduates face high unemployment and underemployment rates, depressed wages, and burdensome student-loan debts.
Over the last year, the unemployment rate for young high school graduates averaged 31.5 percent and the underemployment rate averaged 54.7 percent. For college graduates, the unemployment rate averaged 9.4 percent over the last year, while the underemployment rate averaged 19.1 percent. Unemployment rates for young African American and Hispanic high school and college graduates were higher than overall rates.
Young workers who find jobs in today’s labor market have had to accept lower wages than they would have a decade ago, with wages substantially lower today than they were in the year 2000. Between 2000 and 2011, the real wages of young high school graduates declined by 11.1 percent, and the real wages of young college graduates declined by 5.4 percent. Entering the labor market during a downturn can have long-term scarring effects on young workers, in the form of reduced earnings, greater earnings instability and more spells of non-employment over the next 10 to 15 years.
Finally, contrary to popular belief, students have not been “sheltering in school,” during the economic downturn – there is no evidence of a significant uptick in college enrollment. In fact, because many students must work to pay for tuition or living expenses, the lack of a substantial increase in enrollment makes it likely that many students have been forced to drop out of school because they could not afford to attend. Students who are able to complete college often must take out loans to do so, which limited job opportunities and stagnant wages can make difficult to repay.
“Young workers are a casualty of weak demand for workers in the overall economy,” said Shierholz. “The policies that will most effectively help young workers right now are ones that generate strong job growth overall, like fiscal relief to states, substantial additional investment in infrastructure, and direct job creation programs in communities particularly affected by unemployment.”