Young Americans graduating from college or high school this spring are facing the worst job market in at least a quarter century, according to a report released today by the Economic Policy Institute.
The report, The Class of 2010: Economic Prospects for Young Adults in the Recession, documents the sharp rise in unemployment among young high school and college graduates since 2007; shows that the recession itself is entirely to blame for young workers’ job woes; and explains how gaps in the safety net expose young workers to heightened financial insecurity during spells of unemployment.
“The economy has added jobs over the last few months, but we still have a very deep hole to climb out of before every worker who wants a job can find one, and young workers are no exception,” said EPI economist Josh Bivens, a co-author of the report. “Deficit hawks play a cynical game when they oppose spending on job creation on the grounds that it burdens future generations. The truth is that the recession is taking a heavy toll on young workers, and if we don’t create millions of jobs, young workers will pay a heavy price for years to come.”
Specifically, the report found:
The unemployment rate among college graduates under age 25 averaged 9% over the last year, while in 2007, before the recession began, it averaged 5.4%. These figures do not account for the young college graduates employed in jobs below their skill level, which both lowers these college graduates’ wages as well as possibly bumping less-credentialed workers out of jobs. Unemployment among young high school graduates averaged 22.5% over the last year, compared with 12% in 2007. Young graduates struggling to find work are not at fault for their job woes; the recession is entirely to blame, according to the report.
The number of workers age 16 to 24 in the labor force (meaning they were either working or looking for work) has decreased by 1.1 million (5%) since the recession began. This is not because more young people are choosing to wait out the recession by enrolling in school. On average, 53.6% of 16-to-24-year-olds were enrolled in either high school or college over the last 12 months, up only slightly from the 2007 average of 51.9%. There is no evidence, however, that these increases have been induced by the recession, as they can be fully explained by a rise in the decades-long trend toward higher enrollment.
The share of young people who were neither employed nor enrolled in school has increased from a 2007 average of 14.5% to an average of 17.7% over the last 12 months.
Young workers are often ineligible for public assistance during times of unemployment. For example, restrictive eligibility rules can exclude young workers from receiving the unemployment insurance benefits that help workers who become unemployed through no fault of their own to make ends meet while they look for a job.
The Class of 2010 further explains why concerns about the effect of deficits on young people’s futures are misplaced, since increased public spending is the most effective way to create jobs and promote a robust recovery. Meanwhile, the longer that high unemployment persists, the worse off young workers will be in terms of lifetime earnings, according to the report. Public investments in education, health, infrastructure improvements, and green jobs boost the economy in the short-run and lead to a more productive economy in the long-run, with clear benefits for young workers.
Researchers Kathryn Anne Edwards, Alexander Hertel-Fernandez, and Anna Turner authored the report with Bivens.