As young adults across the country graduate from high school and college, it’s an appropriate time to reexamine how the labor market is performing for young workers. Young workers, 16–24 years old, were among the hardest hit in the pandemic recession, given their vulnerability to labor market downturns in general and their specific exposure to economic weakness in the pandemic. For instance, a quarter of young workers had leisure and hospitality jobs, where employment declined 41% in the spring of 2020.

Fortunately, unlike the protracted recovery from the Great Recession, policymakers responded to the pandemic recession by enacting policies at the scale of the problem. As a result, the economy bounced back quickly, and employment is now within 1% of pre-recession levels. Mirroring the overall labor market recovery, young workers have also experienced a tremendous recovery from the depths of the pandemic recession.

In April 2020, the overall unemployment rate spiked to 14.7%. Over the last three months, the unemployment rate has leveled out at 3.6%—basically at pre-pandemic levels—while labor force participation continues to recover steadily. Figure A compares the unemployment rate of young adults, ages 16–24, with workers ages 25 and up through the last two recessions. There are two key factors to note from the figure. First, young workers tend to have much higher unemployment rates than older workers, on average about two and a half times higher. Second, both groups of workers saw a huge increase in unemployment in the spring of 2020 and both groups have experienced a tremendous bounce back, far faster than the recovery from the Great Recession.

In the pre-pandemic period, the unemployment rate for young workers was 7.8%, over two and a half times higher than the 2.9% unemployment rate for workers 25 and up. Young workers’ unemployment rate spiked at 27.4% in April 2020, while the unemployment rate for workers 25 and up hit 13.0%. Both groups have returned to their respective February 2020 unemployment rates in the last three months.

There’s some evidence that the unemployment rate may be overstating the strength of the economy since labor force participation is still below pre-pandemic levels. Figure B compares labor force participation and the employment-to-population ratio for workers in both age groups. So far, participation and employment among younger workers remains a bit further behind pre-pandemic levels than for workers 25 and up. While there has been a huge improvement in both measures over the last two years, the labor market needs to keep expanding to bring in more workers of all ages. As employment continues growing at its current pace—or even slows a bit in the coming months—I remain optimistic that more and more workers will return to the labor force and get jobs. Overall, the prospects for young workers in today’s labor market are vastly better than two years ago.

As with workers overall, the unemployment rate varies significantly among young workers by race and ethnicity. Young white unemployment peaked in April 2020 with about one-quarter unemployed, but it kept rising for Black and Asian American and Pacific Islander (AAPI) workers, with close to one-third of each of their workforces unemployed in May 2020. While the data (not shown here) exhibits volatility because of seasonality and smaller sample sizes in a single month comparison, the difference is stark.

Figure C shows the average unemployment rate among young adults, 16–24 years old, and other workers, 25 years and up, over the last year by race and ethnicity. The 2:1 ratio of Black unemployment to white unemployment among workers in the overall labor market persists among young workers as well. While labor market opportunities for young adults now are much better than during the recession or the recovery’s first year, they are far scarcer for young Black workers than they are for young white workers.

Another key indicator of labor market strength for young workers is wages and prospects for wage growth. Some evidence indicates that lower-wage workers have experienced faster wage growth in the last year than their middle- and higher-wage counterparts. For some, wage growth has been fast enough to exceed price inflation. Workers in lower-wage industries, such as leisure and hospitality, have also experienced faster nominal wage growth (along with faster employment growth) as employers work harder to attract and retain the workers they want.

It should come as no surprise then that young workers—more likely found in lower-wage jobs—have experienced stronger (i.e., less negative) real wage changes than older workers. Figure D illustrates the inflation-adjusted change in wages by age group and gender between the average wage in the 12 months ending in April 2021 with the average wage in the 12 months ending in April 2022. Wages fell much further, on average, among older workers than younger workers. To be clear, the wages of younger workers, on average, are about half that of other workers ($16.60 versus $33.61). Wages fell less for men than for women in both age groups. And women, on average, continue to be paid less than men. Among young workers, women are paid almost 10% less than men, $15.79 versus $17.41. That gap grows as workers age; among workers 25 and older, women are paid about 20% less than men, $29.53 versus $37.34.

Young workers are among the most vulnerable in the labor market. While they tend to have a tougher time in weak labor markets, they also have the potential to see enormous benefits when the overall unemployment rate is very low and remains that way for a sustained period of time. Fortunately, policymakers acted quickly at the scale of the crisis and young workers benefited. While a return to pre-pandemic labor market conditions is on the horizon, more can be done to shore up young workers’ experience in the labor market—from prioritizing full employment to raising the federal minimum wage to making it easier for young workers to exercise their right to form unions.