As we approach graduation season, it’s important to note the uphill battle young job seekers continue to face in today’s labor market. The unemployment rate for workers under the age of 25 has improved to 16.0 percent since its peak of 19.6 percent in the spring of 2010, but, excluding the Great Recession and its aftermath, remains higher than it has been since the fall of 1983.
Evidence from past recessions of the effect on young workers who entered the labor market during a downturn shows that the impact is severe and long-lasting. In particular, entering the labor market in a severe downturn can lead to reduced earnings for up to 10 to 15 years. Young workers at all levels of educational attainment who enter the labor market during a downturn face higher rates of unemployment. With a scarcity of job openings, young workers are 1) less likely to land a stable entry-level job that will lead to advancement, and 2) more likely to experience a lengthy period of instability in employment and earnings.1
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1. See Oreopoulos, Philip, Till von Wachter and Andrew Heisz. 2008. “The Short- and Long-Term Career Effects of Graduating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates.” IZA Discussion Paper No. 3578 and Kahn, Lisa. 2010. “The Long-Term Labor Market Consequences of Graduating from College in a Bad Economy,” Labour Economics, Vol. 17, No. 2.