By Cliff Montgomery – May 14th, 2012
Today’s young people—specifically, those aged 16 through 24—are being especially hard hit by The Great Recession in anumber of different ways, according to a recent federal study.
The Recession influences more than “the employment prospects of youth today.” It’s quite possible these long-term economic problems may also effect young people’s “future earnings and participation in the labormarket,” states the government report.
Congressional Research Service (CRS) studies are crisp, easy-to-understand reports especially created forU.S. legislators. They are relatively short and are tailored for the non-specialist.
So perhaps it’s telling that the CRS studies are not officially released to the general public, even though theyare unclassified documents – and even though the public’s tax dollars paid for them (making U.S. citizens theactual owners of these reports).
Below, The Spark provides the CRS report’s summary:
“Congress has indicated a strong interest in ensuring that today’s young people—those ages 16 through 24—attain the education and employment experience necessary to make the transition to adulthood as skilledworkers and taxpayers.
“[But] in the wake of the December 2007-June 2009 recession, questions remain about the employmentprospects of youth today and the possible effects on their future earnings and participation in the labor market.
“This report provides context for policymakers on the youth employment situation. It includes data on laborforce participation, employment, and unemployment in the post-World War II period, with a focus on trendssince 2000.
“This discussion compares rates based on age, gender, race/ethnicity, and income, where applicable.“The report also explores the factors that influence youth participation in the labor force and their prospects foremployment.”
Major Findings
- Over the past decade, teens and young adults have experienced a precipitous decline in employment and a corresponding increase in unemployment. In 2000, their Employment to Population (E/P) ratio, or employment rate, was about 60%. Their E/P ratio steadily eroded even when the economy grew in the mid-2000s.
- The December 2007-June 2009 recession resulted in record low employment for this population.
- Since the official end of the recession, younger workers have continued to fare poorly in the labor market. In 2011, youth ages 16 through 24 had an E/P ratio of 45.5% and a rate of unemployment at 17.3%. This is compared to an employment rate of 75.1% and an unemployment rate of 7.9% for workers of prime working age, 25 through 54.
- Recent declining employment rates for young people are likely due to decreasing demand for labor generally and youth foregoing work for higher education. Youth may decide to pursue education because of dismal employment prospects and the growing need for more education to be successful in the labor market.
- Throughout the post-World War II period, the E/P ratio has been highest for white youth, followed by Hispanic youth. Black and Asian youth have been the least likely to be employed.
- For black youth, this is likely due to lower educational attainment.
- Lower rates of employment for Asian youth is likely attributable to their increasing participation in post- secondary education.
- Young black males in particular have had the lowest E/P ratios.
- Beginning in the 1970s, the E/P ratios for women increased as they entered the workforce in greater numbers. The gender difference in the E/P ratio for teens and young adults began to narrow in the 1990s, likely due to greater high school and college attainment among females and shifts in cultural expectations and public policies about women in the labor market.
- Lower employment rates—and simultaneous increases in unemployment—for young people appear to be due to a confluence of factors. Youth have less education and experience relative to older workers. During dips in economic activity, young adults may find it difficult to attain a first job, and are often most vulnerable to layoff because firms are more likely to lay off those with less seniority and less training.
- The consequences of decreasing E/P ratios and increasing unemployment among youth have not been fully explored. Preliminary research in this area has hypothesized that reductions in human capital, such as deterioration of skills and foregone work experience, may have lasting impacts on the employability and wages of youth.
- Some studies show that on average, early youth unemployment has negative effects on incomes but not as strong effects on future unemployment. However, youth entering the labor market during severe downturns in the economy appear to have relatively lower wages in the longer term.
