US labor markets ended 2012 with a whimper, as Friday’s release of the December unemployment numbers showed all major indicators essentially unchanged. That may come as a relief for those glass-is-half-full Millennials who find encouragement in the steady upward trend of the labor market even during a winter flurry of political bedlam. But those content to ride out the slow trek back to full employment will be waiting an awfully long time—at the 2012 rate of job growth it will take more than a decade before we return to pre-recession employment rates.
Meanwhile, our national politicians are talking about cutting spending rather than creating jobs. Under our current conditions young people, whose unemployment rates are much higher than those of older workers, will continue to bear the burden of the Great Recession well into their adult working lives. No news, in this light, is not good news for young adults.
The December data show young people returning cautiously to the labor market. Among both men and women, labor force participation rates picked up in December after declines across age groups in the month before. The capacity of the labor market to absorb these new or returning workers, however, extended only to those in the older cohort. In December, workers ages 25 to 34 increased their labor force participation rates from 81.7 percent to 81.9. At the same time their employment-population ratio ticked up by 0.3 percentage points to 75.6 percent as more workers in the age group found jobs. Younger workers, in contrast, found a less welcoming market. A greater share of the population ages 20 to 24 entered the labor market last month, increasing labor force participation rates from 71 to 71.7 percent—the highest rate in this age group since February. But even with the additional workers ready and willing to navigate the labor pool, the ratio of employment to the population hardly budged; it actually slipped downward by one tenth of a percentage point to 61.9 percent.
Workers 20 to 24-years-old entered the market in December but could not find a job, and as a result their unemployment rate jumped up from 12.6 percent in November to 13.7 percent to end the year. At the close of 2012 there were 2.15 million workers in this age group who were looking for work but could not find them— that’s hardly moved from one year ago when labor force participation was approximately the same. The cohort of 25 to 34-year-olds fared better, managing to pull off some gains over the course of the year. The unemployment rate of 25 to 34-year-olds dropped in December to 7.7 percent—another low unseen since December of 2008. This age group counts about 2.6 million unemployed workers in the market, significantly down from 3.1 million a year ago.
Decreased labor force participation has left many young adults uncounted in the work force. If the 2012 trend continues—with increased labor force participation in a market unable to absorb new workers—2013 will show unemployment rates climb across the board. But the labor market experience of young people is much different than that of older workers, and their disadvantages are reflected in lower hiring numbers and persistently high unemployment. Although some young people managed to find their footing in the labor market, over the course of the recovery most of the new jobs in the economy went to workers ages 55 and up. Young adults took what positions were offered, in many cases at jobs that could not give them enough hours or utilize their skills. A breakdown of unemployment by age reflects the disparity in job prospects across groups, showing workers ages 20 to 24 with unemployment rates well-above the national average while those 35 and older are well-below.
Over the past two years the economy produced 153,000 jobs per month—more than enough to accommodate the rising population, but not enough to put us on the fast track to recovery. That’s bad for the unemployed, but high rates of unemployment affect workers who already have jobs too, by reducing the bargaining power of employees and holding down compensation. The December jobs report shows average wages barely keeping up with inflation, indicating little pressure to increase hiring, production, or consumer demand, and offering a forecast of future jobs reports that reveal more of the same. Without an increase in private job growth or a targeted public employment program, young people in this generation will no longer be young people when they finally obtain a career.