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New Year, Same Troubled Labor Market for Young People

Catherine Ruetschlin

At the latest count, more than 5.6 million young adults ages 18 to 34 are officially unemployed. 

Last week’s tepid labor report from the BLS showed that employers added another 157,000 jobs in January, but they didn’t go to the youngest workers.  Employment levels and employment as a share of the population actually declined for everyone under 35, leaving 3 million 18 to 24-year-olds and 2.6 million 25 to 34-year-olds seeking work as the economy continues to plod toward recovery.  All signs point to another long year of slow advances in 2013, leaving young people plenty of time to polish their résumés. 


Unemployment rates held steady for the cohort between ages 25 and 34, coming in at 7.7 percent—just below the national rate of 7.9 percent for the labor force as a whole. The real winners in that story are 25 to 34-year-old men, whose labor force participation rates actually ticked up without adding to the ranks of unemployed.  Women, in contrast, left the market in January.  The labor force participation rate for women 25 to 34 dropped from 74.4 to 73.8 percent but that did not boost the percentage employed, meaning that the cohort lost female workers and jobs last month.  Still, when unemployment among this group hit 7.7 in December it was the lowest point in 5 years.  If 25 to 34-year-olds can hold on to their gains overall—by keeping workers in the labor market without increasing their unemployment rates—they’ll be better positioned to take advantage of the slow growth ahead.  

As usual, younger workers fared worse than their older counterparts. Unemployment among 20 to 24-year-olds jumped up to a monthly unemployment rate higher than any they’ve seen since 2011. While the smaller population size makes estimates for this group more volatile, the half-percentage-point climb in the unemployment rate to 14.2 percent follows an even greater increase from the month before and suggests the inception of a pattern where new jobs in the economy fail to reach workers in the age group. Similarly to the older cohort, men ages 20 to 24 joined the labor force in January while women left. However, unemployment rates for men in the age group increased as the larger population of workers failed to find jobs. Unemployment rates for women declined as the unemployed stopped looking for work. 

While unemployment rates give a good picture of the direction of change in the labor market, they cannot fully represent the experiences of young people who are struggling to find a place in the working world.  A broader measure, officially called the U-6 by the Bureau of Labor Statistics, includes not only the unemployed but also those who have gotten discouraged and stopped looking for work as well as the folks who would like to find a full time position but are stuck in dead-end, part-time jobs. The U-6 measures underemployment, and offers a better idea of just how far young people have to go before they can feel secure about their working lives. Last year, 15.1 percent of 18 to 24-year-olds were underemployed, as were 8.3 percent of those ages 25 to 34.  

When compared to unemployment, the underemployment rate appears staggeringly high. In fact it is down slightly from 2011 when 18 to 24-year-olds came in at 28.6 percent and 25 to 34-year-olds were 16.6 percent underemployed.  That shows slow but marked improvement in the context of employment for young people.  But it also reveals that during 2012 more than 14 million people ages 18 to 24 could not find opportunities commensurate with their desire to work or their ability to contribute to the economy. That’s 14 million examples of unfulfilled potential. 

Even the best educated workers are having trouble putting their skills to use. According to a recent report from the Center for College Affordability and Productivity, 48 percent of college graduates who managed to find a job are in positions that don’t require a college degree—and they are the lucky ones. The employment of college grads in lower-skilled positions displaces less educated workers, increasing competition for jobs at the bottom of the income distribution and putting downward pressure on wages for the uneducated. Yet somehow I doubt that many young people are celebrating their good fortune between shifts at the Olive Garden.