The High Cost of Youth Unemployment

Jan 17, 2014

By Zane Jennings and Kisha Bird

Since the Great Recession, young adults have struggled to connect with and thrive in the American workforce. A new study by Young Invincibles, “In This Together,” demonstrates the dire situation young adults face in today’s labor market a and the economic consequences of youth unemployment to our nation.

Since 2007, workers ages 18 to 34 (known as “Millennials)” have faced double digit unemployment rates. And the youngest American workers, ages 16 to 24, have fared the worst, with unemployment rates exceeding twice the national average. In contrast to prior economic downturns, in which young adult unemployment returned to pre-recession levels within 5 years, recovery from the Great Recession is taking significantly longer.

Continued high unemployment has caused many young adults to withdraw completely from the workforce. Recent research estimates 5.8 million young adults are neither working nor in school. Ages 16 through 24 are critical development years, as young people prepare to take on adult responsibilities. Having early work experience and attachment to the labor market is essential to establishing work history and credibility and is a predictor of future wages and employment mobility.

According to the study, young adults’ economic struggles, anxiety, and “deferment or denial of dreams” have major consequences both for them personally and for the national economy. Through loss of tax revenue and safety net expenditures, federal and state governments lose almost $9 billion annually due to Millennial unemployment. That’s roughly $4,100 in forgone tax revenue and public benefits for each unemployed person between the ages of 18 and 24, and $9,875 for each unemployed person between 25 and 34.

Tackling the issue of youth unemployment is not only the right thing to do—it is a necessity. As we continue to right our sluggish economy and address long-term challenges, such as the federal budget deficit, special attention must be paid to the broader economic implications of this demographic in the workforce.

Young Invincibles identifies several strategies to reconnect young adults to the workforce and improve their skills, including:

  • Investing in national service programs, such as AmeriCorps. Expanding national service will enable young adults to make money and garner work experience while contributing to communities in need.
  • Reinstating the Youth Opportunity Grant. Although grant funding ended in 2005, an evaluation of the program showed that Youth Opportunity created pathways to education, training, jobs, and internships for thousands of youth in high-poverty communities.
  • Expanding the Department of Labor’s Registered Apprenticeship (RA) program. RA provides training in vital technical skills, as well as wages for workers. The RA program is also an incredible investment for the federal government and employers.  For every dollar invested, the federal government gains $50 in return. Employers also many reap benefits including a more technical and well-trained workforce.
  • Establishing a “Career Internship” standard by offering long-term internships with school-approved employers that provide wages and/or school credit. The recommendation also includes a targeted component to allow for the participation of out-of-school youth.
  • Providing more opportunities for Millennial workers. Their greatest strengths—their technology skills and entrepreneurial, collaborative, and creative approaches to problem solving—are essential assets to employers.

CLASP has long advocated for a diverse set of policies and interventions to connect the most vulnerable youth (including those without a secondary credential and youth of color) to work, education, and ultimately opportunity; this includes building on research and lessons learned from the Youth Opportunity Grant Program.

As “In This Together” shows, young adult unemployment is an important issue with widespread consequences for continued inaction.  It is imperative that we act, and act quickly.

Read the full report and access state data>>

Learn about CLASP youth policy recommendations >>>

site by Trilogy Interactive