Bridging the Opportunity Divide

Ask the Experts: How Can We Solve the Young Adult Unemployment Crisis?

June 18, 2014
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Ask the Experts: How Can We Solve the Young Adult Unemployment Crisis?
A job seeker looks over an application. Getty Images
Despite the recovery, millennials still face double-digit unemployment rates. Here’s how to get them working again.

For young adults who entered the workforce between the start of the Great Recession in 2009 to the present, days spent searching for jobs — any jobs at all — have stretched into weeks, months and even years. This endless disappointment seems to be the new normal for a generation of young people who were once assured that if they graduated from high school, attended college and studied hard, they would enjoy gainful employment in the field of their choosing.

Instead, these millennials have become a generation-in-waiting — waiting to find a job that will pay more than minimum wage, waiting to be given a chance to earn the experience that employers seek in an employee, waiting to take the next steps into independent adulthood. This generation is in the midst of an unemployment crisis.

So how can we fix it? NationSwell convened a panel of experts to explain the severity of the young adult unemployment crisis, why it matters and what we can do to get this generation working again. Read on for their thoughts, and then join the conversation by leaving your own ideas in the comments box below.

How bad is the problem, really?

Young adult unemployment is a serious economic issue — and it’s not improving. According to Catherine Ruetschlin, policy analyst at Demos, a public policy organization dedicated to creating a more equal America, it’s not uncommon for young adults to have higher unemployment rates than the rest of the population. But it is unusual for these rates to persist as long as they have.

“Young people under 35 still hadn’t recovered from the recession in 2001 when the next recession began in December 2007,” Ruetschlin says. “So it’s been a long process for young people to finally catch up, even if the economy is moving forward.”

Millennials ages 18 to 34 have experienced double-digit unemployment rates for more than 70 months — or almost six years — according to a recent report called In This Together: The Hidden Costs of Young Adult Unemployment by the youth advocacy group Young Invincibles. Young people of color and those without college degrees are especially hardhit by the unemployment crisis. One in four black youths between the ages of 16 and 25 are unemployed. Young adults without a college education face an unemployment rate of 12.2 percent — double the national average. While young adult college grads have an overall unemployment rate of 3.8 percent,the statistics are higher for black college graduates. A recent report from the Center for Economic and Policy Research found that 12.4 percent of young black grads are unemployed.

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“Research shows that people who graduate from college during recessions — with the exact same skills and credentials as someone who graduates during a boom in the economy — take a financial hit over the course of their lifetimes,” Ruetschlin says. Even those lucky enough to get jobs don’t go through life unscathed. “They start at a lower salary, which means that for the rest of their career, they’re still earning less than someone who graduated during an economic peak.”

Why should American care about our unemployed youths?

Let’s face it: When one section of the labor market is struggling, the rest of society is dragged down with it. “In a time of tight budgets, everyone should be paying attention to the youth unemployment situation, because it’s directly costing us money right now,” says Tom Allison, policy and research manager at Young Invincibles.

In the group’s In This Together report, researchers estimate that unemployment for this age group costs state and federal governments around $8.9 billion per year in foregone tax revenue and social safety net benefits. Broken down by age group, an unemployed 18- to 24-year-old costs the government more than $4,100 annually. For an unemployed 25- to 34-year-old, that number rises to $9,900 annually.

“Another way to think of it is that, if that $8.9 billion [was passed directly to the taxpayer], it would add about $50 per year on top of each taxpayer’s federal tax bill,” Allison says.

Financial implications aside, there are other reasons that Americans should be concerned about young adult unemployment. “The immediate reason is that we’ve already made an investment in the skills training of our young people,” Ruetschlin says. “The longer those young people are shut out of the labor market, the more that investment deteriorates — we actually get less return on it — because skills deteriorate over time.”

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Young Americans between the ages of 20 and 24 will lose about $21.4 billion in earnings over the next 10 years, according to Young Invincibles. That’s roughly $22,000 per person — money that’s not being reinvested in the economy through the purchase of goods and services. As this demographic struggles to become financially stable, they are putting many of the traditional markers of adulthood — moving out, getting married, buying cars and homes, having children — on pause. “It ripples into so many different areas that it’s hard to ignore that young people’s economic situation is intricately tied into the success of the economy,” Ruetschlin says.

Why should companies invest in young adult workers?

It’s hard to ignore headlines that claim millennials are “lazy,”“narcissistic” or “entitled.” But this generation’s economic struggles make them different, in a positive way. This group is resilient and motivated, despite what one might read.

“These young people have been beaten down by the labor market,” Ruetschlin says. “It’s hard to look for a job. It’s especially hard to look for a job in an economy that thinks you don’t have the skills that it takes to be productive, or you’re only wanted in a job that has a low payoff. It’s demoralizing and frustrating.”

Ruetschlin says that employers should consider hiring young adults as an investment in the future of the nation’s economy. “What we see is that firms are very willing to invest in human capital at the top ends of the income spectrum, but not at the entry level,” she says. “That’s because the perception is that people change jobs so frequently that taking time to train someone won’t pay off. Well, in this labor market, there’s nowhere else to go. It’s actually a great time to invest in a person.”

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Tom Allison of Young Invincibles says millennials bring unique skillsets to the workplace, which can be of benefit to employers. “We already know that our generation is quick to adopt new technologies, and that’s going to increase their importance in the workforce,” he says. “Our generation is instilled with a collaborative approach. We work well together. We’re also pretty creative. Lastly, we’re adaptable. We graduated high school and college right when the recession hit, and we’ve been able to demonstrate our flexibility and adaptability, and that’s exactly what companies are going to need in a changing global economy.”

So what are some ways to get young adults working?

We should examine both short-term and long-term solutions to the young adult unemployment crisis, according to Martha Ross, a fellow at the Brookings Institution’s Metropolitan Policy Program. She says that “we need to do more to bridge the worlds of education and employment, and create stronger on-ramps into the labor market for young people.”

There are a number of ways to do this. We can encourage partnerships between high schools and private industries, which is the premise behind Alamo Academies in San Antonio, Texas. Here, students receive specialized job training in high-demand fields such as aerospace, manufacturing, information technology or health care, all while working toward a high school degree and earning college credits. “One long-term solution would be to take the Alamo Academies model and apply it across the country,” Ross says.

We can also create more registered apprenticeship programs, which give students hands-on training in a marketable skill, combined with classroom instruction, all the while getting paid. “There are 4 million job openings in the U.S. that require certain skills,” Allison says. “Apprenticeships can help develop those skills, while also giving young people their first work experiences.”

Young Invincibles is pushing to increase funding for AmeriCorps, an intensive national-service program that employs Americans to work at nonprofits, schools, public agencies and community groups across the country. According to Allison, more than a half million Americans apply for the 80,000 spots that the program offers every year. “AmeriCorps gives young people experience in serving our country and serving their communities. It’s often their first experience in the workforce,” Allison says. He points to studies that found that the economic multiplier effect of AmeriCorps is about $2.50 for every dollar invested.

And Ross says that we need to change the way that we think about education and work, focusing more on applied learning. “Today the model is, at age 18, after taking college-prep courses, you wave bye to Mom and Dad and go to school,” she says. “You study fulltime for four years, and then you graduate, and at that point you start looking for your first full-time job. That works relatively well for a subset of the population. But it doesn’t work at all for lots of people.”

According to Ross, schools should shift their focus from test scores and graduation rates to increasing project-based learning, placing students in valuable internships and supporting them as they look for jobs in the workforce. “It’s a cultural and institutional change that could make a big difference,” she says.

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