Teaching a Man to Fish: How to Solve Youth Unemployment in the U.S.

This year, unemployment rates among young people in the United States have been increasing to levels not seen since the early 1990s. Youth unemployment rates are usually a good indicator of the overall state of an economy, since young people typically face the greatest difficulties in finding employment in times of recession and, lacking experience, are often the first to be laid off by employers who need to cut back on labor costs. They may also lose out on job opportunities when more experienced older workers decide to defer retirement or return to the labor market, a common phenomenon in the current economic downturn.

The national unemployment rate for all workers in the U.S. has been steadily increasing over recent months, reaching 6.1% in September, according to the Bureau of Labor Statistics. For 16 to 19 year-olds, however, the reported rate of unemployment is more than three times that for all workers, at 19.1% in September. Among ethnic and racial minorities youth unemployment rates are even higher, for example reaching 24.8% in July 2008 for African Americans aged between 16 and 24. The tight employment market is having a harsh impact not only on those looking for permanent, full-time employment, but on students seeking summer jobs, perhaps to help finance their education – it has recently been reported that it was harder to find jobs in summer 2008 than at any other time since the 1940s.

Setting Precedents

Previous studies have documented the serious knock-on effects that youth unemployment has on the individuals affected as well as the economy as a whole. For example, using data from the National Longitudinal Survey of Youth, researchers at the Employment Policies Institute found that early unemployment was associated with lower future earnings as well as repeated spells of unemployment; this was attributed to the delays in the accumulation of employment experience and training while unemployed. The demoralizing effects of prolonged unemployment may also have adverse psychological effects on young people, including depression or low confidence which may further decrease their future likelihood of gaining employment.

For the economy and society as a whole, high unemployment rates among youth also have potentially serious consequences. Unemployment is a factor contributing to social exclusion and disruptive behavior such as crime and drug-taking, which not only increase social unrest but also the overall costs of health, law enforcement and other public services. At the same time, overall economic growth may be hampered by the under-use of a large group of recently-educated people who could potentially make a major contribution not only to overall productivity but to innovation and technological development.

So what can the government do to increase employment rates among young people in the United States, and thus maximize their contribution to the economy?

The Role of Education

International research unfortunately suggests that there are few viable ways of making a difference in the short-term, in the absence of an improved economy and more dynamic labor market. For example, a pan-European study by researchers at the European Central Bank found that direct interventions such as preferential hiring policies and greater wage flexibility have relatively little impact on improving job prospects for young people when markets are generally slow. However, the higher rates of youth employment in countries with apprenticeship systems suggests that the development of education and training programs linked specifically to labor market needs may be a promising longer-term option; there is also evidence from the literature that entrepreneurship and work-related training targeted at particular groups can help to increase employment rates. More generally, it can be hoped that policies intended to increase the academic attainment levels of all students in the United States, notably the No Child Left Behind Act, will help to improve the job prospects of young people in the longer-term, and thus maximize the contribution of this group to economic growth.

References

DeFreitas, G. (Ed.) (2008). Young Workers in the Global Economy: Job Challenges in North America, Europe and Japan. Cheltenham, UK: Edward Elgar Publishers.

Gomez-Salvador, R. & Leiner-Killinger, N. (2008). An Analysis of Youth Unemployment in the Euro Area. European Central Bank Occasional Paper Series No. 89, June 2008.

International Labour Office (2000). Employing Youth: Promoting employment-intensive growth. Geneva.

Kalwiji, A.S. (2004). Unemployment Experiences of Young Men: on the Road to Stable Employment? Oxford Bulletin of Economics and Statistics 66, 2, p. 205.

Mroz, T.A. & Savage, T.H. (2001). The Long-Term Effects of Youth Unemployment. Employment Policies Institute. Retrieved from http://www.epionline.org/studies/mroz_10-2001.pdf

Sum, A., McLaughlin, J., Khatiwada, I. & Palma, S. The Continued Collapse of the Nation’s Teen Job Market and the Dismal Outlook for the 2008 Summer Labor Market for Teens: Does Anybody Care? Boston, Massachusetts: Center for Labor Market Studies. Retrieved from http://www.clms.neu.edu/publication/documents/The_Continued_Collapse_of_the_Nations_Teen_Job_Market.pdf.

Bureau of Labor Statistics (2008). Labor Force Statistics from the Current Population Survey. U.S. Department of Labor. Available online at http://www.bls.gov/cps/.

1 comment to Teaching a Man to Fish: How to Solve Youth Unemployment in the U.S.

  • samantha nyamutoru

    the youth should be job creators that job seekers in otherwords they are encouraged to start up income generating activities other than searching for white collar jobs which is hard to find.

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