August 31 2011
For Youth, Slow Economy Means 'No We Can't'
Move-in day has come and gone at college campuses nationwide. Teary-eyed mothers have gone home, leaving nervous freshmen to fend for themselves. But a harsher reality awaits students on the other side of their four years of collegiate study: the "real world." And the real world of today is not kind to college graduates. Many college seniors will attend job fairs this fall; if trends continue, few will find work next spring.
Between April and July of 2011, the number of employed 16- to 24-year-olds increased by 1.7 million. At the same time though, the youth labor force grew by 2.4 million, as students finished school and began to look for summer jobs and graduates sought permanent work. The result is that only 48.8 percent of young people were employed this July, a record low for that month (since BLS started measuring this statistic in 1948).
Youth typically face higher unemployment rates than the rest of the population. For example, in July 2000, 9.2 percent of youths were unemployed, compared to 4.0 percent of the general population. This makes sense: These workers have the least experience and fewest connections. But these days, with the national unemployment rate at about 9 percent and youth unemployment at a staggering 18.1 percent, young people are in a particularly sticky situation.
Employers simply aren't hiring. Most feel they can't afford to take risks on young talent while they face uncertainty about the economy, as well as taxes, regulations, and health care costs.
Unpaid internships abound, and many youth find themselves underemployed in jobs they are overqualified for, or in part-time jobs or contracted work. The recent-grad resume is often a collage of three months here, three months there - much of the work unpaid, or at least unreported. A lot of students who never planned on graduate school will enroll this fall, hoping in another few years the economy, and job prospects, will improve.
This is an ugly picture, but it's the reality of what's going on today. And given the policy choices being made in Washington, many grads fear that things won't be getting better any time soon.
Some joke that last week's earthquake in D.C. was caused by the crushing weight of $14 trillion in national debt. That's funny, but reality is not. Clearly, our mountainous liabilities contribute to our current economic uncertainty. Employers know that our government's books aren't going to improve on their own. In fact, with Medicare and Social Security's costs set to explode, the implementation of an expensive new health care entitlement (ObamaCare) looming, and interest payments threatening to spike if our historically low interest rates climb, our country is poised for an even worse fiscal crisis.
These problems worry today's adults, but the real losers will be Millennials. Not only will they one day face actually paying for the spending choices made by past politicians - they also suffer most from lost job opportunities.
First jobs are critical for skill-building and ultimately career-building. This will affect the economy for years to come as the next generation gets off to a slower start, and has lower earning potential that could be an anchor for decades.
Furthermore, the lack of jobs today doesn't just strain our personal finances or hurt our aggregate GDP; the national budget is also adversely affected. Unemployed youths are potential taxpayers who, if working, would help shrink the deficit. Consider this: In 2007, the IRS received approximately 22.7 million tax returns (for salaries and wages) for taxpayers aged 18 to 26. Two years later, the number of salary-and-wage tax returns filed by this age group dropped by nearly two million. This disturbing trend is continuing: If youth aren't working, they aren't paying taxes. And if they aren't working and paying taxes today, they are less likely to be paying taxes, or earning as much, in years to come.
College students typically lean left politically. But many may quickly rethink their positions after they enter - or try to enter - the "real world." Ultimately, they don't want the band-aids of unemployment checks. They don't want to be dependent on mom and dad's health insurance. They don't want more finger-pointing and demagoguery coming out of Washington. They want a real solution - a dynamic private sector that creates jobs and provides the opportunity to gain the independence and self-sufficiency they hoped for after college.
Policymakers need to embrace those policies that will encourage private sector hiring and risk-taking so that today's future leaders aren't sidelined, but begin building skills critical to their - and the country's - future.