The Class of 2014 The Weak Economy Is Idling Too Many Young Graduates

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http://www.epi.org/publication/class-of-2014/

Introduction and key findings

The Great Recession officially ended in June 2009, nearly five years ago. However, the labor market has made agonizingly slow progress toward a full recovery, and the slack that remains continues to be devastating for workers of all ages. The U.S. labor market still has a deficit of more than 7 million jobs, and the unemployment rate has been at 6.6 percent or higher for five-and-a-half years. (In comparison, the highest unemployment rate in the early 2000s downturn was 6.3 percent, for one month in 2003.) The weak labor market has been, and continues to be, very tough on young workers: At 14.5 percent, the March 2014 unemployment rate of workers under age 25 was slightly over twice as high as the overall unemployment rate, 6.7 percent. Though the labor market is headed in the right direction, it is improving very slowly, and the job prospects for young high school and college graduates remain dim.

A key finding of this paper is that there is little evidence that young adults have been able to “shelter in school” from the labor market effects of the Great Recession. Increases in college and university enrollment rates between 2007 and 2012 were no greater than before the recession began—and since 2012, college enrollment rates have dropped substantially. This means there has been a large increase in the share of young high school and college graduates who are idled—neither employed nor enrolled in school—by the weak economy. This represents an enormous loss of opportunities for this cohort that will have lasting consequences.

This paper’s title, The Class of 2014, is admittedly something of a misnomer, as we do not yet know the labor market outcomes of these soon-to-be graduates. However, the outcomes of recent high school and college graduates provide a good sense of the labor market conditions the young men and women graduating this spring will face. This briefing paper examines the labor market that confronts young graduates who are not enrolled in further schooling—specifically, high school graduates age 17–20 and college graduates age 21–24. We look at young graduates who are not enrolled in further schooling in an attempt to focus as closely as possible on the labor market outcomes of those who are starting their careers. Key findings include:

Unemployment of young graduates is extremely high today not because of something unique about the Great Recession and its aftermath that has affected young people in particular. Rather, it is high because young workers always experience disproportionate increases in unemployment during periods of labor market weakness—and the Great Recession and its aftermath is the longest, most severe period of economic weakness in more than seven decades.

In today’s labor market, there are nearly 1 million “missing” young workers—potential workers who are neither employed nor actively seeking work (and are thus not counted in the unemployment rate) because job opportunities remain so scarce. If these missing workers were in the labor market looking for work, the unemployment rate of workers under age 25 would be 18.1 percent instead of 14.5 percent.

[Squinch]

1. I wonder how Obamacare will affect this. As older people get covered and

see the path cleared to not having to work longer hours or more jobs to cover their health insurance, I wonder if they will ease up on working and vacate some of those second jobs that would be just right for a new graduate.

[madville]

2. I'm currently encouraging my son to go trade school

He's looking at industrial electrician/instrumentation technician courses now. I've always been a big proponent of learning a trade out of high school or even while in high school (I went to welding courses while I was a high school senior).

Then go to college a few years later and have those technical skills under your belt for work while in school or something to fall back on later.

The income earning potential of many technical trades is at or has surpassed many white collar jobs that typically require a bachelors degree at a minimum. As an electronics and communications technician over the last 15 years I've made between $19 and $27 an hour and have worked a lot of overtime in there as well. Welders I know make between $20-30 an hour, same for industrial maintenance workers.

I don't know many college grads making $60-80k a year a few years out of college unless they are in IT, a medical field or an engineering field.