Imagine the city of New York—all 8 million people. Take a moment to appreciate how many people that is: every skyscraper, apartment building, housing project; every subway, plus Times Square and Grand Central Station, all packed to capacity.
Next, add another two million people; suddenly, New York City is bursting at its seams, teeming with 10 million people.
Now, put them all out of work.
Sarah Ayres of the Center for American Progress recently published an in-depth white paper that lays out the grim landscape of today’s job market. She focuses specifically on the challenges faced by youngest generation of workers. At the moment, according to CAP figures, more than 10 million Americans aged 25 and under are unemployed.
Ayres cites some sobering figures; for example, she notes that the unemployment rate among Americans ages 16 to 24—16.2 percent—is more than double the unemployment rate for people of all ages. What does this mean for the economic future of these unemployed young people, and for the country at large? Nothing good, says Ayres.
Some of the negative impacts of high youth unemployment are already clear: Young people are increasingly failing to make payments on their student loans, delaying saving for retirement, and moving back home with their parents.
According to our analysis, a young person who experiences a six-month period of unemployment can expect to miss out on at least $45,000 in wages—about $23,000 for the period of unemployment and an additional $22,000 in lagging wages over the next decade due to their time spent unemployed.
This affects not just the unemployed worker, but the local and national economy, through a range of factors; to begin with, there’s no social security contribution without a paycheck, which will affect these workers—and the country—when they reach retirement age. So even short-term unemployment has long-term consequences. And there are further repercussions:
Businesses will consequently suffer from reduced consumer demand, and taxpayers will feel the impact in the form of lost revenues, greater demand for more government-provided services such as health care, increased crime, and more welfare payments.
Ayres’ brief provides insightful detail regarding the demographics of this unemployed and under-employed generation, breaking the numbers down by age and experience. She includes a focus on the “disconnected” segment of this generation:
This includes both those young adults who are unemployed and searching for a job, as well as those who have dropped out of the labor force, many of whom have given up their employment search even though they want a job. …these are 4 million young adults who are not… gaining education in school, nor are they learning skills or getting experience through work. Failure to build these skills as a young adult is likely to seriously hinder their ability to join America’s middle class in the future and contribute to the economy as productive workers and taxpayers.
Unsurprisingly, education is a factor here. Only one in three of these 4 million “disconnected” unemployed young people has a high school diploma; even fewer have any college credits or a degree.
As we noted in a recent post, tuition represents another challenge. Whether accumulating the resources to pay up front, or taking on the responsibility of paying for it for years afterward, it’s a daunting component of the equation for those considering higher education.
It is true that young people with a bachelor’s degree are more likely to find a job than their less-educated peers, but recent graduates today suffer from high unemployment rates, declining wages, lower-quality jobs, and few opportunities for advancement. At the same time, student debt in America has ballooned to more than $1 trillion, and one in four student-loan borrowers is delinquent on their loans.
> All of these points seem relevant to grad school, as well; while tuition rates can be intimidating, the prospect of plunging into the shallow end of the job market after four years of college is probably less appealing for many than taking the “more school, please,” option.
> But for how many? In a New York Times article from just under a year ago, author Catherine Rampell notes:
> New enrollment in graduate schools fell last year for the second consecutive year, according to a report from the Council of Graduate Schools… The number of students enrolled in master’s and doctoral programs (excluding law and certain other first professional degrees like M.D.’s) declined by 1.7 percent from the fall of 2010 to fall 2011.
> On the other hand, an article published less than two months later states that “[g]rad school enrollment is expected to increase 30% in the next four years, according to estimates from a private equity firm.” (Here at Aspire, we come down on the “back to school” end of the debate, as you may recall.)
What about you? Are you 25 or under—and are you working? How do you see your professional future shaping up? What about the 25-and-over crowd—are you dreading the hit that this generation is likely to take on the economy?