The youth unemployment crisis may not be a crisis
There’s no doubting that worldwide, kids are out of work. In the United States alone, the unemployment rate for 15 to 24-year-olds is about 16 percent, nearly twice the national average. In parts of Europe, the figures are much worse, with a whopping 56 percent youth unemployment rate in Spain alone — representing about 900,000 people.
But do these high numbers represent a global labor market crisis that imperils future growth, as the headlines warn? Maybe not. Maybe instead, they’re evidence of a generation of college graduates determined not to settle, which bodes well for our future.
To understand why, it’s worth a quick detour through history. Until the early 20th century, there was no clear concept of “unemployment.” Classical economics emerged in the late 19th century at a time when there was an ample supply of labor to feed the relentless maw of industrial production in both Europe and America. Because there was no social safety net, people worked in order to generate essentials such as food, clothing and shelter. You had to work to survive, and there was always work to be done and need for bodies to do it. Many believed that “unemployment” was only an option for vagrants, who were in turn viewed as immoral.
The Great Depression threw those views into question. Millions found themselves unable to find jobs, even when they wanted to. The Bureau of Labor Statistics began to create an unemployment rate in the 1930s, and with it a definition of what qualified as “the workforce” and of what it meant to be unemployed. A key aspect of the definition was not that you were “out of work” but rather that you were actively looking for a job, yet unable to find one. It pointed to a flaw — either temporary and cyclical, or longer-lasting and structural — with the labor market and, by extension, with the economy as a whole.
Today, the high levels of youth unemployment are viewed primarily as a breakdown in the labor market and a sign of a failing system. That’s why so many call it a “crisis.” But if you start to look at the patterns of youth unemployment, a different set of conclusions is possible.
It’s best to start with the unemployment rate among recent college graduates, which attracts the lion’s share of attention. According to a recent Georgetown University study, about 8 percent of recent college graduates are unemployed, and the number is about 10 percent for students majoring in the arts, law, public policy, and most social sciences. The BLS actually says the situation is worse, with the unemployment rate for those under the age of 29 with only a bachelor’s degree above 15 percent for men and around 11 percent for women.
And the true unemployment numbers might actually be higher. For instance, in assessing unemployment among younger people the Bureau of Labor Statistics faces greater challenges in obtaining responses from cell phone users who don’t have land lines. Moreover, many of these recent grads are working in a succession of short-term jobs, which is difficult to classify in employment surveys.
Take a 25-year-old woman I met recently, who left her job to develop an app, work on a live-stream talk show, and write a book. If by some chance the Bureau of Labor Statistics contacted her, she would say that she doesn’t have a job, and hasn’t been looking. She would simply evaporate from the labor force and not be considered unemployed. But are her decisions a symbol of systemic crisis and failure? No.
Most economists believe that not having a job in your twenties has systemic repercussions for years to come. A study from the Center for American Progress claimed that, “the nearly 1 million young Americans who experienced long-term unemployment during the worst of the recession will lose more than $20 billion in earnings over the next 10 years. This equates to about $22,000 per person.”
Yet we should be wary of these statistics. The BLS has only been collecting data on age, unemployment and subsequent incomes for a few decades. That is not enough time to make conclusions. Even if accurate, the $22,000 figure doesn’t factor in how much was recouped in unemployment and other benefits, which likely would lower that figure considerably.
The larger point is that many college-educated young people are choosing not to take low-paying service-level jobs if they don’t absolutely have to. Because they can live with their parents (and as many as 45 percent of recent grads do) and because they rarely have much in the way of fixed costs such as homes and children, they can hold out for a job that matches their ambitions. They can also retool their skills as they discover that their college degree in marketing and communications may not leave them in the best position to get the type of job that they want.
This type of unemployment is one of choice — rational, legitimate choice — not of systemic failure. It is a challenge to find a meaningful job, but that hasn’t stopped people from trying. A youth cohort determined to create meaningful work should not be seen as lazy, lost or in dire straits. Instead it could be exactly the type who might actually lead the transition of our economy away from the making-stuff economy of the 20th century to an ideas economy of the 21st.
The employment picture for young people without a college degree is different. They’re being left further behind. According to the BLS, more than 30 percent of recent high school graduates who aren’t in college are unemployed, and the number is worse for those who dropped out of high school. African-Americans without a college degree, especially under the age of 20, have an unemployment rate that approaches 40 percent. African-Americans also have higher incarceration rates, especially males, and most states and companies enact punitive regulations that make employment for those with a prison record extremely challenging.
The Hispanic population faces similar, albeit slightly less acute, stats. But these are not indications of a breakdown of labor markets. They’re proof that social policies and a shift in labor markets towards rewarding different and newer skills sets are hitting these populations, especially young men without college degrees, extremely hard.
In the United States, youth unemployment is not quite what it seems. It is not a simple sign of how bad the economy is. Youth unemployment is actually a sign of ambition and expectation. Young people aren’t part of a generation of despair, but rather a generation determined not to settle. That may not always be realistic, but it is a vital fuel to propel our society forward.
PHOTO: A woman opens a glass door with a “Now Hiring” sign on it as she enters a Staples store in New York March 3, 2011. REUTERS/Lucas Jackson