According to several estimates, the percentage of unemployed Americans between ages 25 and 34 outranks that of the U.K., France, and Germany.
According to Eurostat, at the end of 2012, Greece had a national unemployment rate of 24.3 percent. Racked by a crumbling economy, insurmountable debt and no real prospect for relief without a massive restructuring of its fiscal identity, the Greek people have become the worst-case scenario for austerity.
As with most of the rest of southern Europe — Croatia with 15.9 percent unemployment, Slovakia with 14 percent, Portugal 15.0 percent and Spain 25.0 percent — Greece has come to represent a divide between north and south, between rich and poor. In the United States, a new divide — between young and old employees as well as jobs availability — threatens to bring home the realities of American austerity.
In Spain, for example, there was 55.3 percent unemployment in 2012 among workers aged 15 to 24, according to Eurostat. In Portugal, the rate was 38.4 percent; in Greece, 57.9 percent. Of the world’s 202 million unemployed people as of 2013, according to the World Economic Forum, 40 percent of them are young people. The global adult unemployment rate is currently 4.5 percent, while the global youth unemployment rate is estimated at 12.6 percent.
The wealthiest nations are not immune from this trend. According to the Organization for Economic Co-operation and Development (OECD), in 2012, 26.2 percent of the U.S.’ 25- to 34-year-old population were unemployed. This is compared with 21.6 percent in the United Kingdom, 22 percent in France, 21 percent in Japan, 20.4 in Germany and 20.2 percent in Canada.
The unemployment rate for 25- to 34-year-olds in the United States is reported as 25.1 percent, according to the United States Bureau of Labor Statistics (BLS). [Ed. note: Methodologies vary in how unemployment statistics are calculated, hence the discrepancy between BLS and OECD estimates.]
The question of why the U.S. has the largest rate of young adults unemployed among the world’s economic superpowers is a puzzle. Among active job-seekers, in April unemployment among 18- to 29-year-olds held at 11.1 percent — nearly four points above the national average. Forty-five percent of America’s unemployed are between the ages of 18 and 35, and — as reported by the Atlantic — 53.6 percent of all recent bachelor’s degree recipients under the age of 25 are jobless or underemployed.
The young and unemployed
The situation is worse for those who enter the workforce without a college degree. According to the Economic Policy Institute (EPI), in 2011 the average hourly wage for entry-level workers with only a high school diploma was $11.68 for men and $9.92 for women, compared with $21.68 for men with a college degree and $18.80 for college-educated women.
“It is a rough time to be a young person in America,” Evan Feinberg, president of Generation Opportunity, a youth-based grassroots group, said in a statement. “[There] is no sign of an economic recovery for my generation. Half of all graduating seniors aren’t going to find meaningful work in the coming months. And it isn’t like politicians care … Reckless policies coming from Washington continue to prevent the next generation from prospering.”
The problem lies in the fact that there are not enough meaningful jobs for new workers. Many employers have cut back on hiring, and many new workers are stuck taking temporary jobs or jobs outside their degree path. In light of heightened unemployment, many young workers suddenly must compete with older applicants with more work experience. According to an Accenture survey, more than 40 percent of all college-educated young workers work in a job that does not require the degree that they have earned.
This is a point echoed by Kathleen Wailes, senior vice president for Levick, a national communications firm. Wailes told Mint Press News that the lack of “hard skills” inhibits many new workers from effectively competing. A lack of science, technology, engineering and mathematics (STEM) skills makes many new members of the workforce less desirable in the global marketplace, while the expansion of automation has decreased the number of unskilled jobs available.
The cost of youth unemployment
It is currently estimated that 4.1 million jobs must be added to the economy to restore youth employment to levels that existed prior to the recession. The BLS has reported that 165,000 jobs were added in April — 25,000 more than expected. Leisure, hospitality and food services saw a 38,000 jobs increase and retail saw a 29,000 jobs increase in April.
As discouraging as these numbers may seem, they are worse among minority communities. Among the active labor force, according to the BLS, White 25- to 34-year-olds had an unemployment rate of 7.3 percent. The Black unemployment rate for the same age bracket was double this, at 14.7 percent. Half of all African-American ages 16 to 19 are unable to secure a job.
It is estimated that the current group of long-term unemployed young adults will lose a total of $21.4 billion in earnings over the next 10 years, or about $22,000 per person. As of 2010, the number of 20- to 24-year-olds that have been unemployed for six months or more reached 967,000.
Richard Ebeling is a professor of economics at Northwood University. In conversation with Mint Press News, Ebeling argued that the high youth unemployment rate is due in part to high uncertainty within the business community. Many employers have rolled back or frozen hiring out of concern of the possibility of a minimum wage hike and new insurance requirements under the Affordable Care Act (ACA).
Many employers also have rolled back the weekly hours for hourly employees to under 30.5 — the minimum for mandatory employee health care coverage under the ACA. Meanwhile, Ebeling said that the economy — in real dollars — has been sluggish and has not recovered as robustly as anticipated.
Most pressing, however, is the skills gap facing many new non-college-educated workers. According to Ebeling, many minority students are graduating high school without the skills or the basic competencies needed to be competitive.
Ultimately, improving the employment prospects for young workers may require a serious investment in education and a national commitment to securing the long-term competitiveness of the nation through government action toward protecting and creating new jobs, and the private sectors’ creation of well-paying, productive jobs.