Quick Hit Ellyn Fortino Monday June 10th, 2013, 6:06pm

Report: Future U.S. Economic Growth In Jeopardy Due To Youth Unemployment Crisis

More than 10 million Americans under the age of 25 are out of work or underemployed.

And a new recently-released report from the Center for American Progress warns that the youth unemployment crisis will deliver a significant and long-lasting blow to the country's future economic growth if lawmakers do not adequately address it soon.

"The labor market has failed these kids," said Jack Wuest, executive director of the Chicago-based Alternative Schools Network. "And the private sector doesn't want to deal with them."

The unemployment rate among Americans ages 16 to 24 is 16.2 percent, according to the report. In comparison, the country's overall unemployment rate as reported by the Labor Department last Friday is 7.6 percent, which factors in the people who are out of work but are actively looking for a job.

Americans ages 16 to 24 are unemployed at about twice the rate of older workers, the report noted.

This means more young people are falling behind on student loan payments, moving back in with their parents and putting off retirement savings, according to the report, “America’s 10 Million Unemployed Youth Spell Danger for Future Economic Growth.

Like the report pointed out, Wuest said more jobs need to be created for these out of work or underemployed young adults.

Young people today are earning less, which puts them on track for a "darker future" compared to their parents and previous generations, Wuest added.

Also among the report's key findings, a young person who is unemployed for a six-month period stands to lose about $45,000 in wages. That breaks down to be about $23,000 for their time without a job and an additional $22,000 in sluggish wages over the next decade as a result of their time spent unemployed, the report noted.

The Center for American Progress projects that some $20 billion in lost wages is just one of the looming long-term economic costs due to high unemployment among young adults.

The report's author Sarah Ayres noted that if the crisis is not addressed, "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."

And young adults are not only losing out on the ability to earn some money, they are also missing out on working with different types of people and gaining other social skills that are "absolutely necessary," Wuest explained.

Additionally, young people who are lucky enough to land a job also have to prove themselves, and "that's really a key thing of building self confidence to find other work," Wuest said.

"If you don't have that, you missed out on that whole learning experience," he added.

The U.S. unemployment rate for teens ages 16 to 19 is 22.5 percent, according to the report.

In Illinois, however, the unemployment rate for the 16 to 19 age group as of April was 28.5 percent, according to data on MinimumWage.com, a project of the Employment Policies Institute.

In 2012, the average unemployment rate in Illinois for young adults ages 16 to 24 was 18.5 percent, according to the most recent annual data from the Labor Department.

But overall, 2.5 million Americans in the 16 to 19 age range are either unemployed or underemployed. And almost 300,000 of those teens are employed but want a full-time job, according to the report.

An additional 728,000 teens in this age bracket are unemployed, but are enrolled in school and actively looking for employment. Another 1.4 million teens, known as “disconnected” youth, are not enrolled in school or working.

"These teens are not accumulating human capital in the form of either education or work experience, the loss of which will hinder their employment opportunities, social mobility and income in the future," the report reads. 

Unemployment also disproportionately affects young blacks and Latinos. Black teens ages 16 to 19, for example, have an unemployment rate of 36 percent, while Latino teens are unemployed at a 28 percent rate. In comparison, white teens have a 21 percent unemployment rate, the report noted.

More specifically in Chicago, Wuest said about 90 percent of the city's black teens ages 16 to 19 were jobless in 2012. He described Chicago's neighborhoods on the West and South sides as job deserts.

Also, Chicago has about 50,000 to 60,000 high school kids who are dropouts, Wuest added, "and the number of those youth who do not have jobs is very high." 

Amy Dworsky, senior researcher at the University of Chicago's Chapin Hall, said it is also important to note the employment challenges facing young people who are currently in or coming out of foster care.

"Their situation is probably two to three times worse than youth in general," she said.

Young people in foster care are less likely to have a high school diploma or GED. They are also less likely to go on to and complete college compared to other people their age, Dworsky said.

Youths in foster care also have higher rates of mental health problems, which may prevent them from succeeding in the workplace, compared to the general population of young people. They are also more likely to have a criminal record, among other factors that can cut them off from getting a job, Dworsky explained.

"They're really facing a lot of barriers that are not necessarily unique to them, but they're just at higher rates among their population," she said.

Meanwhile, 8.4 million Americans ages 20 to 24 cannot find a full-time job. And overall, these young adults have a 12.5 percent unemployment rate, according to the report.

About 4.1 million young adults in the 20 to 24 age group are neither enrolled in school nor working. And an additional 3.6 million are part-time workers but would like a full-time job, the report found.

Of these more than 4 million young adults, about 1 million have not graduated from high school, while 1.9 million have a high school diploma.

An additional 790,000 dropped out of college without obtaining a degree. And as the report's author pointed out, these student borrowers are four times more likely to default on school loan payments compared to college graduates.

Although black youths make up just 16 percent of the 20 to 24 age group, they comprise 23 percent of the young adults who are not in school or working.  Latino youths make up 21 percent of Americans in this age range, and they also represent 23 percent of the disconnected young adults.

And finally, younger college graduates have a much higher unemployment rate compared to older college graduates, the report found. The unemployment rates for college graduates under the age of 30 is 7.4 percent, while college graduates in their 30s and 40s have a 3.4 percent unemployment rate.

As it currently stands, the average student loan debt for college students is more than $25,000, the report pointed out.

The high unemployment rate coupled with rising student loan debt not only puts a drag on young people's financials, but the government is also on the hook for recovering defaulted loans, the report noted.

Wuest highlighted the need for President Barack Obama's proposed $12.5 billion Pathways Back to Work Act, which is included in his fiscal year 2014 budget plan. Pathways Back To Work looks to create job opportunities for the long-term unemployed. Funds would also be set aside for summer and year-round employment opportunities for low-income young adults. The proposal also includes a competitive grant program for work-based training and education programs for both adults and youth.

But as the school year comes to a close, there are a few job programs at the Chicago and state level looking to get young people into work for the summer.

The end of May was the deadline for young Chicagoans to apply for the 2013 One Summer Chicago program, which sets aside 18,000 summer jobs.

On the state level, eligible youths ages 14 to 24 can still apply for Illinois' 2013 Summer Youth Employment Program. The program, which is set to start the second week of July, provides young people with life skills and supervised work experience where participants can earn $9 an hour.

Community-based organizations looking to get a portion of the funds to take part in the program have until this Thursday, June 13, to apply.   


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