Economy
4:11 am
Wed July 2, 2014

A 'Lost Generation Of Workers': The Cost Of Youth Unemployment

Originally published on Mon July 21, 2014 9:52 am

It makes some sense that young people might work less than their older counterparts. They are figuring out their lives, going in and out of school and making more short-term plans.

But a whopping 5.8 million young people are neither in school nor working. It is "a completely different situation than we've seen in the past," says Elisabeth Jacobs, the senior director for policy and academic programs at the Washington Center for Equitable Growth.

"It's a big deal. ... That's a whole cohort of Americans who are at the very beginning of their careers and are pretty dispirited," she says.

Youth unemployment remains remarkably high across the country. In some places, the unemployment rate among 16- to 24-year-olds is more than twice the national unemployment rate, which is currently 6.3 percent.

It's a development that experts warn could have ripple effects for decades to come — not only for young people's lifelong earning potential but also for their contributions to the tax base and the strength of the U.S. economy overall.

And many of them have more than just themselves to support.

"This isn't the story of people who can't get a job at the mall. It's about people who are trying to support their families," Jacobs told Morning Edition's Steve Inskeep. "We're talking about a lot of American parents who are struggling."

One of them is 22-year-old Patty Sanchez of Reno, Nev., who recently had to take several days off from her job at a call center while her young daughter had foot surgery. But there was a mix-up; Sanchez was ruled a "no-show" and fired.

Since then, the high school graduate has sent out dozens of resumes, posted on career websites and gone from store to store asking about work. Meanwhile, she has four children under the age of 5 and was recently evicted from her apartment.

"I feel like it's a hole that I can't seem to get myself out of, even though I'm trying," she says. "And I'm trying to stay positive about it,"

Mark Pingle, an economist at the University of Nevada in Reno, says that a high school education isn't enough these days — even for a place like Reno, which has traditionally had ample work opportunities in the service sector. During the peak of the recession, the unemployment rate for young adults in Nevada shot above 20 percent.

"You need, more so, an education in Nevada than in the past. You need to get skills," he says.

But, as Alexandria Roberts is learning, even a college diploma is no guarantee. Roberts, 23, recently graduated from the University of Nevada with a degree in political science and a goal of working in political campaigns. After months of struggling to find a job in her field, she has expanded her search.

"A human resources position, any kind of office management, things like that," she says. "I applied for these jobs, and it's just ... the opportunity is not there," she says. "I have a bachelor's degree, which doesn't get you anywhere. But it's a Catch-22: It doesn't get you anywhere, but everybody thinks that you're overqualified for things."

When Alex Contreras finished high school, he knew he'd need some kind of specialty. He moved away from home and enrolled in Job Corps, a one- to two-year federal program for economically disadvantaged youth. There, he received training as a security guard, which he hoped would help him find stable employment while working toward his long-term goal of becoming a police officer.

But, so far, lacking on-the-job experience, the 20-year-old has only been able to find part-time work. He suspects that older people, with more experience, are getting the kind of entry-level positions he is aiming for.

"You maybe have all those certifications, but what about the other person? He maybe has the same certifications, but he has probably done it more than I have," Contreras says.

But, according to Jacobs, even taking that part-time job might be better than holding out for full-time.

"If you've had a long unemployment spell, even if it's in the beginning of your career, employers don't like that. So, to start your career with that black mark on your record, it follows you for a very long time, for a variety of reasons," she says.

Throughout the labor market, she says, experts are seeing what she calls a "cruel game of musical chairs," in which people with more education or experience aren't able to get jobs that they want and are instead going after positions that might require fewer skills or less experience.

"When the music stops, you have all of the college grads have taken the Starbucks jobs, and so if you're a less educated person who, in the past, a job like that might have been kind of your go-to first job — the chairs just aren't available to them," Jacobs says.

And the difference has long-term impact, affecting earnings for about 20 years, according to Jacobs.

"You kind of hop on a career ladder with that first job, so that impacts your wage trajectory, because, you know, you start off on a lower rung," she says.

"We risk really having this lost generation of workers," Jacobs says. "And what that means in terms of the economy's ability to innovate and compete, when you've kind of wasted the talents of some substantial portion of a generation, is really, it's alarming."

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

RENEE MONTAGNE, HOST:

It's MORNING EDITION from NPR News. I'm Renee Montagne.

DAVID GREENE, HOST:

And I'm David Greene. Here's a troubling reality in parts of the U.S. The unemployment rate for young people is twice the average. It's a problem we're focusing on all this summer. In a moment, Steve Inskeep digs into the challenges for people ages 16 to 24 - first, to Nevada and Will Stone from Reno Public Radio.

WILL STONE, BYLINE: Earlier this year, 22-year-old Patty Sanchez took several days off from her work at a call center while her young daughter had foot surgery. But there was a mix-up, and she was ruled as a no-show. So she lost her job.

PATTY SANCHEZ: I've been work - looking for a job since then. And it's just - it's hard. It's hard.

STONE: Sanchez sits nervously in the corner of an unemployment office in Reno. She's held down a job since her early teens, even when she was in foster care herself.

SANCHEZ: Yeah, I've done from call centers to casinos to customer service - everything.

STONE: The high school graduate has sent out dozens of resumes, posted on career websites and gone from store to store, asking about work. Meanwhile, she has four children under the age of five and was recently evicted from her apartment.

SANCHEZ: How would I explain it? - I feel like it's a hole that I can't seem to get myself out of even though I'm trying. And I try to stay positive about it.

MARK PINGLE: Historically, Nevada's been a place where, without an education, you could make good money parking cars at a casino, for example.

STONE: But that's no longer the case, says Mark Pingle, an economist at the University of Nevada, Reno. The downturn hit this state hard, and Pingle says it's been a double whammy for young adults. In Nevada, the unemployment rate for that group shot up to over 20 percent during the peak of the recession. It's since come down to around 17 percent and remains high across the country. Pingle says young adults can't just rely on a high school degree anymore.

PINGLE: So you need more so an education in Nevada than in the past. You need to get skills.

STONE: That's what 23-year-old Alexandria Roberts had in mind when she majored in political science at the University of Nevada, here. The recent grad strolls through the campus sporting a cowboy hat and points to a small balcony, one of her old haunts.

ALEXANDRIA ROBERTS: It's definitely the place that I used to go to just, like, sit and think, and it was quiet. Nobody would bother me.

STONE: Those days are over now. At first, Roberts thought she'd work on a political campaign. That never panned out, and for months, she's been sending her resume to all sorts of places.

ROBERTS: Human resources position - any kind of office management - things like that. And so we apply for these jobs - I applied for these jobs, and it's just the opportunity is not there.

STONE: Roberts had a post-graduation plan - work for a couple of years, pay off some loans, go to law school and then join the military. But she says that may not be realistic anymore.

ROBERTS: I have a bachelor's degree, which doesn't get you anywhere, but it's catch 22. It doesn't get you anywhere, but everybody thinks that you're overqualified for things.

STONE: For now, she's picking up an odd shift as a waitress. Unless she finds something permanent soon, Roberts will go right into the military and then eventually pursue law school.

ROBERTS: Which takes me out into my life a lot farther than I was anticipating it would.

STONE: Another route for young people in search of work is vocational training. When Alex Contreras finished high school, he realized he needs some kind of specialty. So he moved away from home and enrolled in Job Corps, a one to two-year federal program for young people who are economically disadvantaged. He was trained as a security guard there, but when he graduated, the job market was still thin.

ALEX CONTRERAS: I had to find work, like, right away but I couldn't. No one - didn't call me or anything like, oh, you want a job? Yeah, they never called.

STONE: The 20-year-old recently did find some part-time work, and that's helped. But he's moving to Las Vegas in the fall to be with his family and will start his search over again there. He's noticed older people are often going after the same entry-level positions as he is.

CONTRERAS: You maybe have all those certifications, but what about the other person? He maybe has the same certifications, but he has probably done it more than I have.

STONE: Contreras is motivated to work and upbeat about his prospects. He hopes to be a police officer one day, but for now, he and his peers are faced with a tough economy made more difficult by their age. For NPR News, I'm Will Stone in Reno.

STEVE INSKEEP, HOST:

Let's talk about this more now with Elisabeth Jacobs. She's with the Center for Equitable Growth, which studies income inequality here in Washington. Welcome to the program.

ELISABETH JACOBS: Thank you so much for having me.

INSKEEP: You know, it makes perfect sense, actually, that more young people would be unemployed. You're figuring out your life going, in and out of school - but there's a suggestion in that report that things are worse now. Are things worse now than in the past?

JACOBS: I think they are, yes. I mean, the youth unemployment rates - so unemployment for people ages 16 to 25 - is twice the national unemployment rate. So that means about 13 percent of young people are looking for a job and can't find one. There are even more young people who have thrown up their hands and given up looking for a job. And so they're neither in school nor looking for work. And that's a different situation than we've seen in the past.

INSKEEP: Giving up at age 19 or 23.

JACOBS: (Laughing) I'd like to think that some of those people are taking a break as opposed to having completely given up, But it's pretty dispiriting. I mean, that's 5 million young people who are neither connected to school nor work. And that's a big deal. I mean, that's a whole cohort of Americans who are at the very beginning of their careers and are pretty dispirited.

INSKEEP: Well, let me ask about what works here because we just heard this report in which we heard from a young person who did the right thing - went and got an education - another young person who did the right thing, theoretically - went and got some job training - didn't work for either of them.

JACOBS: Yes. And this is the kind of thornier problem. You know, there's some research suggesting that, since about 2000, there's been kind of a cruel game of musical chairs going on in terms of what happens with work. And so there was an increase up until about 2000, in terms of the number of jobs, that demanded really creative cognitively advanced skills - so the reasons, in theory, that you go to college - to really be able to take on kind of more demanding jobs. And we saw that plateau - or at least there's research suggesting that that plateaued in 2000. And since then, there've been fewer jobs like that, and so you have college-educated folk taking the less demanding jobs - quote, unquote "less demanding" - for example, like a Starbucks barista kind of job that, actually, to me, seems very demanding 'cause keeping track of all those coffee orders seems like...

INSKEEP: Sure. Sure.

JACOBS: ...A lot of work. But you don't imagine getting a college degree to go to work at Starbucks. Increasingly, that's what's happening, in terms of, at least, a first job because those kind of complicated jobs are less available. But as a result, you know, when the music stops, you have all the college's grads have taken all the Starbucks jobs. And so if you're a less educated person who in the past, a job like that might have been kind of your go-to first job. The chairs just aren't available for them.

INSKEEP: What happens if your first first job out of school is at Starbucks instead of some professional job like you thought it would be or if your first job is nothing?

JACOBS: Well, I mean, we see long-term wage affects. So your first job matters a whole lot in terms of what happens to your career trajectory. It's not just the lost earnings and, you know, not bring home a paycheck for that six weeks to a year to two years that you're unemployed as a young person. Even once you do find a job, we see, you know, for 20 years, wage effects where it's really hard to catch up and see your.

INSKEEP: Why would that be?

JACOBS: I think, in part, it's because, you know, you kind of hop on a career ladder with that first job. So that impacts your way trajectory because you, you know, start kind of off on a lower rung.

INSKEEP: Your next step up is also...

JACOBS: Your next step up.

INSKEEP: ...Going to be lower than it would have been.

JACOBS: Exactly. So I think that's one of the reasons. And the other reason is that if you've had a long unemployment spell, even if it's the beginning of your career, employers don't like that. So to start your career with that kind of black mark on your record - it follows you for a really long time for a variety of reasons.

INSKEEP: Let's flip this around here because we've been talking about how this affects individuals. When you have millions of individuals affected in this way, how does it affect the economy?

JACOBS: We risk really having this lost generation of workers. I mean, if you've got this whole cohort - and I mentioned earlier that we have 5 million young people who are attached to neither work nor school -and what that means in terms of the economy's ability to innovate and compete when you've kind of wasted the talents of - of some substantial portion of a generation is really - it's alarming.

INSKEEP: Five million people is like the population of a medium-sized state.

JACOBS: And I think - I mean, it's - it's one of the things I really liked about the Nevada pieces is that it was a young mother. I think, sometimes, when people hear about youth unemployment, they think about teenagers who aren't able to get the life-guarding job at the pool, and, you know, these youth unemployment figures capture people ages 16 to 25. And so we're talking about a lot of American parents who are struggling. This isn't the story of people who can't get a job at the mall. It's about people who are trying to support their families.

INSKEEP: Elisabeth Jacobs with the Center for Equitable Growth. Thanks for coming by.

JACOBS: Thanks so much for having me.

GREENE: It's MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.