Unemployment Amongst Young Adults Dragging Down Economy

John Challenger of Challenger, Gray & Christmas

The latest employment report revealed a job market that is most definitely improving.  That is, unless you are under the age of 20 or you have been out of work for more than six months.

Youth and long-term unemployment are not only inflating the unemployment rate, but they are a drag on the economic recovery.  According to an unpublished table of non-seasonally adjusted data from the Bureau of Labor Statistics, 4,488,000 Americans in April have been out of work for at least 27 weeks.  Of those, more than 3,000,000 (3,085,000) have been jobless for a year or longer.  “This prolonged unemployment takes a significant toll on the economy, not only in lost spending, but in lost tax revenue.  If politicians are truly concerned about reigniting the economy and fixing the deficit, getting these people back on payrolls should be the top priority,” said John A. Challenger, chief executive officer of global outplacement consultancy Challenger, Gray & Christmas, Inc. 

Meanwhile, 16- to 19-year-olds represent less than 4 percent of the civilian labor force, but they account for nearly 12 percent of the unemployed.  “Teenagers typically earn less, but they are more likely to spend a greater portion of their earnings on food, clothes, entertainment, etc.  Ironically, these are the same areas that usually provide teenagers with the most job opportunities.  Unfortunately, due to slow job growth in higher-skilled, higher-paying occupations, the jobs that would normally be filled by teens are being filled by recent college graduates, stay-at-home mothers returning to the workforce, and seniors,” said Challenger.