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What Unemployment Rates Don’t Tell Us About Millennials’ Jobs Woes

Unemployment and underemployment persist even in the best of times, as workers “churn” through the labor market seeking better opportunities and higher wages. But this is not the best of times, and the unemployment and underemployment faced by young people today is not pushing us toward better opportunities. Rather, it holds us back from achieving our productive potential and puts other concerns – like starting a family or buying a home – on the backburner.

After years of discouraging labor market reports, the figures from December and January rallied national optimism and offered a moment of relief for workers wringing their hands over their own economic prospects and those of the nation. But while the numbers are good – and they are actually good – the unemployment rate is just a part of the story of labor market experiences. And for many young adults, it is merely an anecdote that doesn’t begin to describe the real effects of the recession on their working lives.

Employment took a nosedive at the end of 2007, and after four years only now seems to promise an upward trend. At the same time, underemployment rates doubled but received little attention from media or policymakers seeking a way to quell the exodus of jobs and workers from the labor market. Underemployment includes those who are unemployed, as well as workers who are part time because they cannot find full time work. Added to that number are the “marginally attached” – those who want a job and are available to work, but haven’t looked in the past four weeks (eliminating them from the count of unemployed persons). This measure, officially called the U-6 Special Unemployment Rate, captures weaknesses in the labor market that are left out of the official unemployment rate. And it is not offering much reason for comfort.

In 2011, the annual underemployment rate was 15.9 percent. That is about one-in-six people who are either unemployed, inadequately employed, or who got discouraged and dropped out of the labor market altogether. Unsurprisingly, young people are disproportionately underemployed, with rates approaching one-in-three. The breakdown by age group shows that younger workers have it worst – the underemployment rate for 18 to 24-year-olds was 28.6 percent last year, that for 25 to 34-year-olds was 16.6 percent, and for workers over 35 the rate was 12.8 percent.

2011 Underdemployment Rates, By Age, Race and Ethnicity

 

All

White Only,
Non-Hispanic

Black Only,
Non-Hispanic

Asian Only,
Non-Hispanic

Hispanic,
Any Race

18-24

28.6

24.5

42.6

22.4

32.6

25-34

16.6

13.0

27.7

12.0

20.7

35 and Older

12.8

10.8

18.6

11.8

19.0

Total Population

15.9

13.1

24.8

13.0

22.1

(Underemployment rates calculated by the author from Bureau of Labor Statistics Current Population Survey Public Use Microdata)

 Young people, who are just beginning their careers and often seeking a job path that offers room for growth, face a discouraging road ahead, where instability and low incomes are mile markers toward a reliable career that may still be years away. Labor market slumps are particularly harsh on young African Americans and Latinos, who have higher unemployment and underemployment in general, and so are not well positioned to bargain for good jobs when a recession hits. The youngest African Americans have the highest rate of underemployment in the nation – with 42.6 percent barely clinging to their place the labor force. Eighteen to 24-year-old Latino workers are underemployed at a rate of nearly one-in-three, and white and Asian workers have rates just under one-in-four.

Stability and benefits are the nearly-unattainable brass rings of modern employment. But with current policies focused on creating any jobs at all, we’re failing to provide the kind of programs that help workers establish a better position in the labor market or to cultivate the skills on which they may build a career. It is a market with little opportunity and even less choice, making it difficult for young people to find the job where they’ll be most productive. Choice is a matter of great importance, both for the economy to find the best matching of skills with demands and for worker satisfaction and long-run productivity. People stuck in jobs they don’t like or can’t count on use their productive energy in the search for better working conditions, rather than for the project at hand. High turnover rates, less involvement in tasks, stress, depression, and strains on families are as attributable to underemployment as they are unemployment and threaten a substantial portion of young Americans. 

They are problems we will have to take seriously as unemployment inches-downward and we’re left with a generation of young adults whose working lives were thwarted before they began.

Catherine Reutschlin is a research analyst in the Economic Opportunity program at Demos.

Photo Credit: Ed Yourdon

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