NCPA - National Center for Policy Analysis

Younger Workers Hit the Hardest by Recovery

April 19, 2013

While some indicators suggest that the job market is slowly recovering, recent graduates and younger workers continue to be hit particularly hard in the labor market. The employment report for March indicates that the labor force participation rate dropped. Contrary to claims that the drop is due to demographics and an aging workforce, the reduction in labor force participation is due to young people dropping out of the labor market, says Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute.

  • In March, 500,000 Americans left the labor force and the labor force participation rate for people age 20 to 24 declined by six-tenths of a percent, compared to two-tenths of a percent for the labor force as a whole.
  • The statistics are troubling for a society that must incur the costs of unemployed youth. As income support payments rise, crime becomes a more attractive solution and recently earned college graduates lose the skills they learned.
  • Since 2000, the labor force participation rates of workers age 55 and older have been rising, presumably because it is more difficult to retire and life expectancy has risen.

For workers under age 55, the labor force participation rate has been decreasing, with the biggest decline occurring in the 16 to 24 year old population.

  • During the past decade, workers 55 year olds and older have gained 9.3 million jobs, while workers age 25 to 54 lost 3 million jobs and workers age 20 to 24 lost 25,000 jobs.
  • Unemployment rates are the lowest for the 55 year old and older age group who have seen the smallest increase in unemployment -- only 1.9 percent over the past 10 years, compared to a 3.3 percent increase for the 20 to 24 age group.
  • For newly graduated men and women with bachelor's degrees, unemployment was 8 percent in 2012, more than 3 percent higher than the rate in 2006.

When older workers work later into their lives, the natural attrition rate for good jobs slows, meaning that younger workers will not fill lower-level positions as workers are promoted to fill retired workers vacancies.

  • Graduating in a recession is thought to lead to earning losses that can last for 10 years after graduation, which is particularly troubling for the new graduate who has an average debt load of $26,000 in student loan debt.
  • Along with lower attrition are high corporate tax rates, burdensome regulations and the ObamaCare mandate that place downward pressure on the hiring of youth.

Source: Diana Furchtgott-Roth, "The Jobs Crisis for Younger Workers," MarketWatch, April 12, 2013.


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