Young Adults Missing out on Job Market's Slow Gains
June 13, 2013
U.S. employers added 175,000 jobs in May, a better net gain than expected. And while the jobless rate ticked up to 7.6 percent from 7.5 percent, that was because more people joined the labor force. However, for many young people who tossed their graduation caps into the air this spring, the modestly positive May jobs report did little to improve their employment hopes, says McClatchy.
Not enough of the new jobs are going to young adults.
- In the 20-24 year old age group, the jobless rate was 13.2 percent, which is floating about where it's been stuck for over a year. This worries economists.
- That age group includes recent college graduates who are trying to kickstart their careers, pay off college loans and establish separate households.
- It also includes young people with less education who aren't equipped to meet the skill demands of available jobs.
The 175,000 jobs created by established businesses, even considering a downward revision of 12,000 from previous job growth estimates for March and April, was better than most economists expected.
- The consensus outlook had expected more of a summer slump.
- Indeed, job growth has slowed in the past three months to an average of 155,000 a month from the 207,000-a-month average gain in early 2013.
- Modest as the job gains were, the stock market reacted positively, with the Dow closing up more than 200 points on the day.
- The middling gains also raised questions about whether the Federal Reserve will continue its stimulation effort buying bonds or will raise short-term interest rates.
Analysts say the private sector needs to create 200,000-plus jobs each month in order to accommodate new graduates, other entrants and reentrants to the work force. Such job creation is important not just for those job hunters but for the national economy.
Bloomberg senior economist Joseph Brusuelas calculates that, conservatively, the nation will lose about $18 billion in wages over the next 10 years because of youth unemployment. According to Brusuelas, six months of joblessness at age 22 results in an 8 percent lower wage at age 23, 6 percent lower at age 26, and 4 percent lower at age 30. In other words, it's hard to catch up to lost earnings. That affects consumer spending, the foundation of the U.S. economy.
Source: Diane Stafford and Ben Unglesbee, "Young Adults Missing out on Job Market's Slow Gains," McClatchy, June 7, 2013.
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