The Labor Department has released numbers on unemployment among young people this summer, and the
numbers are grim:
- The youth labor force, which consists of people between 16 and 24 years old who are either working or looking for work, typically spikes in the summer for obvious reasons. This year, youth labor force participation "was 59.5 percent in July, the lowest July rate on record." In other words, many young people did not even bother to look for jobs—and it's unlikely most of them weren't bothering because they didn't need the money.
- The issue of who enters the labor force by actively looking for work is why the following two things can be simultaneously true:
The employment-population ratio for youth—the proportion of the 16- to 24-year-old civilian noninstitutional population that was employed—was 48.8 percent in July, a record low for the series, though only marginally lower than in July 2010.
And:
The number of unemployed youth in July 2011 was 4.1 million, down from 4.4 million a year ago. The youth unemployment rate declined by 1.0 percentage point over the year to 18.1 percent in July 2011, after hitting a record high for July in 2010.
While we often look at the unemployment rate, in this case, the number that's most telling is the employment-population ratio, the overall share of young people who were employed in July (the peak month for youth employment). That number was a historic low. And this isn't a problem that will go away any time soon, as an Economic Policy Institute/Demos fact sheet (PDF) points out:
Research has shown that entering the labor force during a recession can result in lower earnings. A recent study shows that white male college graduates entering the workforce in a bad economy earn 6 to 8 percent less for each additional percentage point in the national unemployment rate. Although the magnitude of this effect decreases over time, the impact is long term: fifteen years after college graduation, wages are still lower for those who entered the labor market when unemployment was high. Given the depth of unemployment among young people, the wage suppression effect of this recession could potentially have lifelong consequences for a generation of workers.
So basically, we're looking at a lost generation, economically speaking, to hasten the decline of the already declining middle class.