Is the recession creating a "lost generation" of workers?
While the overall unemployment rate was 9.8% in September, according to the Bureau of Labor Statistics, unemployment among teenagers was a whopping 25.9%. Among 20- to 24-year-olds, unemployment was 14.9% last month.
There are a couple of reasons why this is happening: Adults are filling the low-skill, minimum-wage jobs that had historically been claimed by teens looking to earn pocket money, and new college grads and entry-level young adults are competing for jobs against older workers who have more experience and training.
As this BusinessWeek article points out, those stats underscore a growing problem that is likely to persist in the years ahead. Prolonged joblessness is a challenge for any group, since it is harder for long-unemployed to merge back into the workforce seamlessly. This is a catch-22 for young job-seekers in particular. They can't get the experience they need because no one will hire them without experience. This initial joblessness can become a negative feedback loop. Although new college grads are having difficulties landing that first full-time job, the picture is even bleaker for those who lack a college degree due to increased competition from better-educated workers who are also searching for employment.
Even the lucky ones who manage to eventually land work are at a disadvantage. According to an economist from Yale University interviewed in the article, each percentage point of higher unemployment translates to a 6 to 7% drop in first-year wages when people do get work. Even after the economy improves, a wage discrepancy persists for 15 years -- a substantial portions of most employees' careers.
These Americans will be playing catch-up as far as their wages and Social Security contributions, and may be less satisfied and more depressed with regard to their career outlook. BusinessWeek draws a parallel between today's employment landscape and that of Japan in the 1990s, which is widely referred to as that country's "lost decade" in economic circles. The article cites higher instances of work-related stress and depression among employees who were entering the workforce during Japan's economic crisis.
Economists suggest a number of possible fixes for the problem, including beefed-up job training and apprenticeship programs, as well as creating tax credits for companies to hire new workers. It's likely that some combination of all of these and more will have to be implemented in order to get young workers -- our economy's future -- engaged in jobs and careers that will carry them through the rest of their adult lives.