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Policy

The Kids Are Not Alright

The effects of currently elevated youth unemployment can be long-lasting.

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Job-seeker Donte Walker reads an employment newspaper at the employment training facility, JobTrain, in Menlo Park, Calif.(AP Photo/Paul Sakuma)

The jobs report on Friday morning offers hope for the continuing recovery, but there's still plenty of reason to be concerned about the labor market. More than one in three of the unemployed haven't worked in at least 27 weeks, a predicament that brings with it a host of mental-health problems and has proven incredibly hard to reverse. And more and more seniors are working, while fewer young adults are.

The share of Americans ages 16 to 24 who are working has fallen from 62 percent 10 years ago to 55 percent in the second quarter of this year, while the opposite trend was true for Americans 65 and older. A decade ago, 14 percent of seniors over 65 were working, while now 19 percent are in the labor force. Here's that change graphed over time:

 

Youth unemployment, in particular, is a pernicious problem that can have lasting, long-term effects on the workforce. Unemployment among those aged 16 to 24 was unchanged at 16.3 percent from May to June, according to the report. And for the last year and a half, it has hovered in the 16 percent range, up from 10 percent at the start of 2007.

Being unemployed young can reduce earnings by as much as 20 percent for up to two decades, and those who are jobless early in their careers also end up less satisfied with the work they do find later in life. Unemployment before age 23 can lower life satisfaction for as much as two decades, and being out of work early on can reduce self-reported health rankings for decades, according to studies.

 

Here's how Congress's Joint Economic Committee explained the problem in a 2010 report:

The high rates of unemployment among young workers are cause for concern, and the effects can last long after the recession has ended. The "scarring effects" of prolonged unemployment can be devastating over a worker's career. Productivity, earnings and well-being can all suffer. In addition, unemployment can lead to a deterioration of skills and make securing future employment more difficult.

And it's a global problem, too. Earlier this week, German Chancellor Angela Merkel said youth unembployment was "perhaps the most pressing problem facing Europe at the present time." Worldwide two in five of the unemployed are 15 to 24 years old, according to the World Economic Forum. In a 2010 paper, two economists affiliated with the Institute for the Study of Labor in Germany examined the issue globally and explained its lasting effects:

Spells of unemployment while young create permanent scars. Unemployment is higher in the years ahead if a young person doesn't make a successful toe-hold into the labour market early in their lives. Solving youth unemployment is the most pressing problem governments are facing today. Not dealing with the problem of high, and rising levels of youth unemployment hurts the youngsters themselves and has potentially severe consequences for us all for many years to come. The time to act is now. The young must be the priority.

 

The June jobs report shows that the recovery is continuing apace, but not everyone is seeing the gains.

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