You’ve heard the economy is getting better, that companies are hiring again, and that we’re finally putting the recession behind us. But don’t get too happy. For recent grads entering the job market today, things are still bad, going on desperate. The official numbers don’t necessarily tell the whole story.
The overall unemployment rate fell to 6.6% recently, its lowest point for more than five years. But the rate for under-25s is more than double that (14.5%) and about a million people aren’t counted, according to a new paper from the Economic Policy Institute. These missing workers are neither employed nor actively seeking work. But if you included them, the under-25 rate would rise to 18.1%, or three times the overall figure.
What’s more, the EPI says many recent graduates (both high school and college) are under-employed: they have work, but not enough to live the life of someone working full-time, especially someone working full-time with benefits (an increasingly rare breed of individual). The under-employment rate has doubled since 2007, and is now 41.5% among high school graduates ages 17 to 20:
It’s normal during recessions for youth unemployment to be higher than for other groups. What’s different now is that young people aren’t “sheltering in school,” probably because the cost of college is so high. There was barely any increase in university enrollment between 2007 and 2012, and the numbers for 2012 actually show a decline:
Moreover, college graduates aren’t picking up work reflecting with their skills or learning. In 2012, 44% under the age of 27 were working a job not requiring a university degree, up from 38% in 2007.
The scariest thing is that the recession is likely to have long-term effects, the EPI says. Even if people who have struggled to find work now find it, they’ll still likely to be behind where they could, or should, be. “Research shows that entering the labor market in a severe downturn can lead to reduced earnings, greater earnings instability, and more spells of unemployment over the next 10 to 15 years,” the paper says.
This is why people refer to a “lost generation.” These are people who haven’t had the start they should have had, and now have to compete with new cohorts entering the economy this year. Pity the classes of ’07 through ’12. They were unlucky to be born when they were.