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Youth Unemployment is Not Just An American Crisis

17 Dec

Youth unemployment is a worldwide crisis.  Many of the the rich countries of the Organisation for Economic Co-Operation and Development (OECD) are suffering from extraordinarily high ratio of youth to adult unemployment, according to a new report, Good Start? Jobs for Youth, released yesterday.  Spain has the highest youth unemployment at 42%, while Switzerland has the lowest.

Of the 16.7 million youth who are neither working nor in school or training, 10 million have given up even trying to get into the system.  This can lead to permanent scaring for both the youth and the country.  To combat this the report suggests governments should:

  • Move towards early intervention programmes and effective job-search assistance for different groups of youth, such as in Denmark, the Netherlands and Japan.
  • Strengthen apprenticeship and other dual vocational training programmes for low-skilled youth, as traditionally done in Austria, Germany and Switzerland and scaled up in Australia and in France.
  • Encourage firms to hire youth, by offering temporary subsidies targeting low-skilled youth and those have completed their apprenticeship, as well as small and medium-sized firms.

Unions have a role to play in creating these opportunities as well.  As occurred during the summer months, locals used federal TANF dollars to create apprentice programs and share workloads.  There is no reason why with a little creativity we couldn’t figure out a way to create similar programs now or create more permanent pathways (of course having more funding from the federal government for such a program wouldn’t hurt either…).  Creating a type of structure where the union facilitates your first entrance into the labor market will pay huge dividends in the long-run as a new generation of union activists emerges.

New Report on Youth Unemployment Crisis

8 Dec

New report out today from the New America Foundation:

The Great Recession and Joblessness Among Young Workers

Shayne Henry, Next Social Contract Initiative
December 2010

Introduction

During the last three years, youth employment has taken a large hit, absorbing a significant portion of job losses.  One in four unemployed persons is under the age of 25 and nearly one in five young workers is unemployed.1  The rate of joblessness among individuals aged 16-24 is at its highest level on record.2

The Recession

Young workers, aged 16-24, are an important part of the American labor force, accounting for 14% of all individuals in the labor market.3  At the same time, they are also the most vulnerable workers during weak economies and recessions. Since the start of the recession, youth unemployment has increased by 7.5 percentage points while unemployment for the rest of the labor force has only increased by 4.7 percentage points.  The overall unemployment rate, an aggregate of the two, has increased by 5.1 percentage points. 

During this same period, the number of employed youth has declined by 12.2 percent, compared to only a 3.9 percent decline for the rest of the working population.4 This is the result of increased layoffs and the number of young workers who appear to be leaving the labor market.  While the employment-to-population ratio of young people has been steadily decreasing for the past decade, this decrease has become more dramatic since the beginning of the Great Recession and far outpaces the drop in the employment-to-population ratio of the remainder of the workforce. 

 

The fact that youth have been hardest hit by the recession is not surprising. Since the recession began, both the number of job openings and the number of people voluntarily leaving their jobs have declined dramatically.5 In this tight labor market, young workers are less competitive and are often the first to be laid off because they tend to work in temporary positions, are among the newest hired, and are heavily concentrated in job sectors that are most vulnerable to economic fluctuations.6

 

Underemployment and Long-Term Unemployment

Entering the job market during a recession can lead to reduced earnings for up to 15 years, and many workers may never entirely recover.7 Among college graduates, one study has found that individuals entering the labor market during severe recessions earn 17.5 percent less than their peers who enter the labor force during better market conditions, an effect that can plague workers for over 17 years.8 This is the uncertain future faced by the millions of young people who have entered the job market since the beginning of the Great Recession and represents billions of dollars in lost salaries and potential consumption.

While the future of those youth who find employment during the Recession appears precarious, many youth are faced with an even more severe problem. Perhaps the most alarming aspect of youth employment data is that young workers represent not only a larger proportion of the unemployed population, but also a larger proportion of those who suffer from long-term unemployment. As shown in Figure 3, while young workers make up only 14% of the labor force, they represent 26% of the unemployed and 21% of the long-term unemployed. The remaining two age subsets in the labor force, workers aged 25-54 years and 55+, are both underrepresented in these unemployment categories. Long-term unemployment can have long-lasting and often permanent consequences for the individual’s career in terms of productivity, earnings and skill retention.9 Young workers, both those who are fortunate enough to find jobs and those who are not, face a difficult road of underemployment and low wages in the years ahead.

 

Existing Programs are Failing to Address the Problem
The federal government continues to allocate money to programs specifically targeting the problem, with the expressed aim of improving employment prospects for young workers. However, these programs have had, at best, limited effectiveness.  Programs like JOBSTART and the Job Training and Partnership Act appear to be largely ineffective in lowering unemployment or providing higher earnings for youth participants.10

Job Corps, the leading program designed specifically to improve youth employment by providing training and benefits for 60,000 disadvantaged youth aged 16-24, costs the federal government $24,000 per participant and yet seems to have little effect on long-term job placement or earnings.11 While individuals who complete the program have higher medium-term job prospects, within as little as five years the difference in wages and employment between individuals who completed the program and those who did not becomes increasingly non-existent.12 The figure below further illustrates the limited effectiveness of Job Corps in placing participants in jobs during the short-term, with only small advantages between years two and four.

Policy Solutions
As seen in Figure 1, unemployment numbers for young workers follow the trend of the general job market.  It makes sense, then, to focus on overall job creation in order to bring down youth unemployment.

However, simply returning to an employment situation similar to pre-recession levels would leave youth unemployment rates hovering around 10%.  In the long-term, then, policies must be created that target young workers specifically.  For example, a continued investment in educational access for young people is something that has been encouraged by the policy community for years. It is widely known that there exists a strong negative correlation between educational attainment and unemployment.13  Further, engaging larger numbers of young people in vocational training or higher education removes individuals from the labor market, bringing unemployment numbers down.  Any durable solution for the youth unemployment problem must at least address high school graduation rates and access to higher learning or vocational training.

Conclusion
Youth unemployment is a continuing and escalating problem for the American labor market. Traditional approaches to bringing down unemployment numbers among youth have failed to adequately address the problem, while important policy initiatives such as increasing access to education seem to be addressing the problem too slowly. As such, it is time for the policy community to turn to new, innovative ideas to tackle the problem of youth unemployment.

Notes

1Bureau of Labor Statistics. Household Data, A-9 Unemployed persons by age, sex and marital status, seasonally adjusted.

2US Congress Joint Economic Committee, Unemployment Among Young Workers, May 2010

3Bureau of Labor Statistics. A-13 Employment status of the civilian noninstitutional population by age, sex and race

4Bureau of Labor Statistics. Employment Level 16-24, Employment Level 25 years & over; Author’s calculations

5Department of Labor. Job Openings and Labor Turnover Survey. October 7, 2010.

6Stefano Scarpetta, Anne Sonnet and Thomas Manfredi, “Rising Youth Unemployment During the Crisis: How to Prevent Negative Long-Term Consequences on a Generation?” OECD Social, Employment and Migration Papers, No. 106, April 14, 2010 available at http://www.olis.oecd.org/olis/2010doc.nsf/LinkTo/NT000028DE/$FILE/JT03281808.PDF and
US Congress Joint Economic Committee, Unemployment Among Young Workers, May 2010; Bureau of Labor Statistics, Household Data, Employed persons by occupation, sex and age.

7Oreopoulos, von Wachter, and Heisz (2008); Till von Wachter Testimony to the Joint Economic Committee, May 26, 2010.

8Lisa B. Kahn. The Long-Term Market Consequences of Graduating from College in a Bad Economy. 2009.

9Stefano Scarpetta, Anne Sonnet and Thomas Manfredi, “Rising Youth Unemployment During the Crisis: How to Prevent Negative Long-Term Consequences on a Generation?” OECD Social, Employment and
Migration Papers, No. 106, April 14, 2010 . Available Online
http://www.olis.oecd.org/olis/2010doc.nsf/LinkTo/NT000028DE/$FILE/JT03281808.PDF

10James Heckman, Robert Lalonde, and Jeffrey Smith, “The Economics and Econometrics of Active Labor Market Programs.” Handbook of Labor Economics, First Edition, (Amsterdam: Elsevier, 1999), Vol. 3, Chap. 31, p. 2056

11ExpectMore.gov. Program Assessment of Job Corps. Available Online <http://www.whitehouse.gov/omb/expectmore/summary/10002372.2007.html>

12Peter Schochet, John Burghardt, and Sheena McConnell, “Does Job Corps Work? Impact Findings from the National Job Corps Study,” American Economic Review, American Economic Association, Vol. 98, No. 5 (December 2008), pp. 1864-1886.

13Bureau of Labor Statistics. Occupation Outlook Quarterly.  More Education: Higher Earnings, Lower Unemployment. 1999. http://www.bls.gov/opub/ooq/1999/Fall/oochart.pdf

 
Youth Unemployment

ILO Report- Bad Trends for Youth Employment

16 Aug

In case you were unconvinced that young people globally are especially suffering by the world-wide jobs deficit, the International Labour Organization released a report late last week documenting the crisis, showing 13.1% unemployment through 2010 and 28% of working young people actually doing so in extreme poverty.  More ominous is that the current downturn resulting in unemployment, underemployment, and idleness will negatively effect future prospects, both on individual lifetime earnings and on the make up of society.  A global strategy is needed to ensure that the generation with the most potential of any in recent decades does not become a lost generation.  Here is the press release from the ILO:

(If you are still unconvinced, there is nothing that can help…)

World economic crisis has spurred a record increase in youth unemployment says ILO

GENEVA (ILO News) — Global youth unemployment has reached its highest level on record, and is expected to increase through 2010, the International Labour Organization (ILO) said in a new report issued to coincide with the launch of the UN International Youth Year on 12 August.

The report ILO Global Employment Trends for Youth 2010 says that of some 620 million economically active youth aged 15 to 24 years, 81 million were unemployed at the end of 2009 — the highest number ever. This is 7.8 million more than the global number in 2007. The youth unemployment rate increased from 11.9 percent in 2007 to 13.0 percent in 2009.

It adds that these trends will have “significant consequences for young people as upcoming cohorts of new entrants join the ranks of the already unemployed” and warns of the “risk of a crisis legacy of a ‘lost generation’ comprised of young people who have dropped out of the labour market, having lost all hope of being able to work for a decent living”.

According to the ILO projections, the global youth unemployment rate is expected to continue its increase through 2010, to 13.1 per cent, followed by a moderate decline to 12.7 per cent in 2011. The report also points out that the unemployment rates of youth have proven to be more sensitive to the crisis than the rates of adults and that the recovery of the job market for young men and women is likely to lag behind that of adults.

The report indicates that in developed and some emerging economies, the crisis impact on youth is felt mainly in terms of rising unemployment and the social hazards associated with discouragement and prolonged inactivity.

The ILO report points out that in developing economies, where 90 per cent of young people live, youth are more vulnerable to underemployment and poverty. According to the report, in the lower income countries, the impact of the crisis is felt more in shorter hours and reduced wages for the few who maintain wage and salaried employment and in rising vulnerable employment in an ‘increasingly crowded’ informal economy.

The report estimates that 152 million young people, or about 28 percent of all the young workers in the world, worked but remained in extreme poverty in households surviving on less than US$1.25 per person per day in 2008.

“In developing countries, crisis pervades the daily life of the poor” said ILO Director-General Juan Somavia. “The effects of the economic and financial crisis threaten to exacerbate the pre-existing decent work deficits among youth. The result is that the number of young people stuck in working poverty grows and the cycle of working poverty persists through at least another generation.”

The ILO report explains how unemployment, underemployment and discouragement can have a long-term negative impact on young people, compromising their future employment prospects. The study also highlights the cost of idleness among youth, saying “societies lose their investment in education. Governments fail to receive contributions to social security systems and are forced to increase spending on remedial services”.

“Young people are the drivers of economic development,” Mr. Somavia said. “Foregoing this potential is an economic waste and can undermine social stability. The crisis is an opportunity to re-assess strategies for addressing the serious disadvantages that young people face as they enter the labour market. It is important to focus on comprehensive and integrated strategies that combine education and training policies with targeted employment policies for youth.”

“Today the UN is launching the International Year of Youth. Through this year’s themes of dialogue and mutual understanding, we will be better placed to shape viable policies that respond to the need and aspirations of young people for decent work,” he added.

Key findings in youth labour market trends at the global level:

  • Between 2007 and 2009, youth unemployment increased by 7.8 million (1.1 million in 2007/08 and 6.7 million in 2008/09). In comparison, over the course of the ten-year period prior to the current crisis (1996/97 to 2006/07), the number of unemployed youth increased, on average, by 191,000 per year.
  • The global youth unemployment rate rose from 11.9 to 13.0 per cent between 2007 and 2009. Between 2008 and 2009, the rate increased by 1 percentage point, marking the largest annual change over the 20 years of available global estimates and reversing the pre-crisis trend of declining youth unemployment rates since 2002.
  • Between 2008 and 2009, the number of unemployed youth increased by 9.0 per cent, compared to a 14.6 per cent increase in the number of unemployed adults. In terms of unemployment rates, however, the impact on youth has proven to be greater than that of adults. The youth rate increased by 1.0 percentage point compared to 0.5 points for the adult rate over 2008/09.
  • In 2008 young people accounted for 24 per cent of the world’s working poor, versus 18.1 per cent of total global employment.
  • Young women have more difficulty than young men in finding work. The female youth unemployment rate in 2009 stood at 13.2 per cent compared to the male rate of 12.9 per cent (a gap of 0.3 percentage point, the same gender gap seen in 2007).
  • The projections show a longer expected recovery for youth compared to adults. Youth unemployment numbers and rates are expected to decline only in 2011. The ILO forecasts a continued increase in global youth unemployment to an all-time high of 81.2 million and a rate of 13.1 per cent in 2010. In the following year, the number of unemployed youth is projected to decline to 78.5 million with a 12.7 per cent rate. Meanwhile, the adult rate is expected to peak in 2009 at 4.9 per cent and then decline by 0.1 percentage points in both 2010 and 2011 (to 4.8 and 4.7 per cent, respectively).

Regional trends:

  • Youth unemployment rates increased by 4.6 percentage points in Developed Economies & the European Union between 2008 and 2009 and by 3.5 points in Central & South-Eastern Europe (non-EU) & CIS. These are the largest annual increases in youth unemployment rates ever recorded in any region. The youth unemployment rate of 17.7 per cent in 2009 in the Developed Economies & European Union is the highest the region has seen since regional estimates have been available (since 1991).
  • In most regions, young women continued to be the hardest hit by unemployment. Only in the Developed Economies & European Union were young males harder hit; the increase in the male youth unemployment rate between 2007 and 2009 was 6.8 percentage points compared to 3.9 points for young women.
  • In some countries, including Spain and the United Kingdom, there was an increase in inactivity among youth in the crisis years. This implies an increase in discouragement, whereby growing unemployment has led some young people to give up the job search.
  • In developing economies, the crisis adds to the ranks of vulnerable employment and informal sector employment. There is supporting evidence of such an increase in Latin America where between 2008 and 2009 the number of own-account workers increased by 1.7 per cent and the number of contributing family workers by 3.8 per cent. The region also experienced an increase in the share of teenagers engaged in informal sector employment during the crisis.
  • For almost all regions, slight improvements are forecast as compared with the peak unemployment years (2010 in most cases). Only in the Middle East and North Africa are youth unemployment rates expected to continue on an upward path in 2011. The largest decrease (1 percentage point) in youth unemployment rates is expected for Central & South-Eastern Europe (non-EU) & CIS. The projected 2011 rate in the Developed Economies & European Union would represent a 0.9 percentage point decrease from the previous year. However, the projected rate of 18.2 per cent would still be higher than was ever seen in the pre-crisis period (1991-2007).

New Report: Social Media and Work Family Issues Key

5 Aug

The Labor Project for Working Families, Cornell ILR Programs and UC Berkeley Labor Center released a great report earlier this week on opportunities the union movement has to use social media to organize younger workers and women.  New Approaches to Organizing Women and Young Workers: Social Media and Work Family Issues found that unions can use social media tools like YouTube and Facebook to talk with workers about work/family issues as a way to get them involved.  Following these recommendations and attracting young and female workers into the movement is just the first step towards changing the “male, pale and stale” union culture.

Here’s the executive summary but the whole report is worth the read:

Executive Summary

Perhaps the most significant demographic change in the workforce in the past 50 years is the presence of women, who very soon will outnumber men among those who work outside the home. Another significant demographic change in the workforce is the presence of young workers. Over 70 percent of those ages 16-34 are part of the civilian labor force, but only 8.2 percent of them belong to unions. The future of the labor movement depends upon fresh approaches to organizing, and some of the most exciting and innovative strategies and tools are being developed by young organizers using new technology and social media. We interviewed 23 young organizers to understand how they use social media to organize, and whether they have focused on work and family issues in these efforts.

Social Media

Our interviews showed that organizers use internet websites to provide information and credibility to organizations, Facebook and MySpace to help workers to connect with each other and express opinions, and Twitter and texts to remind workers to take action. However organizers who have used these tools also caution that new technology and social media should not be substituted for personal contact, and precautions should be put in place to ensure security and privacy for the workers we organize.

The use of social media and new technology for organizing has been particularly effective among young workers, many of whom have grown up with computers and the internet their whole lives. Statistics show that young workers who join unions have substantially better wages and benefits, but young workers are less likely to be in unions. Therefore much more needs to be done to reach out to them and make their concerns union priorities. To be effective, unions also need to make unions appealing to young workers through a cultural shift and promoting young workers and young staff to leadership positions.

How social media is used:

  • an on-line presence enables workers to check out the union for themselves
  • social media helps younger workers see the union as hip
  • YouTube or blast texts got people talking about the union by creating a “buzz around the campaign”
  • unions should now ask for cell phone and email information on union authorization cards; home phone numbers are practically useless for contacting young workers
  • organizing committees communicate through Facebook or blogs and/or texts
  • social media and the internet allow people to communicate in flexible time, which helps people with family responsibilities
  • social networking helps people connect across geography and jurisdictions

Users Need Union Support

  • labor movement must become skilled in using these ways of communicating
  • organizers need technical support from their unions
  • frontline organizers need authority to respond rapidly

Work Family Issues

Not only women are concerned about work family issues today. Young workers are also concerned about work family balance, and rate the importance of this issue even higher than their older counterparts. Organizers told us that members’ concerns were not necessarily expressed as work and family issues. Rather caregiving responsibilities were often the real reason why workers wanted jobs security, health benefits, less overtime, knowing their schedules well in advance, and other traditional bargaining topics. This speaks to the need to consider whether work and family issues should be framed differently.

  • Members needed more support for paid family and medical leave, childcare assistance, flexible hours, etc.
  • Work and family issues were major causes of stress for the women they are organizing, whether or not they were framed as work and family issues.
  • Mandatory overtime made it impossible to pick children up from childcare, which indicated disrespect and insensitivity to family demands.
  • Retail workers need to know their schedules far in advance so they can plan childcare and school.
  • The need for paid time off was frequently mentioned in the context of the need to spend more time with family.
  • For low wage workers, inadequate health insurance was a family concern.
  • For single parents job security is a family issue because not having a job means there is no way to pay bills and put food on the table.

Recommendations

We hope that this research will be the first step in bringing attention to the need to organize women and young workers through use of social media and work and family issues. Organizers are using new technology and social media successfully. The immediate challenge for unions will be how to provide organizers with these tools, the skills to use them and the budget to maintain them. The longer range challenge will be how unions use these tools strategically and create a new union culture that is attractive to young workers.

Work and family issues are highly important to women workers and young workers today are even more concerned about work/life balance than previous generations, however they are not priorities at most bargaining tables. Issues like job security, health benefits, work scheduling and other commonly recognized core union topics actually relate to work and family issues. Therefore an effort should be made to reframe work and family issues as core labor issues. We recommend that unions and funders advance the dialogue around work and family issues and young workers; unions begin to include work and family and young workers’ issues in their campaign plans; unions experiment with the use of social media through pilot projects that are planned, implemented and evaluated; and that young workers in unions be engaged, supported, mentored, and given opportunities to lead.

New Report Shows For-Profit Colleges Bankrupting Students, Government

4 Aug

The need for strict regulations and monitoring of the for-profit college system will be made clear again today during a hearing of the Senate Committee on Health, Education, Labor, and Pensions where more light will be shed on an industry that is growing rapidly without much transparency or proven results.  The Government Accountability Office will publicly release a new report, Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices, showing recruiters at 15 for-profit colleges encouraged students to lie on financial aid documents and mislead them about tuition costs.

The hearing is the second in a series being held by Senator Tom Harkin (D-IA) to investigate an industry that brings in 23% of federal education student aid, but only educates 10% of students.  For that large sum of money its necessary that Congress and the Department of Education ensure that students of these colleges are receiving the same quality of education as at non-profit schools and that graduates are able to find gainful employment.

Speaking at today’s hearing, For-Profit Schools: The Student Recruitment Experience:

Gregory Kutz , Managing Director, Office of Forensic Audits and Special Investigations, U.S. Government Accountability Office, Arlington, VA
David Hawkins , Director of Public Policy and Research, National Association for College Admission Counseling, Arlington, VA
Michale McComis , Executive Director, Accrediting Commission of Career Schools and Colleges, Arlington, VA
Joshua Pruyn , former Admissions Representative, Alta College, Inc., Denver, CO
Here is the New York Times’ story on the report:

For-Profit Colleges Mislead Students, Report Finds

By TAMAR LEWIN
A version of this article appeared in print on August 4, 2010, on page A13 of the New York edition.

Undercover investigators posing as students interested in enrolling at 15 for-profit colleges found that recruiters at four of the colleges encouraged prospective students to lie on their financial aid applications — and all 15 misled potential students about their programs’ cost, quality and duration, or the average salary of graduates, according to a federal report.

The report and its accompanying video are to be released publicly Wednesday by the Government Accountability Office, the auditing arm of Congress, at an oversight hearing on for-profit colleges by the Senate Committee on Health, Education Labor and Pensions.

The report does not identify the colleges involved, but it includes both privately held and publicly traded institutions in Arizona, California, Florida, Illinois, Pennsylvania, Texas and Washington, D.C. According to the report, the colleges in question were chosen because they got nearly 90 percent of their revenues from federal aid, or they were in states that are among the top 10 recipients of Title IV money.

The fast-growing for-profit education industry, which received more than $4 billion in federal grants and $20 billion in Department of Education loans last year, has become a source of concern, with many lawmakers suggesting that too much taxpayer money is being used to generate profits for the colleges, instead of providing students with a useful high-quality education.

The report gave specific instances in which some colleges encouraged fraud. At one college in Texas, a recruiter encouraged the undercover investigator not to report $250,000 in savings, saying it was “not the government’s business.” At a Pennsylvania college, the financial representative told an undercover applicant who had reported a $250,000 inheritance that he should have answered “zero” when asked about money he had in savings — and then told him she would “correct” his form by reducing the reported assets to zero, a change she later confirmed by e-mail and voicemail.

At a college in California, an undercover investigator was encouraged to list three nonexistent dependents on the financial aid application.

In addition to the colleges that encouraged fraud, all the colleges made some deceptive statements. At one certificate program in Washington, for example, the admissions representative told the undercover applicant that barbers could earn $150,000 to $250,000 a year, when the vast majority earn less than $50,000 a year. And at an associate degree program in Florida, the report said, a prospective student was falsely told that the college was accredited by the same organization that accredits Harvard and the University of Florida.

According to the report, courses in massage therapy and computer-aided drafting that cost $14,000 at a California for-profit college were presented as good values, when the same courses cost $520 at a local community college.

Six colleges in four states told the undercover applicants that they could not speak with financial aid representatives or find out what grants and loans they were eligible for until they completed enrollment forms agreeing to become a student and paid a small application fee.

And one Florida college owned by a publicly traded company told an undercover applicant that she needed to take a 50-question test, and answer 18 questions correctly, to be admitted — and then had a representative sit with her and coach her through the test. A representative at that college encouraged the applicant to sign an enrollment contract, while assuring her it was not legally binding.

But in some instances, the report said, the applicants were given accurate and helpful information, about likely salaries and not taking out more loans than they needed.

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