Letter

Instructor Notes: Youth Unemployment

AFL-CIO – Young Workers: A Lost Decade (2009)

Nationwide Survey Found: • Young workers have lost financial ground and optimism • Significantly less likely to be covered by health insurance, have retirement plans, more likely to

be unemployed. 1 in 3 reports being uninsured (up from 24% in 1999) because they can’t afford it, or it’s not offered by their employer

• Only 31% make enough to cover bills and put some money away (22% fewer than in 1999); 24% make less than they need to pay their monthly bills; 1 in 4 worries about credit card debt specifically; 675 worry that their prices will outstrip their income – greater for women and workers of color and low-wage workers

• More than 1 in 3 worry they will not be able to find a permanent, full-time job with benefits • 58% receive paid sick days; 41% are offered paid family leave • Working more hours to stay afloat financially – almost 50% reported working more than 40

hours per week • Just over half say they’re more hopeful than worried about economic future – a 22% drop from

a decade earlier • More than 1 in 3 are currently living at home with parents (younger than 35) not by choice but

economic necessity; 41% for those without a college education and 19% for college graduates • Nearly 2 in 5 delayed further education or professional development. Closer to 50% for young

workers of color; access to college obstacles both structural and financial • 1 in 5 say they’re over-qualified for their current jobs; 22% work outside their chosen field • 1 in 3 worries about delaying starting a family because of economic concerns; too few

employers providing that as an option • Low-income workers: more than 50% of young workers fit into this category - earn less than

$30,000 – 1/3 can’t pay their bills; 7 in 10 don’t have enough saved to cover 2 months of living expenses; 44% don’t have health insurance; 27% have pension or retirement plans; less than 50% have paid sick leave (compared with more than 75% who have incomes over $30,000); 31% have paid family leave; greatest decline in employment rates since 2000 has been among those without college diplomas

• Possible that today’s young people will be the first generation in recent history to be worse off than their parents’ generation

Young Workers:

• Have a clear vision: job creation, healthcare reform, improved education system – vital to building a better future; more than 50% consider loss of jobs one of the primary economic problems facing America’s workers; 45% feel wages are not keeping up with the cost of living and is a top concern for working people; rising cost of health care one of the top economic problems

• Embracing greater diversity and technology; more than 70% see computers and technology as a change for the better; low-income workers are less likely to see the increased use technology as a change for the better (access/comfort); 53% see diversity as a change for the better;

• See strong work ethic as the single most important quality for workers to succeed in today’s economy; more than 1 in 3 say having time for personal or family priorities as a top career goal, followed by a good income. Third is making a difference in people’s lives (35%)

• 71% identify preparing the next generation to be competitive in a global economy through training and education as a priority

• Few trust their employer to do what’s best for employees; even fewer have confidence in corporate America as a whole – Over 60% blame Wall Street, banks, and corporate CEOs for economic woes

• Favor expanding public investment over reducing budget deficit and are more progressive on contentious social issues; more likely to favor investment in jobs, health care, education and energy than older Americans – understand investment will help repair and strengthen the economy for all workers

• Becoming more politically active – 35% said they voted for the first time in 2008 (up 14% over previous 2 years who think voting is a “duty”); 75% keep tabs on government and public affairs; calling for improvements on the job and supporting unions; By a more than 2 to 1 margin, young workers say employees who have unions are better off than workers in similar jobs who do not

• Those not involved in politics not because they’re not interested but because they haven’t been given the opportunity; need to re-evaluate conventional ways of reaching out to young people

The Kids Aren’t Alright – A Labor Market Analysis of Young Workers – EPI Briefing April 2010

• Though young adults represent only 13.5% of the workforce, they now account for 26.4% of unemployed workers.

• The unemployment rate for young workers at any time averages around twice the rate for all workers. The cause for this is typically attributed to young adults’ unique position in the labor market—they are not as settled into an employer or career as older workers are.

• Churning: Can be positive; One study found that a typical worker will hold seven jobs in her first 10 years in the labor market, often motivated by an opportunity for higher pay.

• As overall rates of unemployment increase, inequalities between genders and races often become more apparent. The recession has exacerbated existing racial disparities among young adult workers

• Young workers comprise a relatively small share of the total labor force—13.5% of all workers are 16-24 years old. However, young workers account for 26.4% of unemployed workers. In other words, one in every four unemployed persons in America is under the age of 25.

• The median household with a person between the ages of 55 and 64 saw their wealth fall by almost 38% between 2004 and 2009. In the face of such a loss, many older workers chose to delay retirement and either continue working or go back to work because they could not afford to retire.

• 37% of young adults 29 and under had more than $5,000 in non-mortgage and non-student loan debt, primarily in the form of credit cards.

• The loss of human capital that occurs when taking jobs in lower-level occupations is one of the principal contributors to the long-run negative effect recessions have on the wages of young workers

Twelve Ways to Fix the Youth Unemployment Crisis – Brookings May 2014

• Unemployment Rate for 16 – 24-year-olds: 14.5% … been in the double digits for seven straight years; over 3 million are unemployed and many more have dropped out of the labor market (and not counted in official unemployment rates)

• 5.8 million young adults, or nearly 15 percent of 16- to 24-year-olds, are neither working nor in school.

• Growing academic literature on the “scarring” effects of launching a career without a job suggests that young people who endure early spells of unemployment are likely to have lower wages and greater odds of future unemployment than those who don’t.

o Studies indicate a 10 to 15 percent wage “scar” from early unemployment, and those earnings losses persist for at least 20 years.

o These findings hold for individuals with a college degree, and the prognosis for individuals without a college degree is grimmer still

• Every year of high youth unemployment means lower tax revenue and higher safety net expenditures for federal and state governments. High youth unemployment costs $9 billion in foregone tax revenue and benefits paid out each year at the federal and state level, with the vast majority (93%) of the cost coming in the form of lost federal and FICA taxes.

• Expansionary fiscal policy solutions, such as large- scale ongoing public investments, would help all jobless workers.

1. Double-down on community colleges a. Somewhere between a third and a half of American undergraduates are enrolled in

community colleges today, yet community colleges receive only 20% of federal higher education funding

b. Policies should also focus squarely on incentivizing collaboration between community colleges and employers in order to develop training for fast-growing high-demand industry.

c. New policies should encourage community colleges to develop stackable credentials, a sequence of credentials that accumulate over time to build up an individual’s qualifications and help them move along a career pathway or up a career ladder.

2. Expand and revise the Registered Apprenticeships program at the Department of Labor a. Combining on-the-job training and classroom instruction through the apprenticeship

model; The concept of a formal, paid training program that combines on-the-job and classroom instruction can be applied to virtually any field, including the rapidly expanding health care and business administration sectors

b. If the United States had as many apprenticeships per capita as Germany, our system would support almost 7 million apprentices (versus 358,000 in the US).

3. Establish a “Career Internship” standard in order to allow for a shorter-term alternative to the Registered Apprenticeship program

a. While many employers offer internship programs, the quality of these experiences vary dramatically. Young workers currently have no way of knowing whether an internship opportunity is a reasonable investment of their time.

b. A federally administered “Career Internship” standard would create a set of parameters that employers would need to attain in order to participate, with eligible programs combining a long-term internship with a school-approved employer, where internship hours serve as a substitute for some classroom hours.

i. Positions would pay at least minimum wage but require a maximum number of hours per week in order to earn high school or college credit.

ii. Would also include a component to allow out-of-school youth the opportunity to participate.

iii. The program would give youth necessary workplace experience while giving employers an opportunity to evaluate and retain future employees.

4. Increase the financial incentive for employment through an expanded Earned Income Tax

Credit (EITC) targeting childless adults, including younger workers a. The EITC provides a tax refund for low-income workers b. But all childless workers under age 25 are ineligible for the EITC, which means that

millions of young workers receive none of the program’s proven benefits. c. Such proposals have the potential to incentivize employment for young people, and to

reduce poverty amongst those who are working. 5. Ramp up AmeriCorps

a. AmeriCorps places thousands of young adults into intensive service positions at non- profits, schools, public agencies, and community and faith-based groups across the country.

b. AmeriCorps members have a 27 percent higher likelihood of finding a job after being out of work.

c. The demand for AmeriCorps slots far outstrips the supply, particularly at a time when non-profits are having trouble meeting people’s needs.

6. Reinstate the Youth Opportunity Grant (YOG) program a. YOG ran for five successful years between 2000 and 2005, targeting resources in high

poverty areas and incorporating research-backed strategies for improving education and employment opportunities for at-risk youth.

b. Congress defunded the program in 2005 7. Create pathways to success for out-of-school, out-of-work youth by overhauling school

dropout prevention policies a. Just 78 percent of U.S. students graduate from high school in four years. Graduation

rates for African Americans and Hispanics are even lower, at 66 percent and 71 percent, respectively.

i. Earn about 25 percent less than their peers with a high school diploma or equivalent, and that gap grows over the course of a career.

b. Competitive grants program to school districts and non-profit organizations for comprehensive programs with wrap-around services designed to increase the high school graduation rate in high-poverty high schools, enable students who have left high school to return to obtain their diplomas, and facilitate the entry of graduates of these high schools into institutions of higher education.

8. Reauthorize and reform federal policies to improve Career and Technical Education (CTE) a. Focus on aligning skills taught with skills demanded by high-growth industries in local

labor market and beyond 9. Boost Mentoring

a. Data shows that effective mentoring results in improved academic performance, reduced truancy, better health outcomes, reduced juvenile crime, reduced adult crime, and reduced need for social services.

b. Currently, 18 million kids in the United States want and need a mentor, but just three million have one; public investment returns $2.72 for every dollar spent.

10. Encourage partnerships to improve impact a. Wherever possible, policies should aggressively incentivize collaboration between the

workforce development system, higher education, and employers to encourage opportunities for students to simultaneously earn credit for work-based learning.

11. Engage employers in building a solution

a. Employers should be involved from start- to-finish in the design of new programs and policy around workforce development

for youth, and the White House Toolkit provides a good example of a policy effort to integrate these valuable partners.

12. Invest in the existing high-quality programs that reconnect young adults to education and employment opportunities

a. Investing appropriately in today’s programs so that service providers can truly meet the needs of their clients is critical to paving the way to a vibrant labor market for the next generation of American workers.