Economic Downturn Hits Young Adults Particularly Hard, Study Shows

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Young Americans between the ages of 16 and 24 have endured the worst of early job losses associated with the current economic downturn, according to a new analysis by Northeastern University's Center for Labor Market Studies (CLMS).

The overall drop in the employment rate for young adults has been nearly five times greater than that experienced by Americans ages 25 and over. This sharp decline has affected virtually all groups of young adults, including teenagers as well as those in their early 20s and high school graduates as well as college graduates.

Underscoring the dramatic impact of the recession on young adults, CLMS Director Andrew Sum noted that nearly all of the employment rate gains they have achieved during the economic boom of the 1990s have been wiped out over the course of a single year.

"Labor market conditions among the nation's young adults will continue to deteriorate further as the nation's overall unemployment rate continues to rise," said Sum. "If the recession doesn't end until the middle of this year, young workers may not see substantial improvements in their job prospects until early 2004."

A Disproportionate Burden

Examining a three-month period (Sept.-Nov.) in late 2000 and comparing it to the same three-month period in 2001, CLMS researchers found that the total number of employed persons in the United States (ages 16 and over) fell, on average, by 803,000.

Employment among the nation's young adults (ages 16-24) dropped by 603,000 over the same period, accounting for a stunning 75 percent of the net job loss caused by the current economic downturn.

Young people typically are hit harder by lay-offs and hiring freezes during periods of recession. Conversely, economic booms benefit young adults disproportionately. The presence of higher wages, a significant number of jobs available, and fewer barriers to entry attract large numbers of young people to the labor market.

The recent decline in the employment rate is particularly troubling, however, because it comes at a rime when the total population of young adults is growing. While greater numbers of young people wanted to enter the labor market, employers were hiring and keeping fewer on their payrolls.

Widespread Impact

Most young adults have felt the effects of the economic slowdown. The sharpest drop in employment rates occurred among high school graduates without post-secondary education. Their employment rate dropped by more than four percentage points. By November 2001, less than three-fourths (72 percent) of these young adults were employed.

In contrast, young adults who did not complete high school were the only group within this age range that have not seen their job prospects worsen during the slowdown. This surprising exception to the broader trend partly reflects the fact that employment rates for high school dropouts are always quite low even in more prosperous times (57 percent in November 2001).

Population increases for a variety of demographic groups -- most notably among Asians, Hispanics and recent immigrants -- are likely to fuel further increases in joblessness unless new public policies are adopted to counteract these trends. …