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Unemployment does not equally affect all workers. Different segments of the population often have different rates of unemployment, whether the distiction is made by race, gender, education, or age. While the national unemployment rate has yet to meet the dismal 10.8% benchmark set in 1982, certain subgroups have, since the start of the recession in December 2007, reached post-War unemployment highs. One of these groups is workers age 16-24, whose unemployment rate peaked at 19.2%. Though young adults represent only 13.5% of the workforce, they now account for 26.4% of unemployed workers. This Briefing Paper will discuss the severity of the unemployment crisis facing young adults, its historical context, and the implications for their future wages and skills.

Young adults in the labor market

Even during periods of economic expansion, younger workers experience higher unemployment. Figure A shows the relationship between unemployment among workers aged 16-24 and the total population.

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. Indeed, the youth labor market is characterized by more “churning” than other age groups as workers try out new fields, different employers, and different cities (Elwood 1982; Gardecki and Neumark 1998). Some see this churning as positive because job mobility can be associated in part with the search for higher wages (Neumark 2002). Topel and Ward (1992) 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.

Unemployment

Current rates
Since the start of the recession in December 2007, young adults have attained the highest unemployment rate on record (since 1948). The unemployment rate for 16-24-year-old workers peaked in September 2009 at 19.2%— passing the peak rate of 19.0% from November 1982—and started 2010 at 18.9%. Between December 2007 and January 2010, the unemployment rate for young workers increased 7.1 percentage points (Table 1).

Moreover, as overall rates of unemployment increase, inequalities between genders and races often become more apparent. The difference between male and female unemployment rates for 16-24 year olds started 2010 at 7.5 percentage points; young men have a rate for 22.5% and young women 15.0%. This is the largest gap between men and women in any age group—the difference for 25-54 year olds is 1.7 points, and for workers 55 and older it is 1.4 points. The disparities between the unemployment rates of white, black, and Hispanic young workers are also stark. Black 16-24 year-old workers had the highest rate, starting 2010 at 32.5%, followed by Hispanics (24.2%), and then whites (15.2%). However, it is 16-24 year-old Hispanics workers who saw the largest increase in unemployment (13.2 percentage points), compared to their black (10.7 percentage points) or white (8.2 percentage points) counterparts.

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