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Young Money: In November, Youth Unemployment Rate Hits Its Lowest Point In Years

This Sept. 19, 2013, file photo shows workers at the Target Technology Innovation Center office in San Francisco. According to a survey by Fidelity Investments, millennials between the ages of 25 and 34 are saving a median of 7.5 percent of their pay for retirement, including whatever match they get from their jobs.

CREDIT: AP/Jeff Chiu

In November, the youth unemployment rate fell to 10.1 percent, its lowest rate since 2007. This marker continues 2016’s steady decrease in unemployment among youth aged 16 to 24. Indeed, compared to the 2014 average youth unemployment rate of 13.4 percent and the 2015 rate of 11.6, the 2016 year-to-date youth unemployment average of 10.4 appears to be a strong improvement. However, it’s important to contextualize this decline within the labor force participation rate (LFPR), as will be discussed later. The overall unemployment rate, which measures the percentage of unemployed Americans 16 and older actively seeking work, fell to 4.6 percent in November, bringing the 2016 year-to-date average to 4.9 percent. The economy also added 178,000 jobs.

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Even when segmented by race and ethnicity, the youth unemployment rate dropped across the board. The white youth unemployment rate fell from 8.8 percent in October to 8.3 percent in November, with a 2016 year-to-date average of 9.3 percent. At 17.7 percent, the year-to-date black youth unemployment rate remains nearly double that of white youth, and fell from 18.3 percent in October to 16.6 percent in November. The Latino youth unemployment rate fell slightly, to 10.5 percent, while the Asian youth unemployment rate dropped significantly, from 8.3 percent in October to 5 percent in November. The Asian youth unemployment rate is more vulnerable to large changes month to month, as it is a much smaller sample size. However, it’s also important to note that different ethnicities that fall under the Asian youth unemployment rate umbrella face very different employment outlooks. As a 2014 report from the Department of Labor notes, “The aggregate statistics…tell an incomplete story of the economic status of the AAPI community. There is a great deal of variation in these economic outcomes across ethnicity groups, disparities that have their roots in different immigration histories and many other factors.”

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As mentioned earlier, a decline in unemployment rates is generally assumed to be a positive indicator of a strong economy, but must be analyzed alongside the labor force participation rate in order to fully understand its meaning. While the unemployment rate tracks only those who are actively working or looking for work, the labor force participation rate measures the proportion of the population that is working. In 2016, the youth unemployment rate has averaged to about 10.4 percent, while the labor force participation has stayed around 55 percent. And while the youth unemployment rate has steadily declined since recession-level highs, the youth LFPR has not returned to pre-recession levels. For youth, this may mean that more young people are opting to go back to school rather than enter the workforce, or simply that they have decided to leave or avoid entering the workforce because of poor job outlooks. In November, the youth labor force participation rate rose slightly, to 55.1 percent, and the overall labor force participation rate fell 0.1 percentage points, to 62.7 percent.

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Are your struggling in today’s economy? Are you feeling better about the dropping unemployment rates? Share your story to help us understand the your everyday life, and what policies would help you and your family feel more economically secure.

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