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Young Money: Youth Unemployment Rate Falls To Single Digits For First Time Since 2007

Youth unemployment is down, but labor force participation hasn't returned to pre-recession levels.

CREDIT: Pexels.

Though February marked the first full month of President Trump’s administration, the jobs numbers released today are still largely reflective of President Obama’s economic policies and legacy. In February, employers added 235,000 jobs to their rosters and the national unemployment rate fell to 4.7 percent. For the first time since May 2007, the youth unemployment rate dropped into the single digits, falling to 9.9 percent. Contrastingly, during the peak of the Great Recession, youth unemployment rate levels were as high as 18 percent. Still, this seemingly strong unemployment rate—which follows young people aged 16 to 24—must be contextualized within the labor force participation rate, which has not yet returned to pre-Recession levels.

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February’s jobs numbers show that employment opportunities for young people still look wildly different depending on one’s race or ethnicity. The black youth unemployment rate (16.2 percent) was nearly two times as high as the white youth unemployment rate (8.7 percent). Meanwhile, Latino youth still saw higher-than-average unemployment rates in February (10.8 percent compared to the overall youth average of 9.9 percent), despite falling from January. The Asian youth unemployment rate, which tends to swing volatilely because of its small sample size, ticked slightly upwards, form 9.9 percent in January to 10.3 percent in February.

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While much of the conversation around the health of our economy tends to revolve around unemployment rates, the truth is that in order to more fully understand the state of the economy we must look at how unemployment rates intertwine with labor force participation rates. While the unemployment rate measures the percentage of people who are searching for work but cannot find employment, it does not capture people who have given up searching for work or are not looking for other reasons. The labor force participation rate, on the other hand, measures the percentage of people who are working out of the entire population. Unlike the unemployment rate, this allows us to see not just those who are looking for work and unemployed, but also those who have stopped looking because of poor prospects or other reasons.

In February, the youth labor force participation rate moved upwards slightly, from 55.6 percent in January to 55.8 percent. These numbers still lag behind pre-Recession levels, when youth labor force participation rates still regularly hovered around 60 percent. The youth labor force participation rate in February fell below the overall labor force participation rate (55.8 percent to 63 percent), as it has before, during, and since the Great Recession. Young people, whether in or out of a recession, tend to have more reasons to not be working, whether they’re in school or pursuing another non-work opportunity, pushing their labor force participation below overall participation.

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