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Young Money: In April, Youth Unemployment And Labor Force Participation Remain Low

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In April, the economy added 211,000 jobs and the national unemployment rate fell to 4.4 percent—its lowest rate since 2007. The youth unemployment rate, which measures Americans 16 to 24, ticked slightly upward in April, to 9.4 percent from 9.1 percent in March. Despite this slight increase, the youth unemployment rate still matches pre-Recession levels. However, the unemployment rate on its own offers limited insight and must be viewed in the context of the labor force participation rate and broken down by race and ethnicity.

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Though youth unemployment rates continue to look vastly different depending on one’s racial or ethnic background, the rates for white, black, Asian, and Latino youth all fell in April. The white youth unemployment rate dropped from 7.8 percent in March to 7.5 percent in April, far outpacing the 2016 average white youth unemployment rate of 9.2 percent. The black youth unemployment rate, which, at 13.9 percent in April is nearly double that of the white youth unemployment rate, is also faring far better thus far in 2017 than in 2016, when the average black youth unemployment rate was 17.5 percent. In April 2016, the black youth unemployment rate was 17.8 percent—almost 4 percentage points higher. The Latino youth unemployment rate fell one full percentage point in April, down to 7.8 percent. That’s over three percentage points lower than the 2016 average rate for Latino youth (10.9 percent), and two percentage points lower than April, 2016 (9.9 percent). The Asian youth unemployment rate, which offers limited information and is particularly volatile because of its small sample size and wide variation among different subsets of the Asian population, decreased from 9.3 percent in March to 8.4 percent in April. However, this is a higher rate than the 2016 average Asian youth unemployment rate (7.7 percent), though lower than last April (7.9 percent).

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As noted earlier, the unemployment rate offers limited insight on its own—while the national unemployment rate is now at its lowest point since 2007, this could simply be because people who had been searching for work for a long time decided to stop looking. This group—the “long-term unemployed”—are not accounted for in the unemployment rate. Similarly, people who are working part-time but would like to be working full-time are also not included in the unemployment rate. This is where the labor force participation rate, which is essentially the percentage of people who are employed out of the entire population, can provide useful context. In April, the youth labor force participation rate increased slightly, from 55.8 percent in March to 55.9 percent. The overall labor force participation rate fell by 0.1 percentage points, to 62.9 percent. While the youth unemployment rate has returned to pre-recession levels, their labor force participation rate has not—the youth employment-to-population ratio averaged above 60 percent from 2002 (the earliest year we track) through 2007. Though there could be many reasons for this decline (more young people enrolling in institutions of higher education as a result of poor job prospects, for instance), the conclusion is clear: the low youth unemployment rate is not yet cause for full-blown celebration. There’s still more work to do.

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