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Young Money: Youth Unemployment Falls To Lowest Rate In A Decade But Participation Remains Low In May

Youth unemployment fell to 8.8 percent in May, its lowest rate in over a decade.

CREDIT: Pexels.

While young people across the country finished up the school year and began to look for summer or permanent work in May, the Trump administration worked to reverse several policies that help ensure young workers’ success. The Trump budget, for instance, would cut funding for workplace development and several crucial student loan forgiveness programs that allow workers with student loans the ability to keep their repayments manageable and their shot at economic stability in reach. Though unemployment rates continue to fall—in May, the economy added 138,000 jobs, the overall unemployment remained unchanged at 4.3 percent, and youth unemployment fell to its lowest rate in a decade, at 8.8 percent—these gains are by no means guaranteed, especially when we consider reversing programs that help our youngest workers achieve economic stability.

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The unemployment rate for youth has fallen steadily since the height of the Recession, but employment outlooks continue to vary wildly depending on young workers’ race or ethnicity. In May, white youth experienced a 7.4 percent unemployment rate, Asian youth faced an unemployment rate of 7.2 percent, and Latino youth held an unemployment rate of 8.2 percent. Black youth, however, faced an unemployment rate of 14.8 percent—nearly two times higher than any either racial or ethnic group. Thus, while unemployment rates have fallen for every racial or ethnic group we track since the Recession, the discrepancies among them have not.

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While low and falling unemployment rates are generally taken as a positive sign, the unemployment rate offers limited insight on its own and must be viewed in the context of the labor force participation rate, which measures the percentage of the entire population that is working. Though the youth unemployment rate is currently the lowest it’s been in over a decade, the unemployment rate only measures people who are actively looking for work, not people who have given up on searching. These people—the “long-term unemployed”—are, however, accounted for in the labor force participation rate, which decreased from 55.9 percent in April to 55.1 percent in May for youth.

When looking at both the youth unemployment rate and the youth labor force participation rate since the Recession, it’s evident that the youth unemployment rate has returned to pre-Recession levels, but the youth labor force participation rate has not. Young people are simply not participating in the economy at the same levels as they were before the Recession. Prior to the Recession, the youth labor force participation rate hovered at or around 60 percent (61.1 percent in 2004, 60.8 percent in 2005, and 60.6 percent in 2006) but today the figure is closer to 55 percent (55 percent in 2014 and 2015, 55.2 percent in 2016, and 55.6 percent so far in 2017). While there are numerous possible reasons for this decline in youth labor force participation (including more young people pursuing higher education in the wake of poor job prospects), it’s clear that falling youth unemployment numbers on their own don’t tell the full story and that we must be doing more, not less, to give young people a shot at economic stability.

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