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Young Money: In September, Youth Labor Force Participation Rate Reaches Highest Level In 7 years

The youth unemployment rate ticked slightly upwards in September, but youth labor force participation increased as well.

CREDIT: Pexels.

In September, the unemployment rate fell 0.2 percentage points to 4.2 percent while the economy lost 33,000 jobs—the first loss in jobs in seven years. Meanwhile, the youth unemployment rate, which tracks just those aged 16 to 24, ticked slightly upward from 8.9 percent in August to 9.1 percent in September. Many economists believe the recent Hurricanes, which devastated much of the southeastern United States and Puerto Rico and the U.S. Virgin Islands, may have caused the loss in jobs, but that these losses and other aberrations are likely temporary.

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A young person’s economic outlook continues to be shaped by one’s race and ethnicity. In September, the black youth unemployment rate was nearly double the white youth unemployment rate (14.2 percent and 7.8 percent, respectively). These numbers are essentially unchanged from August, and mirror long-term trends indicating that white youth experience below-average unemployment rates while black youth face disproportionately high unemployment rates compared to the overall youth unemployment rate. The 2017 year-to-date youth unemployment rate is 9.3 percent, while the year-to-date black youth unemployment rate is 14.9 percent and the white youth rate 8.2 percent. Latino youth also face disproportionately high unemployment, though not to the same extent as black youth: in September they faced an unemployment rate of 9 percent with a year-to-date average of 9.6 percent. The Asian youth unemployment rate, which is subject to large swings because of its small sample size, was 8.1 percent in September, and 9.1 for 2017 thus far.

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Though the unemployment rate is a well-known indicator of economic health, the labor force participation rate (LFPR) is another important gauge. While the unemployment rate looks at how many people out of those working or looking for work are unable to find work, the LFPR measures how many people are working out of the entire population, including those who are looking for work and those who are not (the latter of which is not included in the unemployment rate). Without a strong LFPR, then, a low unemployment rate could be meaningless. In September, however, both the youth and overall LFPRs climbed to their highest levels in recent years. The youth LFPR in September was 56.2, its highest in 8 years, since August 2009. The overall LFPR was 63.1, which is the highest its been since March 2014. The upswing for youth paired with a low unemployment rate is good news for young people: it means the unemployment rate isn’t low because young people are giving up on finding work but because more people are looking for and successfully finding work.

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