How the economic recovery is leaving young people behind

Wednesday, May 7, 2014

How the economic recovery is leaving young people behind

By Mandi Woodruff 4 minutes ago Yahoo Finance

In this April 10, 2014 photo, Jennifer Stickney, a recruiter for Right at Home, which provides in-home care and assistance, answers questions from nursing students at a job fair on the campus of Kaplan University in Lincoln, Neb. The Labor Department on Friday, May 2, 2014 said U.S. employers added a robust 288,000 jobs in April, the most in two years, the strongest evidence to date that the economy is picking up after a brutal winter slowed growth. (AP Photo/Nati Harnik)

Any period of unemployment can have a crippling effect on a worker’s career and finances. But to be both young and unemployed in America presents its own set of unique challenges.

Workers under the age of 30 have contended with five solid years of double-digit unemployment — 19% for 16- to 19-year-olds and 10.6% for 20- to 24-year-olds at last count. The economy is slowly improving and there are jobs to be had again. The overall U.S. unemployment rate dropped to 6.3% in April as 288,000 jobs were added -- the highest in two years, the Labor Department announced Friday. But young people who haven’t been able to find work are now struggling to compete in a tough job market with little experience.

“The longer you’re not in the workforce, the harder it is to get back in,” says Rory O’Sullivan, deputy director of the Young Invincibles. “Employers look at resumes and there are a lot of young people working outside of their field of study. You can imagine all those things can make it harder to build a career.”

As many as one in five high school graduates and one in 10 college graduates are considered “disconnected youths,” those who are not working or enrolled in college, according to a new report by the Economic Policy Institute, a liberal think tank.

“There is little evidence that young adults have been able to ‘shelter in school’ from the labor market effects of the Great Recession,” the authors write. “Increases in college and university enrollment rates between 2007 and 2012 were no greater than before the recession began—and since 2012, college enrollment rates have dropped substantially.”

If these “idle” young people were factored into unemployment rates, it would raise the combined rate of unemployment for 16- to 25-year-olds from 14.5% to 18.1%.

And of those young people who have managed to find work, nearly half are considered to be underemployed, often working in part-time jobs that may have little or nothing to do with their chosen career path. What’s more, young people who graduate in 2014 will likely earn less than they would have if they had graduated in a stronger economy, the EPI report says.

Wages for high school graduates have dropped by 9.8% since the recession and wages for young college graduates fell by 6.9%.

Youth unemployment isn’t just a “young people” problem either. A recent report by the Young Invincibles estimates it has cost the U.S. economy nearly $9 billion in lost tax revenue since 2007. Each unemployed 18- to 24-year-old represents an estimated $3,200 in lost tax revenue, and each 25- to 34-year-old costs more than twice as much: $7,000. And with nearly one-third of millennials living at home with their parents, parents who might have otherwise been enjoying the relief of an empty nest must instead continue their roles as financial guardians.

The reality is that young people are disproportionately impacted by economic downturns and no matter how much the U.S. economy improves, they will be feeling the effects of the recession for many years to come.

We spoke with several young people under the age of 30 -- all solidly in the “underemployed” camp -- who are struggling to launch their careers.

Photo: Sara Beck

“My resume is a work of art.”

Sara Beck, 28, has spent the better part of a year trying and failing to find a full-time marketing position in Plymouth, Minn.

Her troubles have little to do with her lack of education or job skills: She has an MBA in international business, spent six years working abroad, and speaks perfect Spanish.

“My problem is that I’m either too experienced or not experienced enough for some of the jobs I want,” she says. “I had a really promising interview, but I got an email recently that they decided to go with candidates whose experience aligned more with the requirements. It was an entry-level position.”

While Beck pursues a career in the U.S., her husband, a Chilean national, stayed behind in Santiago to work on obtaining a work visa. She’s caring for their daughter on her own while living with relatives until she can find work.

“I can't send my daughter to the daycare of my choice because I'm saving money,” she says. “I have more than $70,000 left in student loan debt. It's insane to think about.

In the meantime, she has cobbled together enough freelance work to stay afloat — writing, editing and translating gigs that put food on the table but don’t necessarily improve her odds of landing a marketing job.

“I try to take a job in, say, content writing and apply it to a job as a business analyst,” she says. “My resume is a work of art."