Millennial Unemployment: Why Are Younger Americans Still Struggling in This Economy?
The economic prospects for millennials are not promising. Their December unemployment numbers showed little change and foretell longer-term problems. The overall unemployment rate stayed constant at 7.8%. However, workers 20-24 years old had difficulty finding jobs and their unemployment rate jumped from 12.6% to 13.7%. At the end of the year, 2.25 million workers in this age group were still looking for employment. On a positive note, a greater share of the 20-24 year old group entered the labor market increasing participation from 71% to 71.7%, the highest rate since last February.
Older millennials fared better as the unemployment rate of out of work 25-34 year olds dropped to 7.7% decreasing their unemployed total to 2.6 million, down from 3.1 million a year ago. Other age groups fared even better. Their unemployment rates were: 6.6% for 35-44 year olds, 5.8% for 45-54 year olds, and 5.9% for 55 and older.
What do these statistics mean for younger millennials generally? For one thing, based upon current job creation, millennials who want to work will not have many options. It will likely take more than a decade for pre-recession employment rates to return. Further, millennials will probably be more inclined to accept jobs with lower salaries and ones that are not commensurate with their education and experience.
Spending cuts will exacerbate the problems. We do not know how the president and Congress will deal with cuts, pending the new rounds of negotiations due to take place over the next 45 days. However, most analysts agree that severe cuts will be necessary to decrease deficits and the growth of our national debt. Millennials will be impacted to a great extent by federal cutbacks that will surely touch every branch of government as well as thousands of social programs. The counter to this, hopefully, will be more confidence among business people and more spending by them that will create new jobs.
Looking ahead, millennials face numerous other problems that have been magnified by recent actions by the president and Congress. Whereas greater spending in the short-term will potentially help young people, in the longer-term, it will increase the national debt that they will inherit. Analysts have predicted deficits could elevate U.S. debt to $25 trillion or more over the next ten years. The burden will ultimately result in fewer services for all Americans in coming years.
Regarding Social Security, Medicare, and Medicaid, it is puzzling that millennials have been mute. If entitlements are not curtailed, they will consume the entire revenue stream of the federal government. This will necessitate incremental borrowing for all discretionary expenditures. Yet, young people are not making any noise as their elders gobble up these future security nets offered by the government.
Continued Federal Reserve easing will also impact millennials as their savings, if they have any at all, will generate very low returns. This phenomenon will negatively similarly affect seniors who depend upon income from their savings.
And finally, the acquisition of a home will be out of reach for most millennials. Today, unlike the years before the housing bubble burst, a borrower must have a good credit score, weekly income that approaches monthly mortgage payments, and a limited amount of total debt. The dream of owning a home will be elusive for many younger people.
The bleak picture painted above includes scant employment opportunity, federal spending cuts, increased federal debt, less financial and medical security, lower investment rates, higher taxes, and a tight mortgage environment that will make life more difficult for millennials.
If it is any solace, at least millennials do not have to be concerned with being drafted into military service and fighting an unjust war half way around the world as many baby boomers experienced in the 1960s and 1970s.