Real Unemployment Rate: For Millennials It's a Crushing 16%, and Getting Worse
Last week’s jobs report was pretty bleak. Almost no one is even paying attention to the official unemployment rate anymore as we know it’s not an accurate measure of how many Americans are out of work. The more accurate barometer is the labor force participation rate, which measures the number of working age people (18-64) actively working or looking for work. It’s now hit a low not seen since 1979: 63.3%. That means 90 million working-age Americans have given up looking for work altogether, bringing the real unemployment rate up to 11.6%.
It shouldn’t really come as a shock as means-tested welfare recipients are hitting new historic highs. A record 70.4 million Americans – or 20% of the country – are now on Medicaid at a cost of $404.1 billion in 2011 (both federal and state spending). A record 47.8 million Americans – or 15% of the country – is now on food stamps at a cost of $74.6 billion in 2012. A record 8.9 million Americans are now collecting Social Security disability payments with a deficit tab of $31.2 billion in 2012. That’s a cost of more than half a trillion dollars for those three programs alone.
On top of that, any job growth that has come since the recession has been in part-time hires. The reasons for this are numerous. To corporations, the benefits associated with employing part-time workers are countless: Avoiding substantial benefits-related costs, evading long-term job contracts, hourly basis wages, etc.
In fact, as long as the Obama administration’s policies prevent strong economic growth (and it will for quite a while according to the non-partisan CBO), employers will have even more leverage, while workers have less (and are forced to agree to any employment terms, as long as they get some paycheck at all).
If that weren’t depressing enough, the news is even worse for millennials.
As Director of National and State Policy at Generation Opportunity Terence Grado noted in his op-ed for PolicyMic, the real unemployment rate for millennials (18 to 29-year-olds) is at 16.2% – substantially higher than the national real unemployment rate of 11.6%.
Why is this the case? We all know that education plays a factor not just in employment, but in earnings as well. Data shows that the further you take your education, the better your odds are of finding work and increasing your income.
Another factor that you can’t scientifically measure is connections. One thing I’ve learned the hard way through life experience is how critically important connections are. Networking is a major part of moving up in the world, who you know can make all the difference in the world from having your name put in front of the rest of the competition for any job opening to just being resume #37. In many ways, I’m not sure if what you know is even as important as whom you know now.
The third prong in the hiring process is experience, and this is where I think millennials are in trouble.
Baby Boomers are putting off retirement for a variety of reasons. For one thing, we’re living longer than ever before. In 1960, average life expectancy was 70. In 2010, it’s 80. Who’s in a rush to retire earlier so you can sit around and rot for 10 more years? Also, many baby boomers simply cannot afford to retire whether due to their 401Ks taking a hard hit during the Great Recession of 2008 or simply due to poor planning. Either way, the boomers will be working longer as a result.
The problem is this weak job market is not producing nearly enough jobs to compensate for the new crop entering the workforce, so job opportunities are scarce and highly competitive. In addition to education and connections, experience is a highly valuable qualification as well, and most boomers will naturally hold that advantage over millennials.
As a result, older workers have seen a net gain of 4 million jobs since the recession while younger workers have experienced a net loss of 2.8 million over that same time period.
Without that valuable experience, millennials are getting left behind and many of them are forced to make up the lost time by going back to school (including yours truly) and racking up more student loan debt in the hopes that higher education will eventually pay dividends on the return on investment. That, in turn, is only making the job market even more competitive for future job seekers in a sea of JDs, PhDs, MBAs and many other graduate degrees. Indeed, this looks to remain an employer’s market as long as economic growth stays weak.
The ones who I feel sorry for the most are those who don’t even get the education. Low skill jobs are only going to be outsourced more and more as time goes on. There are countless low wage countries that businesses can outsource those jobs to: China, Mexico, India, Vietnam, Eastern Europe, Latin America, etc. In fact, a new report came out recently showing how Mexican wages have dropped even lower than China’s, so don’t bank on any of those jobs coming back to the U.S. anytime soon.
As I’ve written before, the uneducated (especially men) are in the most danger of being left behind in the emerging job market of the 21st century.