Why Youth Unemployment Costs America $25 Billion a Year — and How To Fix It


Six years after the subprime mortgage bubble brought the global economy to its knees, young Americans are still struggling. Youth unemployment has remained in the double-digits for the last 70 consecutive months, according to a new report from "postrecession youth advocacy group" Young Invincibles

The report, "In This Together: The Hidden Cost of Young Adult Unemployment," paints the portrait of a millennial generation crippled by the devastating consequences of the Great Recession, the victims of a dangerous "new normal" that could imperil our nation's economy for decades to come. In a recent interview with the New York Times, Young Invincibles policy and research director Rory O'Sullivan outlines the very real danger that we still face:

"The key takeaway here is that it's not just the individuals who are suffering as members of our generation. [...] When you have an entire generation of people that are out of work, it's going to create tremendous costs for taxpayers both now and in the future."

How large a cost? According to the report, monstrously large:

"If we consider the more than 3.4 million jobs that simply don't exist due to the recession, the total cumulative cost of joblessness for 18- to 34- year-olds borne by federal and state governments is over $25 billion annually. This represents an average annual cost of over $171 per taxpayer."

If we don't confront this crisis soon, the long-term economic consequences will only grow more expensive — and harder to mitigate. Even if we only fail a small portion of our generation, the consequences could be long-lasting: delayed earnings and lost wages will cost millennials aged 20 to 24 an average of $22,000 a year for the next decade. (For anyone keeping score at home, that translates to $21.4 billion in lost tax revenue.)


And yet, the study is careful to note that creating jobs is the key. Why? Because the long-term costs of youth unemployment are mostly tax revenues we're not collecting — not welfare spending:

"The costs to government grow as unemployed individuals age. On average, we estimate each unemployed 25- to 34-year-old will cost his or her federal and state government a staggering $9,875 annually. Putting that in perspective, the average tuition and fees for an in-state resident at a public college during the 2013-2014 school year was $8,093. In any given year, we lose more money on unemployed young people than it would cost to invest in sending them to an in-state public university. [...] Importantly, lost tax revenue, not safety net benefit costs, drive the social cost of young adult unemployment."

Source: Young Invincibles

So how do we fix it? The Young Invincibles report suggests undertaking three initiatives: strengthen "paid service" opportunities, reinstate the Youth Opportunity Grant (YOG) program, and expand the Department of Labor's Registered Apprenticeship program. These are by no means comprehensive, but that may be more of a feature than a bug. While none of these proposals are particularly innovative, they enjoy the dual advantages of clarity and simplicity.

Programs like AmeriCorp, CityYear and the Peace Corp are facing the same job shortage as other employers: AmeriCorps "currently offers only 82,500 positions yet receives more than 500,000 applicants a year." This, in spite of the fact that our national infrastructure is crumbling around us. Programs like AmeriCorp don't just help young people, they help the economy, with a return-on-investment of $2.50 for every dollar spent.


The report also suggests reinstating the Youth Opportunity Grant program dismantled by Congress in 2005. This would immediately provide at-risk youths with much-needed job opportunities. According to Young Invincibles, "YOG created more than 23,500 internship opportunities, placed more than 46,000 young people in jobs, and provided training to almost 23,500 participants for its 5-year, $1 billion price tag. Considering each at-risk youth costs taxpayers $170,740 over their lifetime, YOG, if reinstated, would pay for itself."

Finally, the report suggests expanding our Registered Apprenticeship program. The social benefits to the economy that result from adding just 600,000 "apprentices" could total $74.4 billion.

This is just the beginning. There are a number of other serious challenges these ideas won't address. How do we fix our student loan debt crisis? How do we revive our labor movement to fight for higher wages, greater job security, and stable benefit and pension programs? But before we can address these larger problems, perhaps we need to first address the more immediate and attainable.

The proposals outlined here may not solve all our generation's problems, but they'd be a pretty damn good place to start.