YOUTH UNEMPLOYMENT IS DOWN, BUT ARE YOUNG PEOPLE ACTUALLY WORKING?

Author:De Rugy, Veronique
Position:ECONOMICS
 
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LAST SUMMER, PRESIDENT Donald Trump was jumping with joy at news that the unemployment rate for workers between the ages of 16 and 24 had reached a worth-tweeting-about 50-year low.

At the time of the president's Twitter post, youth unemployment had dropped to 9.2 percent. It was later revised to 8.6 percent, then dipped to 8.1 percent in November--a rate unseen since February 1969. It currently stands at 8.9 percent.

These numbers are a helpful indicator of America's improving labor-market conditions, signaling that younger Americans looking for a job are having an easier time finding one. The United States has seen an overall decline in the youth unemployment rate from its Great Recession height of 19.2 percent in December 2010.

But this happy figure doesn't tell us everything we need to know. The unemployment rate is a narrow measure that counts only those who are actively looking for work. One way to get a broader view of the health of the labor market is to look at the labor force participation rate of younger Americans.

That number tells an interesting, and at times puzzling, story. After a surge from the '60s to the end of the '70s, the share of young adults who are in the labor force--the percentage, that is, who are either working or looking for work--has been declining. Labor force participation for people aged 16-24 fell from 69.1 percent in 1979 to 54.1 percent in 2014. It has since gone back up a little to 55 percent.

The numbers are even lower if you only look at teens: According to the Federal Reserve Bank of St. Louis, labor-force participation for people under the age of 20 peaked at 59.3 percent in 1978 and then started dropping precipitously around 2001 to reach a low of 32.5 percent in 2014. It stands at 35 percent today.

There are many reasons behind this trend. The first is that young people are staying in school longer. According to a February 2015 article at Vox, "More than 16 million people in the US--about 8 percent of the population--now have a master's, a 43 percent increase since 2002." This also means more teenagers spend their summers beefing up their college applications by doing internships, mission trips, math camps, and other classes, rather than working.

Another factor exacerbating this trend is the increase in minimum...

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