Young Adults Are Dropping Out of the Job Market

Is it any wonder?

Almost five years into the post-crash recession there arent many jobs available and those that are tend to be in food service. Living at home because they cant afford their own place, reducing auto purchases because the price of gas, insurance and the cars themselves is becoming unsustainable, young adults have - in some cases quite sensibly - either gone back to school if they can afford it - or are working in the gray economy where their efforts and pay can not be tracked.

The causes have been endlessly debated: technological advances in which many have not kept up; a generation's worth of cutbacks in education that have left emerging workers under-prepared; ideological opposition to the current President that has stymied attempts at government stimulus; loss of faith in the future by senior executives whose compensation is structured to reward them for risk avoidance - and, therefore, denies long term investments.

Whatever the combination of reasons - and all of those above plus others are candidates - the implication is that the societies emerging from this period will be less well equipped to seize the opportunities that may be coming. JL

Chris Isadore reports in CNN:

The drop in the unemployment rate in August isn't particularly good news for the economy -- it's driven mostly by nearly 400,000 people dropping out of the labor force, rather than more people finding jobs.

But those dropping out aren't so much the discouraged 30-, 40- or 50-year olds. In fact, the Labor Department said there was a modest decline in the overall number of discouraged job seekers. The drop is because so many young adults, aged 16 to 24, are no longer looking for work.
There were 453,000 fewer young adults with jobs in August than in July. But despite that plunge, only 27,000 more young people were looking for new jobs. Most apparently stopped looking and left the labor force. And those numbers take into account seasonal factors such as younger workers returning to school.

As a result, the percentage of young people who are counted in the labor force fell to its lowest level since 1955.

The unemployment rate for young adults rose to 16.8% from 16.4% in July.

"I don't think they're more lazy. It's that there are less opportunities for them," said Heidi Shierholz, labor economist, at the Economic Policy Institute, a liberal think tank. "They have it rough."

But how can the overall unemployment rate fall if people aren't finding work?

Fewer job seekers can drive down the unemployment rate even if there are fewer people working because the labor department only counts those with a job or actively looking for work as in the labor force. If the size of the labor force declines more than the number of people who say they have jobs, the unemployment rate can fall for the wrong reason. That's what happened in the August jobs report, as the overall unemployment rate fell to 8.1% from 8.3%.

But there was some good news buried in an otherwise unsatisfying drop in the overall unemployment rate -- things got a bit better for older workers, the key wage earners in the economy.