For those of us who’ve studied unemployment trends over the past two decades, including sustained impacts of the Great Recession of 2009, it comes as no surprise that young people are among the hardest hit by recent shocks to the labor market caused by COVID-19. Most young people, those ages 16 to 24, were already at a disadvantage, well before the pandemic struck. Many young people do not have enough job experience, job-specific skills, or personal savings, nor have they had time to build strong relationships with employers. Young people have historically been more vulnerable to unemployment, an issue that might be greatly exacerbated by the COVID-19 pandemic (see graph below).
When Mathematica partnered with the Schultz Family Foundation to analyze the data on disconnected youth, we decided to focus on youth unemployment and how this massive public health crisis threatened the financial well-being of young people. Not surprisingly, our work has revealed stark differences in unemployment trends among youth when comparing data from 2019 through May 2020. Although this assessment may be in line with our expectations, our analysis has revealed some critical insights into what the future holds for this generation of Americans.
The COVID-19 shock – young people among hardest hit
Shelter-in-place and stay-at-home orders, combined with social distancing measures introduced between March and April 2020, sparked extraordinary unemployment rates across the county. In April 2020, 32 percent of all young people ages 16 to 19 were unemployed. For young people ages 20 to 24, just over a quarter were jobless. These numbers are remarkably higher than youth unemployment rates recorded at the peak of the Great Recession, likely because the pandemic is impacting the education system and certain types of jobs and industries in a way never seen before.
Historically, Black or African American youth are disproportionally more likely to be unemployed, both compared with other youth groups and to their adult counterparts. Since the pandemic hit, data reveal that unemployment rates have spiked for every gender, racial, and ethnic group. In May 2020, although the unemployment rate among White youth declined, the rate among Hispanic, African American, and particularly Asian youth continued growing (see figure below).
We’re learning as we go – what we know so far
To understand why youth might be particularly affected by the pandemic, we turned to youth’s employment patterns and educational outcomes. The literature review Mathematica conducted for the Schultz Family Foundation has helped us better understand the “why” piece of the puzzle. Why are young people so disproportionally affected by these issues? We’ve learned several important lessons from this research:
- Retail and hospitality industries, the two industries in which nearly half of youth works, were hit hardest. These industries depend heavily on consumer spending, but since the COVID-19 pandemic hit, consumer spending has experienced sudden drops. This trend has greatly affected jobs and young workers in these industries. The eschewing of public places and activities can also affect the availability and stability of jobs youth have in retail, and food and beverage sales.
- Most jobs that youth do cannot be done from home. A recent study estimates that only 14 percent of jobs in retail and 4 percent of jobs in hospitality can be done from home. It means that jobs that a significant share of youth do are more likely to disappear with the pandemic. Those youth who do continue to work in these jobs face serious health risks because they cannot practice social distancing.
- The pandemic is causing a major disruption in the education system. Unemployment rates are substantially lower among those with a college degree. Given the uncertainty about college life, some students may choose not to enroll. That, combined with ongoing challenges of affordability, mean that few students enroll or stay enrolled because of the uncertainties around what college life will be during the pandemic. The shift and disruption in the education system might permanently scar the employment prospects of these youth.
- Many young people do not have access to unemployment insurance. The Coronavirus Aid, Relief, and Economic Security Act, passed by the U.S. Congress in March 2020, expanded unemployment benefits to workers affected by the pandemic. However, in its early form, the Act excludes from coverage students who leave school and look for work for the first time, and students who leave school but cannot find work due to the economic downturn for reasons that are not directly related to COVID-19. Consequently, many young people are still ineligible for unemployment insurance programs and lack an institutional safety net.
Tracking youth unemployment with timelier, more-precise data
As this summer is beginning to show, the pandemic could further exacerbate the economic, health, and educational disparities of African American youth, who face not only limited opportunities for meaningful and well-paying jobs but also persistent structural racism in communities and institutions.
To better understand these deeply troubling issues, monitoring youth unemployment is more urgent than ever. More refined and frequent data will allow policy makers and donors understand which communities are hardest hit and who the most vulnerable youth are. Such data will further allow policy researchers identify and promote evidence-based strategies and interventions to tackle youth unemployment. To help these efforts, Mathematica will continue providing timely and publicly available data on youth unemployment in selected metro areas, and by gender, race, and ethnicity groups at the state and the national level.