When is an economic recovery not an economic recovery? When you’re among the hundreds of thousands of young people being left out of any revival in the jobs market.
The latest employment statistics underscore the dismal state of affairs for those between the ages of 15 and 24: The jobless rate last month was 14.7 per cent.
It is this same demographic cohort that accounted for more than half of the job losses of the most recent recession – the one out of which we’re said to be climbing. But the turnaround has been virtually non-existent for the young; just 1,300 net jobs have been added over the last 2½ years among this group. Nearly 200,000 have left the work force since the recession began.
Participation rate in the job market by youths – a group that includes most college and university graduates – is at a 16-month low and approaching the horrid levels of 1995. This has prompted many students to continue going to school and accumulating record levels of debt.
Oh, to be young again.
It seems any time I lament the lousy employment prospects for today’s youth, I hear the same thing – that it’s the same for every generation. Except it’s not. Not only are today’s university graduates competing with each other for jobs, they’re competing with those who graduated ahead of them and who picked up a few years of experience before being laid off in the last recession. And they’re also fighting a relatively new phenomenon: the older worker.
Canadians 60 and older have accounted for about one-third of all job gains since the economic recovery started in July, 2009. Beyond that, boomers are staying on their jobs beyond the age of 65 for a variety of reasons – some because they need the money, others because they can’t picture themselves retiring to some gated community like, well, old people.
This would all be fine except being young and graduating during tough economic times can have long-time consequences.
A 2006 Canadian study considered university-employer-employee data from 1982 to 1999 to evaluate the long-term impact of graduating in a recession. It was a period that covered two recessions, in fact, both as, or more, severe than the one we’ve just been through.
The report by Philip Oreopoulos, Till von Wachter and Andrew Heisz said that young graduates entering the labour market in a recession suffer significant initial earnings losses that take eight to 10 years to recoup. The report found that the earnings success one experiences upon graduation often depends on the sheer luck of good timing; graduating during a recession can affect a person’s entire career and those with the lowest predicted earnings upon graduation suffer proportionately more during poor economic times than those whose predicted earnings are higher.
A similar U.S. study that looked at students who graduated from college before, during and following the 1980s recession reached similar conclusions. “The labour market consequences of graduating from college in a bad economy are large, negative and persistent,” said a 2009 draft of the report authored by Lisa Kahn.
I wish I had more to offer young people than my sympathy. The current job conditions for them are brutal and unfair. They have a far less certain future than many of us had at a similar age. That includes job security and perks, such as lucrative pension plans, that are disappearing by the day.
If there’s been a positive development, it’s that the job picture is brightening for those 25 and older. Employment in this category is now 400,000 above prerecession levels.
“The good news is that evidence shows that wage gap suffered by those graduating during tough times eventually closes, although it takes a while,” says Francis Fong, the TD bank economist whose recent report on the plight of today’s young workers gained national attention.
And Mr. Fong might know. He told me there were no jobs when he graduated from university with an economics degree so he went back to school to get his masters. Today – at 28 – he seems to be well on the way to closing any wage gap he experienced.