Born After 1985? Chances of Joblessness Are Higher

Unemployed businesswoman depressed.
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People under 35 have borne the brunt of employment declines over the past 20 years, representing two-thirds of the overall worker shortfall in 2020, a new analysis by a Federal Reserve economist shows.

Looking at the share of the population employed in 2020 versus 2000, people born after 1985 accounted for 67% of the estimated 12.7 million workers under 60 who were “missing” from the workforce last year, William Emmons at the Federal Reserve Bank of St. Louis wrote in a blog post March 4. Those between 35 and 59 represented just 33% of the missing workers, despite making up 55% of the 16-to-59 age group. 

“Weakness in the job market in 2020 was experienced very differently across age groups and genders,” Emmons wrote in the post. “Young men and women felt the greatest impact of lower employment.”

The lower employment trend among young people is worrisome both for young adults’ sake, and for the potential growth of the economy overall, according to Emmons. Unemployment can have lasting effects on someone’s prospects for future employment, and on a broader level, unemployed youth means unused labor potential, less input from people who theoretically have the most up-to-date skills, less consumption in the economy, a smaller tax base for the government, and higher social welfare costs for society.

“Low employment rates among young adults are concerning because research shows that scarring—an increased risk of future unemployment as well as diminished earnings prospects when finding a job—is more consequential for that group,” Emmons wrote.

Scarring is likely to lead to a cycle where spells of unemployment alternate with low-paid and unstable jobs as well as underemployment, Emmons said, citing previous research.  

One of the biggest factors in the decline of under-35 jobs may be that there are simply fewer jobs for young people without college degrees now than 20 years ago; weaker demand for less-educated young workers has stemmed from increased competition from China and the rising deployment of robots and other kinds of technology, Emmons said in an email March 5. In addition, fewer very young people (16-24) who are in school also work, he said.

Other possible reasons for the decline include both controllable and uncontrollable factors: a reduced stigma around not working, increased difficulty relocating or finding different kinds of work, difficulty finding childcare, video game addiction, and opioid use, Emmons added, citing a September 2020 article in the Journal of Economic Literature.

Men born after 1985 had it the worst last year, making up 22% of the 16-to-59 population but accounting for 43% of the unemployed, Emmons’ analysis showed. Among women, those born after 1995 were hardest hit.