World Economy

No Change in US Youth Unemployment

No Change in US Youth UnemploymentNo Change in US Youth Unemployment

The economy added 292,000 jobs in December, and the unemployment rate is at a very low 5%. The number of young people who remain unemployed, however, is still very high, as the 16.1% rate among those ages 16 to 19 shows.

The unemployment rate among the young has not changed much in a year. It was 16.8% in December 2014. That month 957,000 people in the 16 to 19 age group were without jobs. Last month the figure was 938,000, Yahoo quoted Wall Street as reporting.

One theory about high unemployment among young people is that their delayed earning power will show up in the economy a decade or more later. As compensation remains low, young people will not buy homes and become significant consumers, and perhaps they will lose the chance for a college education. They will reach their prime earnings years a decade behind where their employment and wages traditionally would be.

Another theory is that Americans over 65 are more likely to keep working full time because many do not have the financial means to retire. That, in turn, keeps skilled people in jobs that might go to the young. People between 16 and 19 are trapped in an economy in which retirement rates undermine their chances for full-time work.

No matter what the exact cause, an unemployment rate among the young that is three times the national average represents trouble for the economy in years to come.

While the Obama administration is touting the good news that the unemployment rate is down to just 5%, the reality is things couldn’t be worse for America’s 50-year-old-and-up workers.

The nation’s labor force participation rate, which measures the share of Americans at least 16 years old who are either employed or actively looking for work dipped in June to a 38-year low—less than 63%. It’s still that low now.

What are the implications? The country is losing seasoned workers, and it has to be seen if younger people are prepared to face the challenges in a global economy that the 50-plus worker understands.

Jim O’Sullivan is the chief US economist at High Frequency Economics. He said the good weather in December could be thanked for the rise in positions: “We suspect the rise in payrolls in December was helped by milder-than-usual weather around the time of the sample week.”

The Guardian reports that the US economy added 2.65 million jobs in 2015.

Rob Carnell, chief international economist at ING Bank said: “One considerable disappointment in this survey, and perhaps a more important one as far as the pace of future [federal interest rate] hikes is concerned, is the wages figures.”

“Consensus had been looking for a modest 0.2% month-on-month increase, which would have taken wages into a range they had not inhabited since before the financial crisis. Instead, wages still seem to be struggling to rise.”