Young people have never done well during recessions. But this particularly severe recession, with a recovery that’s been slower than usual (and than necessary, I might add) is taking an even bigger toll on the lives of younger Americans. A look at the data shows that the labor market has been a pretty harsh place for Millennials. According to BLS, the unemployment rate for Americans under 25 is 12.2 percent, more than twice the rate for 25-to-54-year-olds. They are also over represented in among the long-term unemployed, the ranks of which include 400,000 young people who have never worked in their lives, but have wanted to work for more than 26 weeks in a row.
Joblessness is costly, especially for young adults who have invested time and resources in career-specific knowledge and skills. Studies consistently show that the longer people are unemployed, the less likely they are to find new work. They may lose their job skills over time, have less connections with informal professional networks, or face suspicions from employers about why they were unemployed for so long.
In addition, business formation has slowed down, which tends to hurt the promotion of younger workers. But there’s another way a weak recovery for young people harms the rest of the economy: They aren’t starting households.
The Wall Street Journal has some new data:
Last week, an annual Census Bureau survey showed that the U.S. added just 476,000 households in the year ended in March, compared with an average of 1.3 million in each of the prior two years . . .
The Census releases a separate quarterly survey that also provides household formation figures, though economists say the annual survey is a better gauge of household formation. The quarterly survey has also shown weak household formation—around 650,000 new households—for the same period measured by the annual survey that runs from March to March….
Additional calculations of the same annual survey from Jed Kolko, chief economist atTrulia, show that the U.S. population grew by 2.3 million last year. If household formation continued at the rate of the past few years, the U.S. would have added 1.2 million households last year. Instead, Mr. Kolko’s calculations show it added just 425,000—and nearly all of them were renter households.
Mr. Kolko found that the share of young adults living with their parents ticked down last year, which is good news. The bad news: They didn’t form their own households, perhaps moving in with other relatives or friends.
Millennials are delaying getting married and having children — and who can blame them — which has a visible impact on homeownership rates among their cohort. After a one-year reprieve, homeownership rate for 18-to-34-year-olds resumed its fall last year. It’s down to 13.2 percent, from a high of 17.2 percent in 2005.
I assume that since these young people are delaying marriage and homeownership, they are also delaying starting businesses and postponing getting a better education. All of these factors will have negative effects on the economy’s future growth rates.
Unfortunately for Millennials, one thing isn’t going to be delayed: the bill for their parents’ entitlements.