Labor market weakens for young, less educated workers

Mitchell Hartman Sep 8, 2023
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Young adults without diplomas are "canaries in the coal mine," said Bill Rodgers at the Federal Reserve Bank of St. Louis. "When the economy slows down, they tend to be the first ones to lose their jobs.” John Moore/Getty Images

Labor market weakens for young, less educated workers

Mitchell Hartman Sep 8, 2023
Heard on:
Young adults without diplomas are "canaries in the coal mine," said Bill Rodgers at the Federal Reserve Bank of St. Louis. "When the economy slows down, they tend to be the first ones to lose their jobs.” John Moore/Getty Images
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We’ve been hearing a lot about the job market slowing down: Openings have been gradually falling, as has hiring. And wage increases have moderated.

And — maybe because inflation and dwindling savings are leaving folks strapped for cash — more people have come off the sidelines and started looking for work, driving the unemployment rate higher.

As cracks emerge in what was (until a few months ago) an incredibly strong job market, workers on the margins — especially younger workers — are starting to suffer.

Let’s be clear: The labor market is still very good for most workers. But as job creation and hiring lose some of their vigor, “that has started to have an adverse impact on the employment outcomes of out-of-school young adults,” remarked economist Bill Rodgers at the Federal Reserve Bank of St. Louis.

Rodgers — who spoke for himself, not the St. Louis Fed — was talking about 16-to-24-year-olds with no more than a high school diploma.

While employment levels have held steady for most groups in recent months, he said the share of these younger workers who are employed has declined by about 5 percentage points.

“They’re at the bottom of the job ladder,” he said. “They have the least amount of education, they have the least amount of skills. Many have structural barriers to work: transportation challenges, issues around being an ex-offender, mental health.”

And here’s the upshot, Rodgers said: “These young adults — I call them canaries in the coal mine. Past research has shown when the economy slows down, they tend to be the first ones to lose their jobs.”

Manny Rodriguez sees the problem firsthand at the nonprofit he runs in Chicago. Revolution Workshop provides pre-apprenticeship training to prepare young people for jobs in construction.

“Especially youth in underserved communities, they’re starting from a negative position,” Rodriguez said. “So when they start at a job, they’re still only making $18, $19, $20 an hour at that point. And so when they get laid off, it hurts.”

That could set them back further from getting more training and earning a living wage, he added.

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