For Many Graduates, the Labor Market is Less than Ideal

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A recent study by the Economic Policy Institute that, while the economy has bounced back from the Great Recession, new college and high school graduates, especially minorities such as Latinos, will still have a difficult time dealing with unemployment, underemployment, and living wages. A detailed study looked at the economic outlook for the Class of 2016.

Despite officially ending in 2009, the Great Recession had a lasting effect on the employment prospects of young people. The recession left millions unemployed for prolonged stretches of time. The slow recovery has meant that eight classes of graduates have entered into a very weak labor market and have had to compete with more-experienced workers for limited job opportunities.

According to the Bureau of Labor Statistics, there were 26.1 million Latinos in the work force in 2015 and their unemployment rate averaged 6.6%. Texas had the lowest unemployment rate for Latinos at 4.9% while Arizona had the highest at 8.3%.

The Economic Policy Institute’s study focused on high school (age 17-20) and college graduates (age 21-24) that are not enrolled in further schooling. Despite the progress made in improving the national unemployment rate, the Class of 2016 still faces economic challenges. Wages of young high school and college graduates have failed to reach their pre-recession levels and have either stagnated or declined for every group since 2000.

Other key findings from the report include the vast majority of young people age 24-29 (65.8%) simply do not have a college degree. Access to “good” jobs for these individuals is critical as it allows them to build a career, pay for further schooling, and attend to long-term healthcare needs. For college graduates, the unemployment rate is currently 5.6% (compared to 5.5% in 2007), and the underemployment rate is 12.6% (compared to 9.6% in 2007). For high school graduates, the unemployment rate is currently 17.9% (compared to 15.9% in 2007) and the underemployment rate is 33.7% (compared to 26.8% in 2007).

The overall unemployment rates of young graduates do not convey the severe racial and ethnic disparities that exist in these measures. The unemployment rates of young Latino graduates, both in high school and college, are substantially higher than their white counterparts. Also, the share of young Latino graduates who remain unemployed and not enrolled in further schooling is substantially higher than that of white graduates.

The Economic Policy Institute has determined that the course of action to “fix” these conditions mirror those needed to help workers of all ages in the United States. To lower the unemployment rates of graduates, it is recommended that the Federal Reserve can help ensure everyone that wants a job can find one by keeping the interest rates low until the economy strengthens further. Raising the minimum wage was also discussed as a possible solution.

Read more about the Institute’s study here.

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