National Service and Youth Unemployment – Strategies for Job Creation Amid Economic Recovery
Federal investments in our national service programs are an important way for Congress and the Obama administration to tackle high unemployment and growing poverty across the nation. The almost two-year-long Great Recession appears to be giving way to an incipient economic recovery, but job growth and wage growth will be slow in the months ahead. Providing short-term employment opportunities for jobless youth and helping to build the capacity of nonprofit organizations to transform participants’ long-term career prospects would strengthen the economy and spur economic demand. This memo provides a brief snapshot of youth unemployment and its relationship to the Great Recession and federal anti-poverty services. It describes several national service programs— including Youth corps, AmeriCorps, and VISTA—that can be part of a strategy to reverse these trends. We also offer specific policy recommendations to maximize job creation by investing strategically in national service programs.
Youth unemployment
Youth are experiencing the greatest challenges finding work in the current job market. Rates of unemployment are directly related to age—the younger you are, the less likely you are to have a job. Consider the statistics for unemployment by age in October 2009, the most recent available. Adults age 18 to 19 have the highest rate of unemployment, at 25.6 percent, and the rate decreases with every older age group. Youth with less education are experiencing more difficulty finding a job than those with more. The unemployment rate for youth 16-24 who haven’t finished high school stands today at more than 30 percent. And unemployment adds to the financial pressure of having to pay back student loan debt for those youth who have obtained a college education, which averages about $22,700. A significant number of young veterans are sadly also finding scarce employment opportunities. Iraq War veterans, who are younger as a group than veterans of other wars, recorded an unemployment rate of 11.6 percent in October, which is higher than veterans of previous wars and more than the national average of 10.2 percent. And this unemployment data does not include the growing number of young people—219,000 in the 16-to-24 age range—who have become discouraged and given up on their job search efforts. Young people who initially cannot find a job often suffer consequences that follow them long after a recession ends. The reason: Time spent not developing work experience makes young workers less competitive for future job opportunities. Indeed, lifetime earnings are diminished with each missed year of work equating to 2 percent to 3 percent less earnings each year thereafter. A study of college students who graduated during the 1982 recession found that they were still earning less 8-10 years later than students who had graduated into a strong economy.
Poverty services: Youth could be of help
Rising youth unemployment coincides with severe troubles for those organizations and agencies that provide assistance to poor and low-income Americans. The most recent Census data confirms what everyone seems to know—poverty is on the rise. In 2008, 39.8 million people—13.2 percent of the population—were living in poverty. A proposed alternative measure suggests even greater actual hardship with one in six Americans living in poverty. Using the official definition of poverty and adding in the near poor leads to a total of 53.8 million people who may be seeking assistance from the nation’s non-profits and relevant government agencies. Current and projected unemployment rates suggest rising poverty over the next several years. The Economic Policy Institute estimates that the U.S. poverty rate will reach 14.7 percent in 2009, and that more than one in four children in the United States (26.6 percent) will be poor by 2010. These trends are not expected to reverse any time soon. Isabel Sawhill of the Brookings Institute predicts that without intervening action, poverty will not return to its 2007 levels for another decade. Yet nonprofit organizations’ ability to respond to the growing need is now severely crimped by state and local government budget shortfalls, declining foundation funds, and a dip in individual charitable giving. Forty-eight states and 91 percent of cities are experiencing fiscal year 2010 budget challenges that affect public services and government grants to non-profits serving low-income residents. Sixty-two percent of surveyed grant makers said earlier this year that they expect their giving to decline in 2009, with nearly half (48 percent) anticipating a 10 percent or more dip in grant awards. Individual giving has historically decreased by an average of 3.9 percent in inflation-adjusted terms during years marked by recessions lasting eight months or more. The upshot: The long and painful Great Recession means there is an increasing need for poverty services at a time when there are decreasing resources for government and nonprofit organization that provide these services. National service and funded youth workers can play a role in addressing these disparities.
