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Freitag '14: A generation we can’t lose

Year after year, college graduates are confronted with headlines about the employment woes of their graduating class. During the Great Recession of 2007 to 2009, unemployment of young adults — ages 20 through 24 — exceeded 200 percent of historical levels, leaving over 600,000 young workers jobless for six months or more. Even for college graduates aged 25 or older, the unemployment rate has been as high as 4.5 percent. More critically, college graduates are not only leaving without jobs, they are remaining jobless for an average of more than six months.

Recent economic indicators — optimistic job reports and Gross Domestic Product forecasts — have been encouraging. But growth in macroeconomic indicators has masked underlying structural weaknesses in the labor market. With high levels of unemployment among young adults, there is an increasing skills gap, with long-term implications for workforce productivity.

First and second jobs are critical for the development of early skills, establishing future salaries and serving as indicators for the economy’s long-term vitality. With employment trajectories shortened before they even begin, the future of the American economy has never been so uncertain.

Economists have long discussed the costs of unemployment on the individual and the economy. When an individual loses his or her job, there are both financial and psychological effects. Losing a job or failing to find one can be incredibly stressful. Fear and anxiety can cause a loss of confidence, resulting in prolonged stints of unemployment.

For college graduates without financial support, the difficulties of unemployment can make it challenging to repay student loans while paying for necessities like food, rent and utilities.

Lengthy unemployment can lead to the erosion of skills and a permanent reduction in projected future earnings. In many professions, entry-level jobs provide the development of skills needed to succeed in the future. Learning to use Excel, research an issue, design a business plan or write a briefing provides workers with the skill set necessary to succeed and understand the ins and outs of a profession. The lack of these skills make individuals less attractive not only for promotion, but also for future job prospects, detaching individuals from the labor market.

The United States is a service-based economy dependent on productivity and innovation for growth. With erosion of skills and a generation of inexperienced college graduates, the economy is in danger of decreased productivity and weakened international competitiveness. Although the entrepreneurial spirit that drives the American economy is still very much alive, industry must increase investment and support for the development of our future workforce.

The development of training programs, which facilitate the transition from school to employment, can help alleviate the effects of large-scale unemployment. It is essential to close the skills gap and prepare young adults — both college graduates and teenagers who may have dropped out of school — to enter the workforce.

But the conversation in Washinton is often dominated by budget debates instead of conversations surrounding how to fix the challenges facing college graduates today. Beyond simply ensuring that college remains affordable for all, Washington and industry leaders must safeguard our future by focusing on job growth.

Industry in parts of Central Europe has taken the lead in reducing youth unemployment. In Austria, vocational training programs that provide apprenticeships after compulsory schooling have been highly successful. About 40 percent of Austrian teenagers are now participating in some type of vocational training program. Similarly, Germany provides a dual-program approach to education and training, where apprentices spend half the week at a company learning practical skills and the other half learning the theory beyond their trades to support their future careers.

The low rates of youth unemployment in Austria and Germany are no coincidence. Though these systems can be expensive to fund, they provide industry with a large supply of workers equipped with the necessary skill sets to succeed. This is surely a worthy investment.

In the United States, the federal government can reduce youth unemployment through expansion of programs like AmeriCorps, a community service network that encourages engagement in nonprofits, schools, communities, et cetera. However, the long-term growth of our economy cannot be ensured by government, but instead by leaders in industry and education.

The government must ensure education remains affordable, while universities must provide curricula that prepare students to succeed after graduation. By creating work-training programs as an alternative to traditional education, industry can also provide opportunities to those who have dropped out of traditional schooling.

While difficult to quantify, the past few years in the U.S. have shown that the economic costs of unemployment are profound. With high levels of unemployment among college graduates for over five years, a generation of young adults has been disadvantaged. As tuition costs continue to rise, student loans move to the center of the political debate and a weak economy struggles to expand, the issue of youth unemployment cannot be forgotten.

 

Scott Freitag ’14 is hoping to be employed at the end of the year. He can be reached at scott_freitag@brown.edu. 



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