Employment prospects for the youth have been gradually improving after a massive decline during the 2008 financial crisis. However, the coronavirus pandemic has surprised young Americans with a devastating blow. According to the research data analyzed and published by Stock Apps, youth unemployment in the US during the pandemic hit the highest level in more than 70 years.
The report reveals that in April 2020, the unemployment rate for young Americans aged 16-24 years hit a high of 27.4%. Notably, during that month, lockdown-related layoffs were at their highest.
By July 2020, the unemployment rate among the youth had dropped to 18.6% and further down to 14.7% in August.
According to data from Eurostat, the US had the biggest increase in unemployment among the youth. In January, the youth unemployment rate was 8%, rising to the aforementioned April high. On the other hand, overall unemployment was 3.5% in January.
In May 2020, according to Pew Research data, the global youth unemployment rate was 25.3%, almost double the rate of other age groups. Interestingly, the changes in unemployment rates by age groups were consistent with the trends recorded during other recessions. During the 1930’s Great Recession, youth unemployment peaked at 20% but never surpassed 10.9% for older workers.
Data from the US Bureau of Labor backs these statistics up with solid numbers. According to a news release published in August 2020, employed youths increased by 4.4 million between April and July 2020, marking a total of 17.5 million employed youths.
Though the month of July usually has the summertime peak in youth employment, only 46.7% of youths were employed in July 2020. In contrast, in July 2019, 56.2% of youths were employed.
Pew Research explains that part of the reason for the disparity between youths and other age groups has to do with their concentration in high-risk industries. These include drinking places and food services, which were among the most affected by lockdowns and social distancing directives.
Interestingly, the situation was vastly similar in other countries. For instance, in Italy, the crisis saw youth unemployment rates drop from 28% to 23.5%. Similarly, overall unemployment in the country went from over 9% in January 2020 to under 7% in April.
Thanks to short-term work schemes and expansionary monetary policies, countries like Germany have remained relatively stable. In January 2020, the German youth unemployment rate was 5.5%, dropping slightly to 5.4% in July. Of all countries that were covered in the Eurostat report, this was the best performance.
Changes in employment rates in the US during the pandemic period were widespread among all demographics. For instance, the unemployment rate among women in May was 14.3% while for men it was 11.9%.
Among the reasons for the disparity between women and men is the fact that women are the major employees in the hospitality and education sectors. Employment in hospitality dropped by 39% between February and May, while in education, the drop was 15%.
The number of unemployed Americans rose by a whopping 14 million between February and May 2020 according to Pew Research. In February, the number was 6.2 million, representing a rate of 3.8%, going up to 20.6 million or 13% in May.
The February rate was one of the lowest on record during the post-World War II era. On the other hand, the rate recorded in May was the second highest during the same era. It was only second to the April rate when it peaked at 14.4%.
It is noteworthy that during the Great Recession, the number of unemployed Americans rose by 8.8 million between the end of 2007 and the start of 2010. During this period, the unemployment rate hit a peak of 10.6% in January 2010.
Also worth noting is the fact that the actual unemployment rate could have been much higher than reported. The US government estimates that in May, the rate could have been as high as 16%. During that month, at least 9 million Americans who were not in the labor force needed jobs, compared to 5 million in February. None of these workers were included in the official count. This situation would make the pandemic-related recession more comparable to the Great Depression which took place in the 1930’s, resulting in a 25% unemployment rate.
Nica is a BA Political Science graduate, startup founder and financial expert. She has an entrepreneurial spirit and started several startups from a young age, eventually becoming fascinated with stocks, cryptocurrencies and the blockchain economy. She specializes in financial tech and her expertise is in writing detailed tutorials and guides on how to invest in stocks and cryptocurrencies. Nica has written for many other websites, including Crypto Browser, Coin Review, LearnBonds, and Inside Bitcoins.
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