Our Upside-Down Workforce

By Ronald Brownstein

Why millennials can't start their careers and baby boomers can't end theirs

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It's hard to say this spring whether it's more difficult for the class of 2011 to enter the labor force or for the class of 1967 to leave it.

Students now finishing their schooling--the class of 2011--are confronting a youth unemployment rate above 17 percent. The problem is compounding itself as those collecting high school or college degrees jostle for jobs with recent graduates still lacking steady work. "The biggest problem they face is, they are still competing with the class of 2010, 2009, and 2008," says Matthew Segal, cofounder of Our Time, an advocacy group for young people.

At the other end, millions of graying baby boomers--the class of 1967--are working longer than they intended because the financial meltdown vaporized the value of their homes and 401(k) plans. For every member of the millennial generation frustrated that she can't start a career, there may be a baby boomer frustrated that he can't end one.

Cumulatively, these forces are inverting patterns that have characterized the economy since Social Security and the spread of corporate pensions transformed retirement.

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Since World War II, young people (including those employed part-time in school) have consistently been much more likely to work than older Americans. Federal statistics show that on average during the 1950s, the share of Americans ages 16 to 24 in the labor force (52 percent) was nearly 12 percentage points higher than the share of Americans 55 and older (just under 41 percent). By the 1990s that gap in the labor market participation rate for the youngest and oldest adults had widened to nearly 30 percentage points. At that point, Americans younger than 24 were twice as likely to be employed as Americans older than 55.

But that spread began narrowing after 2000, and it has closed with unprecedented speed during the slowdown. Since December 2006, the employment-to-population rate for young people has fallen by a dizzying 10 percentage points, from about 55 percent to just 45 percent. That decline, much sharper than in previous recessions, has reduced the share of employed young people to the lowest levels in 60 years.

By contrast, the employment-to-population rate for older Americans is slightly higher today (37.6 percent) than it was in December 2006 (37.4 percent). During the long slowdown, no other age group has increased its labor-force participation, notes Heidi Shierholz, an economist at the liberal Economic Policy Institute.

Together, these twin trends have produced an economy in which the oldest workers are now nearly as likely to be employed as the youngest. From January 1948 through September 2009, the labor-force-participation rate of older Americans came within 8 percentage points of the rate among younger people in only one month. Since October 2009, the difference between the two groups has been 8 percentage points or less in every month. One side can't start working; the other can't stop.

In some ways, the change reflects positive trends. Compared with the first decades after World War II, fewer young people are working partly because more of them are in school. And more seniors are working partly because rising education levels have allowed more of them to find satisfying careers they prefer to continue.

But most seniors extending their careers are doing so from necessity, because "the resources they were counting on to retire just aren't there," says John Rother, the policy director at AARP, the giant senior lobby. In the same way, the rapid recent decline in employment among young people hasn't been offset by a commensurate rise in college attendance.

These labor-market trends might be viewed as complementary or even as a benign opportunity for Americans to space out their work life over a different span--from 24 to 68, say, instead of 21 to 65. After all, as life expectancies lengthen, the U.S. can't afford its social-safety net without extending the retirement age. But that would require a systematic effort to help young people use their early 20s to expand their skills and experiences. That's not happening.

Instead, what economists call the idleness rate is rising: The share of Americans younger than 24 neither at work nor in school has steadily increased since 2007. That disconnection creates the risk of what Harvard University labor economist Lawrence Katz calls "a lost generation."

Faster overall job growth would be the best antidote to that threat. But the particular problems of young people demand more-targeted responses. Colleges and universities must see to it that more students don't just start their degrees but also complete them. As Segal says, those institutions must also accept "greater responsibility to ensure" that those graduates leave with skills employers need. Washington, meanwhile, should consider further expansion of AmeriCorps and other service opportunities for this civic-minded generation.

Above all, the class of 1967, which is growing reflexively hostile to government spending, needs to realize the interest it shares with the class of 2011: Unless today's young people ascend into well-paying jobs, it won't be possible to finance Social Security and Medicare for tomorrow's seniors.

Image Credit: Spencer Platt/Getty Images

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