The economy is missing between 5 million and 6 million workers. That's how much bigger our labor force would be if there had been no Great Recession, per the Congressional Budget Office.
So, who are the missing five million? That's the question Greg Ip of The Economist recently asked. The above chart from the Economic Policy Institute (EPI) gives us a hint of at least part of the answer: the young.
Let's step back for a minute. Not all of the missing are the same. On the bad end of the spectrum are older folks who have been out of work for so long that they give up and retire early. Much better are younger folks who have gone to school to wait out the recession. They're building up human capital -- if, big caveat, they're in a worthwhile program. A better job should await them upon graduation. But as anyone who's finished law school recently can tell you, things don't always -- or often -- work out that way now.
Still, despite soaring tuition, the only thing more expensive than going to school is not going to school. And that's why so many prime working-age adults (25-54) have gone back to get a degree since 2008. The green line in the below chart from the Atlanta Fed shows us how big the trend has been.
Among prime-age adults, the move back to school has been quite dramatic. But not so much among younger adults. Let's return to them, before putting this all together. Evan Soltas found that workers 20 years and younger are seven times overrepresented among the missing. But our first chart tells us that it's not because more kids are going to college. This second chart from EPI corroborates this: College enrollment only has grown at its 20-year trend, nothing more.
This all points to a rather troubling reality. Our population is becoming even more bifurcated. We have prime-age adults going back to school in unprecedented numbers, and then we have kids who aren't going to school and can't find work. It's a tragedy that will be with us for a long, long time. Indeed, the data on graduating into a recession is quite clear: It impacts lifetime earnings in a big way. But the only thing worse than graduating into a recession is not graduating, but still into a recession. Especially when you aren't building up work experience.
This should give our policymakers a tremendous sense of urgency. A period of protracted under-or unemployment will cast a long economic shadow. And there's good reason to think that the cost of inaction might be higher than the cost of action when the economy is so depressed.