May BLS Report Portends Bad Economic News for Youth

By Joe Guzzardi
June 8, 2015

The moderately bullish May Bureau of Labor Statistics jobs report distracts from concerns about the market conditions that await this year’s crop of college graduates and the nearly four million high school students who recently turned 18. Both young Americans with university diplomas and teenagers who need to work to save for college or for family reasons face challenging futures.

Superficially, the May data is encouraging: the economy added 280,000 jobs, wages rose 0.3 percent over April and 2.3 percent since last year to reach their current $24.96. Another positive: the labor force participation rate moved up to 62.9 percent from 62.8 percent.

Analysts need to dig beneath the headlines to get to the less heartening news. The wage gap between hourly workers and management is steep; non-supervisory wages lag hourly supervisory earnings by an average $4 an hour and increased 25 percent less than total wages. According to BLS, the May average work week was 34.5 hours, defined as part-time by most employers. The plight of the 8.7 million unemployed Americans, a number that’s been unchanged for more than a year, remains grave as does the future for 2.5 million long-term unemployed.

In its report titled “The Class of 2015,” the Economic Policy Institute (EPI) analyzed market conditions for new workers, and speculated whether they soon may become under-employed or eventually one of the long-term unemployed.
Included in its key findings:

• Unemployment and underemployment rates among young graduates have improved but are still substantially higher than before the recession began. For young college graduates, the unemployment rate is currently 7.2 percent compared with 5.5 percent in 2007, and the underemployment rate is 14.9 percent versus 9.6 percent in 2007.

• For young high school graduates, the unemployment rate is 19.5 percent compared with 15.9 percent in 2007, and the underemployment rate is 37.0 percent compared with 26.8 percent in 2007. Women and minorities fare worse.

• The failure to find employment is not attributable to a lack of education or skills but rather because the economy’s weak demand for goods and services makes employers reluctant to hire. Graduates are often forced into lower-level jobs.

• Young college and high school graduates may have less incentive to seek employment because wages are significantly lower today than in 2000. For high school and college graduates, the pay scale is 5.5 percent and 2.5 percent lower than 15 years ago.

• Regardless of overall economic conditions, the unemployment rate of workers under age 25 is typically slightly more than twice as high as the overall unemployment rate.

Obviously, young people with their newly minted diplomas face huge hurdles to land their first jobs and   work their way up to solid middle class incomes. Yet EPI and other mainstream analytical organizations ignore a variable that exacerbates American unemployment for young and old: immigration.

Statistics taken from the Census Bureau’s Household Employment Survey show that from January 2009, the month of President Obama’s inauguration, through May 2015, foreign-born employment rose by 3.3 million workers or 15.2 percent. Since more than one million legal, work authorized immigrants arrive each year, American worker displacement is inevitable.

U.S. immigration policy is on auto-pilot. Regardless of tight economic conditions, high American unemployment, or stagnant wages, the White House and Congress persist in adding one million new workers each year, issuing more than 500,000 guest worker visas, and allowing an untold number of illegal immigrants to cross the border.

Looking at the White House’s six-year record, its major disappointment is its abandonment of American workers and denying young people their rightful chance to live the American dream.

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Joe Guzzardi is a Californians for Population Stabilization Senior Writing Fellow. Contact him at [email protected]