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Why America's youth aren't finding jobs

August 6, 2013: 12:00 PM ET

The July employment report shows that the job market for 16- to 24-year olds is worse than you think, and it could have long-term effects for the economy.

<> on February 9, 2009 in San Francisco, California.FORTUNE – What it is to be young and unemployed in America has been widely reported, but July's report on the health of the jobs market offers a new snapshot of the scale of the problem.

Some economists have argued youth unemployment isn't as bad as it's made out to be, since many enrolled in school or college are neither employed nor looking for a job and therefore aren't counted as part of the workforce. Of all other months, July provides one of the more accurate pictures of what young people face today -- it's a time when most are taking a break from school and looking for work.

During the Great Recession, the share of 16- to 24-year-olds who were neither enrolled in school nor working full-time fell. Unlike the rest of the population, the decline hasn't improved much: In July, 36% of young people worked full-time, 10% less than the same month in 2007 before the economic downturn. To be sure, July is a time when young people have taken on summer internships, and so the statistics reflect those with paid internships, as well as those with unpaid internships but have taken part-time jobs.

"They're not in school, so what are they doing?" asks Diana Carew, economist at Progressive Policy Institute, who studies youth unemployment. She points out that July's jobs report shows that the share of unemployed 16- to 24-year-olds not in school stood at 17.1%, compared with 11% six years ago. And while workers in general have been leaving the labor force, partly because they're aging into retirement, it's especially worrisome when young people drop out: In July, 8.4 million 16- to 24-year-olds stopped looking for work altogether, a rise from 6.8 million a year earlier.

MORE: July's jobs bummer: Want fries with that?

However slowly the economy has been creating jobs, it's still surprising why so many young people, particularly those who aren't in school, are still having a tough time. The bulk of jobs created in July were in retail, restaurants, and bars. These certainly aren't the highest-paying gigs, but they demand fewer skills and would naturally attract those with less education. What's played out is what Carew calls "The Great Squeeze," where the dearth of middle-skilled jobs have forced many workers to settle for whatever they can get, taking lower-skilled jobs for less pay and therefore squeezing those with less education and experience out of the workforce.

The trend has ripple effects. It's hard for most anyone to be out of work, but it's particularly harsh for young people trying to get their start; in many ways, they will likely suffer the most. Factoring in foregone experience and missed opportunities to develop skills, research shows that workers unemployed as young adults earn lower wages for many years following joblessness. It has been estimated that those who experience long-term unemployment during the worst of the recession will lose more than $20 billion in earnings over the next decade, which translates to $22,000 per person, according to an April report by the Center for American Progress.

And all this has wide-ranging implications for the economy, as we've seen in everything from home to car sales. If anyone wonders why the economy isn't growing as fast as the pace of jobs growth, it might help to give America's young people a closer look.

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About This Author
Nin-Hai Tseng
Nin-Hai Tseng
Writer, Fortune

Nin-Hai Tseng covers economics and finance. Before joining Fortune, Tseng was a reporter at The Orlando Sentinel and a public affairs associate at GE. She holds an MPA from Columbia University and a BS in Journalism from the University of Florida. She lives in New York City.

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