Prosperity Watch Issue 41, No. 2: Young North Carolinians enter a challenging labor market

In order for North Carolina to be economically competitive in the future, young people gaining additional skills through education and work experience has become increasingly important given the changing nature of work opportunities. For many young people, entering the labor market during a recession has profoundly hampered their ability to find work, particularly jobs that provide the potential for advancement and higher earnings over time.  In combination with the rising cost for post-secondary education, many young North Carolinians are not engaged in either school or work.

The unemployment rate for North Carolinians between the ages of  16 and 24 was 19.4 percent in 2013, up from 10.3 percent in 2007 and more than twice the 7.9 percent unemployment rate for North Carolinians overall. Nearly a third of young North Carolinians are underemployed, and a quarter of those who are working part-time are doing so because there are not full-time opportunities available. The number of young people in the workforce has dropped by 11 percent since 2007.

Digging deeper into the age group of North Carolinians 20 to 24 years old, the findings are more disturbing given the importance of these formative years in the labor market and in getting the skills training and education that promotes success in the labor market and civic life.

From 2000 to 2013, the number of North Carolinians age 20 to 24 years old not in school and not in work increased by 48 percent compared to just 25 percent for the nation. This translates to 77,000 more young North Carolinians who weren’t pursuing further education and hadn’t found work over this period. As would be expected, with the growth in the number of so-called disconnected youth, the employment levels in this population have declined.  In North Carolina, the decline was steeper than for the nation from 2000 to 2013. The employment-to-population level for 20 to 24 year olds declined by 22 percent over this period compared to a decline of 15 percent for the nation.

Work experiences before the age of 25 have a profound effect on the lifelong earnings of a worker.  Research shows that entering the labor force during a recession, when jobs are scarce and wages are low, continues to depress a person’s wages for the next 10 to 15 years. A young person without a successful work experience by the age of 25 has an increased risk of poverty, while youth who are unemployed or not in school are more likely to end up in the criminal justice system, both of which create broader costs to society.

Making sure post-secondary education remains affordable, that pathways into employment are facilitated through apprenticeships and paid internships for example, and that jobs are available for those who want to work is critical to ensuring better labor market outcomes for young North Carolinians who are the foundation of North Carolina’s future economy.
 

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