While the national unemployment rate hovered at around 10 percent last month, there was an even more surprising statistic behind it: the youth unemployment rate, which stands at 20 percent for all 16-to-19-year-olds and a whopping 38 percent for African-American teens. In addition, fewer employers are offering jobs to new college graduates than did last year; we all know 20-somethings who are settling for internships or temporary project work or are busing tables while they wait out the recession. Since economists are predicting that high unemployment could be with us for a while, those underemployed and unemployed young people could stay that way for a long time. That's big news for our economy and our politics.
Extended unemployment affects a young person's entire career, creating an "earnings gap" that can severely limit one's lifetime earnings. Lisa Kahn, a Yale economist, found that workers who began their careers during boom times made 25 percent more than those unlucky grads who began working during the 1981–82 recession. For five, 10, even 15 years after college, those unlucky workers didn't make as much as those who entered the workforce during better times. She found that they also were less likely to work in professional occupations. And once they got a job, they weren't as likely to look around for a new, better-paying one and move up.
As much as two thirds of lifetime wage growth typically occurs in the first 10 years of a career. Austan Goolsbee, now a member of President Obama's Council of Economic Advisers, wrote in the New York Times in 2006: "Graduates' first jobs have an inordinate impact on their career and lifetime earnings. People essentially cannot close the wage gap by working their way up the company hierarchy." That's because as they move up, those who started before them move up, too. And as people get married, start families, and buy houses, changing jobs and careers becomes more difficult.
This group of young people is known among pollsters as "millennials," and in another five years, they will become the biggest voting bloc in our electorate. In a study of young voters that Harvard's Institute of Politics published this week, 47 percent of 18-to-24-year-olds said they would rate their personal financial situation these days as "bad or very bad." Among Democrats ages 18 to 29, 44 percent rated their finances as "bad or very bad"; 37 percent of such Republicans did, as did a massive 59 percent of independents. An across-the-board majority of millennials said they are somewhat or very concerned about how they were going to pay their bills, afford healthcare, or find a reasonably priced place to live.
According to the Pew Research Center, millennials were Democratic by a 2-to-1 ratio in 2008 and supported Obama by a margin five times that of any other age group. But they're fickle. During the Bush years, a Harvard study showed an even split on party identification and a 61 percent approval rating of President Bush 43. Now millennials are drifting again. Democrats hold only a 12-point lead over Republicans among them, and Obama's approval rating has dropped by double digits. One report says roughly half of young voters feel he has failed to change Washington.
So they're frustrated at the lack of "hope and change"; they have few job prospects; they're facing higher and higher taxes for fewer and fewer government services; and it's clear to them that Social Security and Medicare will be bankrupt by the time they are eligible. While many millennials like an activist government, they see discretionary spending on things like job training, schools, and homeland security being eaten up by entitlement payments for older Americans. To quote former Sen. Alan Simpson, they're realizing that without drastic action, "they'll be picking grit with the chickens."
This explains the number of young people at tea parties, town hall meetings, and Ron Paul rallies. They're worried about their future, they've got time to get involved, and they're connecting on Facebook and Twitter. They know what's going on and where to show up.