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Unemployment Crisis For Younger Workers

July 14, 2012

By Diana Furchtgott-Roth

Summer is half over, yet many young people are still looking for jobs. They have it especially tough in this economy. The effects of the recession have fallen most disproportionately on them. The unemployment rate for teens is 24.6 %, and the rate for young adults ages 20 to 24 is 13.7 %.

Even those with bachelor’s degrees don’t have it easy. The unemployment rate in 2011 for new graduates with a bachelor degrees was 9%, nearly double the 4.9% rate the same group experienced in 2006.

These unemployment rates not only suggest personal disappointment but also lasting effects. University of Toronto economics professor Philip Oreopoulos, Columbia University professor Till von Wachter and economist Andrew Heisz of Statistics Canada found that graduating in a recession leads to earnings losses that last for up to 10 years. New workers suffer greater losses than those already on the job, who might see smaller raises but already established themselves before the recession. In addition, recessions lead workers to accept employment in small firms that pay lower salaries.

Huge college tuition increases have also left those same new workers with substantial debt. The graduating class of 2011 left school with student loans of almost $23,000, the highest on record. Last November, the Pew Research Center issued a report, "The Rising Age Gap in Economic Well-Being," concluding that the gap in well-being between the young and the old is greater than ever before. The older age group had 47 times the net wealth of the younger group in 2009, compared with a multiple of 10 a quarter century earlier.

What to do? In order to help younger workers, Congress and the administration could expand the teen exemption to the minimum wage. The minimum wage unduly affects young and low-skill workers. Congress could add more certainty to the tax system —rates are scheduled to skyrocket on Jan. 1— and reduce corporate tax rates, the highest in the industrialized world. Finally, Congress could streamline regulations to make America a more welcoming place to do business.

Americans are facing an employment problem on a scale that our government at times seems incapable of grasping. Action is needed now. It might be too late for the summer of 2012, but not for the summer of 2013.

Original Source: http://www.usatoday.com/news/opinion/forum/story/2012-07-13/youth-unemployment-taxes-teenagers/56178650/1

 

 
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