This Economy's Biggest Losers: Young Adults
Why law school applications are a bearish sign
Last week we wrote about the K-Shaped story and the actual winners (people with jobs) and losers (people who need jobs) of the current economy. This week’s post is about the demographic suffering most under current dynamics: young adults (a topic we wrote about at length last November).
First, the unemployment rate for young adults has spiked. Since reaching a cyclical low about three years ago, the rate for people 20-24 years is up about 3 percentage points, while the rate for prime age workers (25-54) is up less than 1 percentage point.
This actually understates how bad the situation is for young adults, because many of them simply aren’t looking for work. The employment to population (EPOP) ratio for those 20-24 years has plunged over the past 18 months, while the prime age EPOP ratio has barely budged (note that we had to do a dual y-axis so you could see what’s happening in this graph).
What are they doing instead of searching for jobs? A lot of them are applying to law school, and that’s how you know the labor market really sucks for young adults.
College grads know when their job prospects are shot and, predictably, apply to law school (ironically, this makes it a brutal time to apply for law school and a few years from now a brutal time to graduate from one).
Of course, it’s not just young college graduates who can’t find jobs. The 20-24 year unemployment rate for those who never attended college has risen similarly.
The Upshot
It’s not that it’s a particularly tough time to be a young adult in search of a job, it’s that it’s a particularly tough time to be in search of a job, and young adults often are.
Yes, it’s getting pretty bleak out there for young adults, but this is still nothing compared to what certain Millennials who entered the workforce in 2009 and 2010 experienced.
What’s Next
There’s a lot more to say about the K-Shaped economy and who’s suffering in the no-hire no-fire environment. Stay tuned.
But next up is Week in Review, our every-Friday post that covers everything you need to know about the economy in a breezy, five-minute read. This week was loaded with data releases, including a critically important one on inflation.
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