Seven months ago, the world abruptly changed for America’s youth. As the World Health Organization declared the coronavirus a global pandemic, young people lost their jobs en masse as service and retail employers shuttered their businesses, and college students were sent home from campus to finish the school year online. By April, one in four of young people between the ages of 20 and 24 were unemployed, even as some became part of the new essential workforce. Young people will feel the impact of the pandemic-induced recession for decades to come and will bear the brunt of its economic consequences.
Young people are the future of America’s workforce and economy, yet relief efforts by policymakers have mostly overlooked them. Policymakers must center young people, and especially young people of color, in efforts to rebuild America’s economy if they are to avoid damage that could cripple a generation.
Young Workers’ Precarious Position
While the economy was touted as strong before the pandemic, young people were already struggling as they were confronted with stagnant wages, student loan debt, and high costs of living. In fact, young adult poverty was on the rise before COVID-19, a trend that has only accelerated. As delineated in a recent Century Foundation report, unemployment rates for young people in April, the first full month of the pandemic, were 30 percent for those ages 16 to 19 years old and 24 percent for those ages 20 to 24 years old. And by September, the unemployment rate remained at 14.6 percent for 16 to 19 year olds and 11.7 percent for 20 to 24 year olds. Breaking down these rates along racial demographics shows a far more fractured picture. Before the recession, young Black men and Native American men already had unemployment rates above 10 percent, and the unemployment rates during the pandemic increased fastest for Native American men and women. Meanwhile, young white women have experienced the fastest recovery. By September, unemployment rates for young white women went down to 8.6 percent compared to April’s 27.1 percent; however, young Black women’s September unemployment rates still hover at 18 percent. Young Black, Latino, Asian, Native American, and mixed-race men and women have September unemployment rates ranging between 12.8 percent and 23.5 percent, compared to their white female and male peers’ 8.6 percent and 11 percent, respectively. It is clear that employment losses among young people due to COVID-19 have not been spread equally.
The impact of this economic upheaval is only just beginning for young people. Research shows that those who graduate from high school and college amid recessions have major income losses that affect long-term earnings. Even with time, some college graduates’ earnings never recover.
Generation-Z will feel the long-term impact of this pandemic more than any other generation. Consisting of those born after 1996, with the oldest turning 23 years old this year, Gen-Z contains many recent high school and college graduates—young adults just starting careers. While Gen-Z is on track to become America’s most educated and most racially and ethnically diverse generation yet, the pandemic has already dealt a devastating blow to its economic engagement. As college students were sent away from campuses in March, their income sources evaporated because jobs they typically had did not shift online. And the onset of the recession-pandemic also had an immediate impact on young adults who are neither enrolled in school or working. The youth disconnection rate spiked back in April, from 12 percent to 20 percent of young adults neither enrolled in school nor working. One factor to blame for this skyrocketing disconnection rate is the significant job loss among young adults, a burden likely felt more drastically by those without college degrees.
The food and retail industries were among the hardest hit. Lockdown restrictions meant stores and restaurants shuttered, and the work of staffing cash registers or waiting on tables simply disappeared. Young people make up a disproportionate amount of workers in the retail and food sectors, so this shuttering led to young people being laid off en masse. Young people employed in food preparation/related serving occupations and in sales saw jobs in these sectors contract by 33 percent in May, and recover to only the mid-20-percent range by August.
The school year wrapped up online in May and for a lot of high school and college students, plans for summer jobs and internships faded away. In a normal year, summer is usually the highest period of employment for young people—it’s when students build work history, skills, and professional networks that help secure jobs after graduation. But that was not the case this year. The online job platform Glassdoor reported a 49 percent decrease in internship postings in May 2020 compared to May 2019, indicating an enormous loss of important experience-building positions. Studies show that graduates entering the job market with internship experience have lower unemployment rates and higher wages five years post-graduation.
In July, 52 percent of those between the ages of 18 and 29 years old had moved back in with family—the highest share of young adults living with family since the Great Depression—and growth was sharpest for those ages 18 to 24.
Because young adults suddenly found themselves disconnected from work and school in droves during the pandemic, many moved in with family. In July, 52 percent of those between the ages of 18 and 29 years old had moved back in with family—the highest share of young adults living with family since the Great Depression—and growth was sharpest for those ages 18 to 24. While a summer uptick in this statistic is normal, as college students often return home during break, the 2020 uptick was much larger than normal. Nearly one in five of all young adults who moved back in with family reported that the decision was directly related to financial reasons, including the loss of a job.
Even many employed young adults who were starting work or whose jobs shifted to telework moved back to a family home. This resulted in the strange reality of starting a career or first full-time job from childhood bedrooms instead of an office. While this may not have an immediate impact on earnings and wealth, it can have a long-term impact on careers. For young people who start a new job via Zoom, the consequences of missing out on building in-person office relationships are unknown. A key element of building a positive professional track record is rooted in the moment-to-moment interactions within the physical office space. This is a serious obstacle for working Gen-Zers who are struggling to establish their professional presence in an online work environment. How will they learn the skills necessary to thrive in the workplace and develop meaningful, rewarding, successful careers if their only experiences are happening from their couch?
The shift to telework was not equal, either. Data from the Bureau of Labor Statistics show that those with a high school diploma or less were among the least likely to be in telework-feasible jobs, along with young adults ages 15 to 24 years old. The COVID-19 economy is not sustainable for people who cannot perform their job functions online.
How Policy Has Fallen Short for People
Emergency economic assistance issued during the pandemic has often bypassed young adults. The federal government passed the CARES Act in March in its initial round of COVID legislation. Part of the $2 trillion CARES Act included a one-time payment of $1,200—however, many young adults were left out of this, such as full-time college students between the ages of 19 and 24 whose parents claim them as dependents. In April, 38 percent of college students lost their jobs because of COVID-19, and some were forced to move out of campus housing with nowhere to go—including those with dependent status—and no stimulus money to help.
The CARES Act also set up Pandemic Unemployment Assistance (PUA) for those who do not qualify for traditional unemployment, such as college students and other young adults—a marked improvement on the existing unemployment insurance system, which is often inaccessible for young workers.. But while PUA offered support to these overlooked populations, it was—and still is—complicated by the patchwork nature of state unemployment offices. Some young adults’ traditional unemployment insurance applications initially resulted in benefits paid out, but many have since been forced to pay benefits back to the state. In most cases, that money was spent long ago, likely on rent or food, and those people—in addition to being unemployed—now are saddled with debt to the state government.
Emerging research indicates that getting evicted during young adulthood can have severe negative effects on mental and general health that can stretch to nearly ten years post-eviction.
Overall, the CARES Act helped curb the most drastic consequences early in the pandemic, particularly through its Federal Pandemic Unemployment Compensation program (FPUC). For young people who did qualify for regular unemployment insurance or PUA, the $600 extra in FPUC benefits helped stave off the worst of the deprivation. However, it did not help new jobseekers graduating from high school or college into a recession economy, or reset the unemployment insurance system to help future young workers who lose their jobs in the now-recession economy if it is not directly attributable to COVID-19.
The CARES Act also included an eviction moratorium in federally subsidized housing, covering between 28 percent and 45 percent of rental units across the country. While this ban helped curb evictions, it did not assist renters with accruing debt—an important factor, given that nearly one in six renters are not caught up on rent. This has particularly stark racial disparities, as one in four Black renters and one in five Latino renters are not caught up on rFent compared to just one in ten white renters. In July, policymakers allowed the moratorium to expire, and in September, the CDC enacted its own eviction ban, but again, it also did not address rental debt. The CDC eviction ban expires in December, when we could see an enormous wave of evictions, just as winter sets in and another wave of COVID could be spreading. Because young people tend to be primarily renters—82 percent of young adults living independently were renters in 2015—the eviction wave will likely impact them more severely than older generations. And losing the roof over their head doesn’t just have immediate impacts on young people. Emerging research indicates that getting evicted during young adulthood can have severe negative effects on mental and general health that can stretch to nearly ten years post-eviction.
Key provisions of the CARES Act expired at the end of July. There is still no relief package, even as we near the end of November and eight million people have been pushed into poverty since May. People of color make up a disproportionate number of those eight million newly in poverty, worsening the already existing racial disparities of COVID-19. With high unemployment and a lack of relief targeted toward them, young adults are likely to make up a disproportionate amount of those newly in poverty.
Policy Action That Would Assist Young People
Young people desperately need support in mitigating this pandemic-induced recession. Absent policy action to provide relief and invest in young adults, the deprivation they face will be baked into their economic futures, setting back their generation and the U.S. economy as a whole for years to come.
To avoid this long-term economic damage, as a first step, the federal government needs to pass a comprehensive relief package that addresses the needs of young people and builds on successful portions of the CARES Act. The House of Representatives passed the HEROES Act in May, but it has stalled in the Senate. A second bill passed in the House in early October, but it has faced a similar fate in the Senate.
In addition to immediate COVID-19 relief, to ensure that young people can thrive as workers and consumers, the nation must also tackle structural barriers that they face, including limited access to a workers safety net for job entrants, the stagnation in wages for entry-level jobs and the student loan debt and the college affordability crisis.
First, young people entering a recession economy with limited work history, through no fault of their own, have little help as they try to get on their feet—something that reforming our existing safety net system by including a Jobseekers Allowance could address by providing financial support for those seeking work.
Long before COVID-19, younger workers were being pinched by a cost of living that was rising as wages were stagnating. The federal minimum wage has not been raised for more than ten years, and today remains at a paltry $7.25 an hour. High-paying jobs are scarce and the job market is only worsening for new graduates. For young workers just entering the workforce, their salaries are often lower than they would have been pre-recession, setting the baseline for their lifetime earnings at a lower position. To ensure that the lowest-paid workers—often, young workers—earn enough to subsist on, the federal government should increase the minimum wage for hourly jobs to a wage that more closely resembles a living wage. For example, to afford rent on a one-bedroom home without spending more than 30 percent of income, an individual must on average earn an estimated $19.56 an hour, more than 2.5 times the current federal minimum wage. The minimum wage should reflect a living wage.
The pandemic has also accelerated trends that have made completing a college education far less affordable for this generation than previous ones. Just before COVID-19, the U.S. hit a grim milestone: $1.6 trillion of student loan debt. Nearly 70 percent of the class of 2019 took out student loans and the average cost of attending a public college for the 2019–20 school year was $26,590. The pandemic has made this situation even worse: an August 2020 Census survey found that, among those who planned to attend college this fall but did not end up doing so, and 42 percent said they had an inability to pay for college because of an income loss. All the while, universities have raised tuition and fees. We have long known that the cost of higher education is on the fast track toward a crisis for young people; letting it continue on this path during a recession would make it even worse.
Policymakers should realize that scores of unemployed youth needing jobs provides an opportunity of sorts during national crises.
Policymakers should realize that scores of unemployed youth needing jobs provides an opportunity of sorts during national crises. As a way to address both the need for a COVID-19 public health workforce and the high unemployment rates among young people, the federal government could take the bold step of creating a jobs program focused on the needs during the pandemic. Senate Democrats have already introduced several pieces of legislation to do this, including the Pandemic Response and Opportunity Through National Service Act, which would expand Americorps programs to partner with public health agencies, as well as increase Americorp positions and compensation for volunteers. Such a jobs program should target its recruitment toward young people, including the thousands of young people out of high school and college who are not connected to the labor market or enrolled in school. A federal jobs program could employ thousands of young people while building out a federal public health workforce to engage in contact tracing and testing, something state governments have not yet mastered eight months into the pandemic.
Finally, policymakers should utilize this disaster to take action on another looming crisis: climate change. Without meaningful action in the next few years, we are all but ensuring a “climate apocalypse” by 2050. A 2019 survey of 18 to 25 year olds found that 41 percent listed climate change as the most important issue facing the world—further instilling that the same young adults who are currently being burnt by the COVID-19 pandemic and recession will also be the adults who have to figure out how to mitigate a changing climate. The transition to a green economy needs workers and young people need jobs—the federal government could kill two birds with one stone by initiating something akin to a Climate Corps program and other green jobs programs that create a sustainable workforce to tackle the looming climate crisis while providing good paying jobs.
Young people are the engines behind the nation’s future economy—if they cannot enter the workforce and earn, purchase, and save, the damage done could last a generation. Policymakers should center young adults in upcoming COVID-19 relief packages and policies to improve their economic well being—and that of the macroeconomy—for years to come.
header photo: A waiter stands outside of a restaurant as New York City eateries are allowed to open their doors to 25 percent capacity in New York City. Source: Spencer Platt/Getty Images