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“Anyone working in [youth unemployment] now understands that we are in danger of losing an entire generation.”
The Rockefeller Foundation’s Initiatives do not spring from thin air: Behind the scenes, our Strategic Research team is hard at work analyzing critical global problems and looking for opportunities for the Foundation to catalyze impact at scale. Our research on youth unemployment in the United States, highlighted in this article from Insights, demonstrates what we look for in this process. The challenge that young people face in finding employment in the aftermath of the Great Recession is clearly a pressing problem, with consequences that could last a lifetime. Just as importantly, our research identified opportunities to bridge the gap between young people and employers, leading to the Foundation’s U.S. Youth Employment Initiative.
The following story is from Insights:
It is midday in Houston, Texas. Lani (not her real name), a woman in her late teens who has been unemployed for several months, is trying to stay productive. She has earned some extra cash by styling a friend’s hair, planned a week’s worth of dinners for her family, volunteered to donate blood, and spent hours on the computer searching for employment leads.
But when, during a job interview later that week, a manager of a local café asks what she does during a typical day, Lani falters, unable to fully convey her entrepreneurial spirit and the responsibilities that come with supporting her family.
This story from the daily struggle of a young job seeker begins to sketch out the realities millions face during an unemployment crisis that continues to plague our country’s youth.
Three years after the start of the Great Recession, the number of unemployed young Americans hit its highest level in more than 50 years—at the beginning of 2014, the unemployment rate for 16- to 24-year-olds exceeded 14 percent in 2013, more than 5.5 million young people were neither in school or work, and millions more were unable to find full-time positions or opportunities for earning money that drew on their formal training. Those numbers translate to significant setbacks for this generation of young people. Studies show that youth who don’t transition to stable jobs by their early 20s are at higher risk of more frequent and prolonged spells of joblessness, permanently lower earnings over a lifetime, and greater difficulty building a secure financial future for themselves and their families. While the stories of college-educated youth struggling to find a job are notable for their recent increase, it remains a fact that youth with the least education have the most difficulty securing employment. Youth from the lowest income quartile are more than five times as likely to drop out of school as youth from the highest income quartile. Youth who have dropped out of high school are four times more likely to be unemployed than youth with a college degree.
Youth unemployment doesn’t only impact the individual worker—it can take a high toll on society as well. Indeed, the total costs associated with the current levels of young people not in school or working will amount to $1.56 trillion—including lost taxes, health care costs, criminal justice system expenditures, and welfare and social service payments. Some estimates aggregate the social costs, which include lost gross earnings and productivity, to be as high as $4.75 trillion.
The youth unemployment crisis results from embedded, systemic challenges—slow job growth, a general trend of disinvestment in workers, weak education and training systems, biased hiring and recruiting practices, increasing competition for entry-level employment, and Baby Boomers’ remaining in the labor market longer than previous generations, just to name a few of the largest drivers. The changing models of business have also contributed, such as the move toward automation and outsourcing, in addition to other means of minimizing labor costs.
“There’s a real sense of urgency: Anyone working in this area now understands that we are in danger of losing an entire generation—it’s that bad,” says John Irons, The Rockefeller Foundation’s managing director working on U.S. employment. “People are now open to system changes and entirely new approaches that they might not have been a few years ago.”
The Obama administration has given new attention to the issue of youth employment as a key to the nation’s economic competitiveness. In his 2014 State of the Union Address, President Barack Obama called on Vice President Joe Biden “to lead an across-the-board reform of America’s training programs to make sure they have one mission: Train Americans with the skills employers need, and match them to good jobs that need to be filled right now.” And in 2011, the president appointed a White House Council on Community Solutions (The Rockefeller Foundation’s president, Judith Rodin, was a member) to recommend a strategy for scaling local solutions to youth unemployment challenges—work that carries on today through the Aspen Forum for Community Solutions.
But there is also a growing recognition that solutions must bring in leadership from the private sector, which controls 80 percent of the jobs. “It is about what we can do to our hiring practices and training programs to make the entry points easier. Simple changes can tip the scales back in favor of young people,” Irons says.
Indeed, the private sector has the opportunity—and responsibility—to be the engine driving innovative programs and solutions that lead to jobs. But to create sustainable change at scale, there will need to be compelling business reasons for adopting new programs or practices that will open more doors for young workers. Says Irons, “The evidence has to illustrate the case and make sense to the employer.”
“Public-private collaboration is critical—and the clock is ticking.”
To date, some bellwether private sector programs have emerged based on employers’ recognition that it is in their businesses’ best interests to invest in youth talent pipelines. For example, in 2011, national clothing retailer GAP Inc. began “This Way Ahead,” a program that provides job-readiness training and paid internships for underserved youth. The reasons? GAP cited “contributions to the health of the community and protecting the long-term health of our business.”
The California-based utility, Pacific Gas & Electric Co. (PG&E), has put into place several youth-oriented training programs, recognizing a generational transition in its workforce, as aging technicians retire. One such program offers young adults free apprentice technician training to move into jobs that don’t require college degrees.
But to be sustainable, these programs must be expanded on a national scale. The Rockefeller Foundation is in early stages of exploring where it can be effective at supporting and scaling employer-focused interventions and raise the profile of the issue among other employers.
“This public-private collaboration is critical—and the clock is ticking,” says Irons. “The U.S. must integrate and leverage the talent of its young workers now to ensure the long-term success of America’s economy and promote secure livelihoods for the next generation.”
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