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Black youth unemployment may restrict future earnings

Imara Jones

As the White House prepares to launch a major economic opportunity effort, record high unemployment among black and Latino youth underscores how essential it is to create job opportunities for young people of color.

The critical issue here is that the ages of 16 to 24 are make or break years for lifelong earning potential. With one out four blacks and 1 out of 6 Latinos under the age of 25 without work, a generation of youth of color risks falling behind.

The situation for black and Latino unemployed youths is so alarming that leading think tanks and economists are raising red flags about it at a staggering pace. One report on the topic by Demos, a public policy organization, argues that the “exclusion of young people of color” from job opportunities “weakens the promise of America.”

Why’s that?

With wealth in African-American and Latino communities already the lowest on record, a loss of income on a generational scale would likely harden existing inequities and set back economic progress in the country for decades. That’s simply because there are so many young blacks and Latinos who want work but can’t find it.

The older worker squeeze

The jumpoff for understanding what’s going on is that the youth jobs market as a whole, like the broader labor market, is in shambles.

With 1 out 6 young people without work, youth unemployment is higher than at any point since most people under the age of 25 have been alive. Close to half of the 4 million young people without work are African American or Latino. They are joined by another 6 million young people of all racial backgrounds who have given up looking for work out of frustration.

The core economic issue here is that younger Americans are being squeezed out of the labor market because there aren’t enough jobs to go around for both existing workers and those just entering the job market.

As The Wall Street Journal points out, the economy is down 8 million jobs from where it needs to be in order to make sure that everyone who wants a job has one. With so many jobs destroyed by the Great Recession, and with mostly lower-wage jobs being created, older, better educated workers are being pushed into areas of employment traditionally occupied by younger workers.

Analysis by the Center for Economic and Policy Research shows that the proportion of 16- to 19-year-olds in low-wage work fell by 50 percent from 1979 to 2011 while workers aged 35 to 64 increased their share of these jobs. Moreover, the proportion of those in low-wage positions who attended college almost doubled.

As Sarah Ayres of the Center for American Progress points out, “With three job seekers for every available job, employers can hire people at an education level above what’s required for the actual position.” This trend benefits older workers.

The school-to-prison pipeline

But there are two additional challenges that magnify black and Latino youth joblessness.

The first is that lower college graduation rates for youth of color puts African Americans and Latinos at a severe disadvantage. As more workers with higher education compete for jobs that were once dominated by high school graduates, the hill for people of color becomes steeper. That’s because one-third fewer blacks and half as an many Latinos have college degrees as have whites. But there’s more at work here.

Disproportionate school discipline directed at blacks and Latinos is a driving force behind lower education attainment rates for these two groups, further damaging lifelong earning potential.

Though students from these communities make up fewer than 4 out of 10 kids in school, they make up seven out of 10 children “involved in school-related arrests or referrals to law enforcement.” As the Advancement Project points out, students who’ve been suspended are up to five times more likely to not finish high school. Given the condition of the labor market, the lack of a high school diploma is simply a non-starter.

The second challenge is the way that higher incarceration rates damage job prospects for youth of color. With 6 out 10 individuals in prison being black or Latino, over 300,000 people of color are released from incarceration each year. Almost all employers perform a background check on job applicants, even those for low-wage positions. Astoundingly, 90 percent of all African-Americans with criminal records are passed over for employment. That’s a rate three times higher than whites with a similar history. Skewed incarceration is another headwind that youth of color face in the job market.

The reason that any of this matters is that youth unemployment means lower incomes and fewer life opportunities for those without work. Since employment between the ages of 16 to 24 is vital to setting the pace for an individual’s future earning power, joblessness experienced by young people has severe consequences. Just six months of unemployment can mean $45,000 in lower wages. It can take up to a decade to make up lost ground. The longer unemployment lasts, the larger the longterm earnings hole grows. Young people aged 20 to 24 will amass $20 billion in lost wages over the next decade. Writ large, this translates into an amount that will be difficult for black and Latino communities, still reeling from the recession, to absorb.

Turning it around

The good news is that youth unemployment is entirely fixable. The most important thing is to jumpstart overall job growth and get the economy functioning normally again.

Consequently raising the minimum wage to $10.10 an hour, lowering the wage gap between men and women, and expanding tax breaks for low-income workers — including those without children — would be great places to start. Together these actions would raise the income of tens of millions and lift millions more out of poverty. A shot in the arm to the economy on such a scale would help push labor to function more normally, allowing older workers to move up the earnings scale, and clearing the way for young people.

But an even more targeted effort to end black and Latino youth unemployment is desperately needed. As Tom Allison, policy analyst at the under-34 advocacy group Young Invincibles puts it, “If the goal is to improve the economy, we have to focus on those who are suffering the most.”

Breaking the school-to-prison pipeline, structuring a way for more people of color to attend college, lowering incarceration rates, and ending employment discrimination for non-violent offenders are all essential.

With an entire generation of black and Latino youth hanging in the balance, the country doesn’t have a second to waste.