Unemployment Hammers Younger Workers

No single age group is faring well during the recession. That’s for sure.

Employment experts agree that record unemployment is affecting all age demographics. But data from the U.S. Bureau of Labor Statistics indicates that some age groups are being hit harder by unemployment than others. In fact, workers age 25 to 34 may be bearing the brunt of layoffs and hiring freezes. Consider the following statistics:

• Unemployment is highest for 25- to 34-year-olds. It’s at 10.5 percent, 1.1 percent higher than the national average.
• The 25- to 34-year-old age bracket has the most people unemployed of all age brackets–3.5 million people are out of jobs.
• Since the start of the recession in December 2007, the unemployment rate for 25- to 34-year olds has more than doubled, from 4.8 percent to 10.5 percent.
• Meanwhile, employment has steadily declined for 25 to 34-year-olds each month since the start of the year.
• Workers age 25 to 34 have the lowest level of employment next to workers 55 years of age and older.
• Workers age 25 to 34 have experienced 4.5 million job losses since May 2008, the most job losses of all age groups.
• 25- to 34-year-olds make up the largest group of underemployed workers. More than 2 million 25- to 34-year-olds are working part-time jobs because they can’t find full-time jobs or because their hours have been cut—which is more than any other age group.

Employment Statistics by Age Bracket

Source: Bureau of Labor Statistics, May 2009

John Challenger, CEO of global outplacement firm Challenger, Gray & Christmas Inc., says unemployment may be hitting younger workers hardest because of their perceived inexperience.

“In an environment where companies are very thinly staffed, employers need people who can perform multiple tasks, multiple roles,” says Challenger. “Younger workers in this environment may get marked down in the hiring process for not having enough experience. Companies may be opting for someone they know can hit the ground running and who they won’t have to train on the job.”

Another reason why unemployment may be so high among workers age 25 to 34 is because they may have short tenures with their employers and because a lot of employers use a “last one hired, first one fired” method for determining who to cut in a layoff, adds Challenger.

The same reasoning around tenure explains why unemployment rates are considerably lower for older workers. “Many older workers have acquired more job tenure with their employer, and therefore, may be less likely to be laid off than younger workers,” notes Steve Hipple, an economist in the Bureau of Labor Statistics’ Division of Labor Force Statistics, via e-mail.

Sara Rix, strategic policy advisor with the AARP’s Public Policy Institute, says unemployment rates for older workers have historically been lower than younger workers.

“The major reason older workers have a lower unemployment rate is because they’re more likely than their younger counterparts to drop out of the labor force [if they can’t find a job],” says Rix. “When that happens, they’re not counted as unemployed.”

Unemployment may also be higher among younger workers because they’re not protected from age discrimination under the Age Discrimination in Employment Act (ADEA), whereas workers over 40 are.

“Perhaps some employers are less likely to dismiss older workers out of fear of age discrimination lawsuits,” notes Hipple.

The good news for younger workers is that they’re less likely than older workers to be unemployed for long periods of time. They have the lowest rates of long-term unemployment (unemployed for 27 weeks or more). Older workers age 55 and up are most likely to be unemployed the longest and experience the highest rates of long-term unemployment, according to the BLS data.

Selected Employment Indicators: January – May 2009

Source: Bureau of Labor Statistics, May 2009