In the aftermath of the Great Recession of 2007-2009, youth unemployment in the United States reached its highest level since the Second World War. Only about half of young people ages 16 to 24 held jobs in 2013, and recent estimates suggest that about one in five people in this age range — 6.7 million people — were neither working nor in school. The recession has taken an unprecedented toll on the economic prospects of young people, and recovery for them has been the slowest. According to one estimate, persistent high unemployment among young people has resulted in up to $25 billion a year in uncollected taxes and, to a lesser extent, higher expenses on safety net programs. Increased investment in strategies to improve the employment prospects of youth, especially those who are economically disadvantaged, is necessary to confront this growing problem and to ensure a better future for the next generation.
To date, most efforts to improve labor market outcomes for young people have focused on supply-side strategies to build human capital and have included some combination of education, training, work experience, and developmental activities to produce a better supply of skilled, employable youth. But relatively little attention has been paid to the demand side of the labor market equation — the private employers who account for the lion’s share of jobs in the U.S. economy. Many programs that prepare youth for work by providing education, training, and employment services are often not backed by an appropriate demand for particular skills in the local labor market. These programs have also historically lacked strong employer partnerships to create job opportunities for the youth they serve. Thus, while these programs increase the supply of new workers in the labor market, these workers are not necessarily placed in new jobs created for them and often displace existing workers. A demand-driven approach to workforce development with strong employer participation should be a vital component of any policy response to youth unemployment, since the private sector is a direct source of jobs and can also provide training to improve career mobility for youth in the long run.
This paper draws from an MDRC review of literature (funded by The Rockefeller Foundation) on labor market trends and employment-related programs for youth over the past 30 years. It aims to inform the search for demand-side solutions by providing a better understanding of: (1) factors that potentially drive high rates of unemployment among young adults; (2) the current state of evidence on employment-related interventions for youth, especially economically disadvantaged youth; and (3) future directions for change that involve stronger employer involvement.