The Wall Street Journal Classroom Edition

Cody Preston is 25 years old, and already falling behind.

Just a few years ago, he was making $14 an hour installing granite countertops with a housing construction crew in Portland, Ore. He married his girlfriend, found an apartment and settled into what he assumed would be a secure pattern of long hours on job sites and enough cash to travel and dine out.

Out of School,
Out of Work,
Out of Luck

The job market has been tough on all young people, but the statistics show that a basic education still makes a big difference in improving your prospects.

According to U.S. Census figures for 2010, the unemployment rate among high school dropouts between ages 16 and 24 was 29%—up from 17.7% in 2000 and seven points higher than that
of their peers who finished high school but didn't go on to college.

‘BACK OF THE LINE'

The problem is particularly acute among Hispanics and African-Americans. Several studies have found that only about 50% of black and Hispanic students graduate from high school, compared with 75% of white students. Up to 40% of the young people in these communities qualify as "disconnected youth," the term for young adults who are neither in school nor working, says David Dodson, president of the research group MDC.

"They've given up hope," says Phillip Jackson, executive director of Chicago's Black Star Project, which helps African-American youth stay in school. "It leads to violence, broken families
and hyperincarceration," for economic crimes that range from selling bootleg CDs to drug trafficking.

The weak job market overall means that young dropouts must compete with older and better-educated workers who are being pushed down the job ladder. "It was hard enough for people without a high school diploma before the downturn. Those folks are at the back of the line now," says Jonathan Bowles, director of the Center for an Urban Future in New York.

‘WORRYING'

Summer Forbes, 19, dropped out of her Hartford, Conn., high school at 17. It "wasn't for me," she says. She spends her days hanging out with friends, completing the requirements for her diploma through an online program and checking Craigslist for job ads.

Two years ago, she managed to find a temporary job she liked at a daycare center. But when it ended in the summer, she found that she couldn't get back into the field without her certification for early-childhood education. Since then, she has cycled through low-wage, often seasonal positions at retail stores, fast-food outlets and social-service organizations.

"I'm tired of waking up and worrying, worrying, worrying about where my next job is going to be," she says.

Andrew Sum, an economist at Northeastern University who studies disconnected youth, says dropouts will suffer a lifetime earnings loss of around $400,000 compared with high school graduates.

— LAUREN WEBER

But when the recession hit and the housing market collapsed a few years ago, Mr. Preston lost his job and the stable life that came with it. Afterward, he was able to find work at a bike store, a skate shop and other retailers, but at lower wages than at his construction job, and often with sporadic hours.

To save on rent, he and his wife moved to her parents' house in Salem, Ore. Later, when the couple separated, he went to live with friends in another part of the state. He found occasional jobs—one was at a gas station—but after a few months, gave up and moved home.

"I wasn't living, I was surviving," he says.

LOSS OF INDEPENDENCE

These days, workers of all ages face economic struggles, but the weak job market of the past few years has taken its biggest toll on teens and young adults like Mr. Preston, especially those with little or no college education. The 16.7% unemployment rate among Americans age 16 to 24 is more than twice the rate for workers 25 and older.

In the severe downturn of 1982 to 1983, unemployment among young adults topped 16% for 23 straight months. The current slump has been longer and deeper: The unemployment rate has been above 16% for nearly three years, reaching a record 19.5% in April 2010.

Unemployment is particularly acute for young men. That is partly because the worst-hit segments of the economy, such as construction, employ more men than women. The share of men age 25 to 34 who are living with their parents jumped to 18.6% this year, up from 14.2% four years ago, and the highest level since at least 1960, according to the Census Bureau.

For such men, high unemployment is eroding their sense of economic independence, with long-term implications. A National Bureau of Economic Research paper in 2009 found that people between ages 18 and 25 who experience recessions believe that success in life depends more on luck than effort, and they tend to have less faith in public institutions.

"We're at risk of having a generation of young males who aren't well connected to the labor market and who don't feel strong ownership of community or society because they haven't benefited from it," says Ralph Catalano, a professor of public health at the University of California, Berkeley.

JUST TO GET BY

There may be long-term psychological effects, as well. Unemployed people are more likely to suffer from a broad range of mental and physical problems. Studies have found that prolonged unemployment adds to the chances of reduced self-esteem and poor health later in life.

College graduates age 24 and younger may be faring better in the job market than their peers who haven't been to college. But those with degrees are struggling, too, with higher unemployment rates than more experienced workers with degrees.

Paralyzed by a painful economy, some young adults are retreating from educational or job opportunities, deciding to forgo college, graduate school or even the search for full-time work. Others are working temporary or odd jobs just to get by.

If history is a guide, when today's young graduates do find a job, they will earn 9% less on average than if they had finished college in better times, according to a recent Columbia University study.

The worst-off college graduates may be those from the classes of 2008 and 2009, according to Yale economist Lisa Kahn. Companies that have resumed hiring say they tend to focus on the most recent crop of college graduates, rather than go through résumés from a few years back. Recruiters assume that a recent grad has fresher skills—such as experience with a computer program's latest version—than someone who graduated three years ago and hasn't taken refresher courses.

STILL BETTER OFF

Despite dismal unemployment numbers, Americans in their late teens and early 20s aren't nearly as bad off as those in some other parts of the world. U.S. adults age 15 to 24 had an unemployment rate of 18.4% in 2010, below the European Union's 20%, according to the Organization for Economic Cooperation and Development. In Spain, the figure was 41.6%, while in Greece, it was 32.9%.

Job opportunities are more plentiful elsewhere. In Switzerland, just 7.2% of adults age 15 to 24 were unemployed. Germany, Austria, the Netherlands and Norway also posted unemployment rates below 10%, as did Japan, Korea and Mexico.

In the U.S., jobs are beginning to open up—unemployment fell to 8.6% in November—but it remains difficult for young people to gain their footing as independent workers. Mr. Preston now has a steady job, making parts for recreational vehicles for $11 an hour. Living with his parents rent-free allows him to start paying off debt he built up during the slump, he says. But he keeps looking for work that will pay the $14 an hour, plus lots of overtime, he made installing granite.

On a recent afternoon, he sat in his parents' kitchen, combing through online classified ads. But construction work remains scarce, and other positions available for which he's qualified don't pay more than he makes at the factory.

Sue Preston, his mother, says several of her friends are helping out their grown sons, providing either money or shelter or both. She worries that lower wages and the shortage of jobs have left young men like her son disaffected and depressed.

"They're working minimum-wage jobs and a lot of times, they don't have benefits, they don't have a full 40 hours a week," she says. "It's such a struggle that they're kind of like, ‘What for? All I'm doing is surviving.'"

ADDITIONAL READING

"How I Found My First Big Job" profiles two recent college graduates and one recent high-school grad.

"China to Cancel College Majors That Don't Pay" is a blog entry from the China Real Time Report that details why the Chinese government will downsize or cut those studies in which the employment rate for graduates falls below 60% for two consecutive years.

"The Toll on Parents When Kids Return Home" looks at how recent graduates are scrambling to find employment and their parents are struggling to take care of them.

"From Ivied Halls to Traveling Salesman" looks at how the weak job market is forcing college grads to take jobs in commission sales.

WEB RESOURCES

The Bureau of Labor Statistics: This Web site includes a career guide and job projections by state as well as economic and employment projections. You can also find a copy of the Occupational Outlook Handbook.

Career Info Net: On this site you'll find information about growing industries. Search by industry or by location.

National Association of Colleges and Employers: On this site you'll find information about the job market for new college grads.

OBJECTIVE
Assess the long-term effects of high youth unemployment

OVERVIEW
These days, workers of all ages face economic struggles, but the weak job market of the past few years has taken its biggest toll on teens and young adults. Men and women in their late teens and early 20s are struggling as the unemployment rate among high-school dropouts between ages 16 and 24 was 29%.

STANDARDS
NBEA: economics and personal finance, career development; NCEE: decision-making, unemployment, income, economic growth; NCSS: people, places and environment, individual development and identity, individuals, groups and institutions

REVIEW
Read the articles "Generation Jobless" and "Out of School, Out of Work, Out of Luck" and answer these questions:

1) Why is unemployment particularly acute for young men?

2) How does unemployment for young people in the U.S. compare with other countries?

3) Why is the competition for low-skilled jobs so fierce?

ACTIVITY IDEAS

• Are you worried now about your future job prospects? Why or why not? Do you think the economy will rebound by the time you enter the workforce? Explain. What might be the long-term effects of unemployment or depressed wages to start a career? Discuss as a class.

• In small groups, brainstorm ways young people can prepare themselves for future employment. Discuss as a class.

• Use the Bureau of Labor Statistics website to find unemployment statistics for your state and region. Compare them with the national average. Are you surprised by the results? Discuss as a class.

• Read the article "The Toll on Parents When Kids Return Home" (see Additional Reading) and discuss how the reverse multiplier effect can be applied to this trend. The multiplier effect is the idea that one dollar spent creates more than one dollar of economic activity. However, when young adults move back in their parents, less money is being spent on things like rent and food. On the board, create a list of goods and services used by young adults on their own. Then make a chart illustrating the multiplier effects of this reduced spending. For example, a young adult living at home would spend less on dining out, which could lead to a decrease in sales at a local diner, which could lead to decreased tips for a server.

• Make a list of five jobs for which a college degree isn't required. Use the Bureau of Labor Statistics website to find the current unemployment rate for each. Chart changes over the past five years. Then predict changes for the next five years.

• Use the Internet to review and analyze economic projections for the job market. (A helpful website is the Bureau of Labor Statistics Employment Projections) Which trends and projections do you think are most accurate? How much weight should you put on these projections as you decide on your college major or career field? Discuss as a class.

• As a class, make of list of popular places for teenagers to work. How widely available are these jobs? Are there jobs available for teens, or are jobs traditionally held by teens being filled by high school or college graduates? Explain.

• Invite your guidance counselor to speak to the class. What does he or she think will be jobs of the future? What advice does he or she have for your class about getting the right education and skill set to be successful in the job market after high school or college? Discuss as a class.