The jobs gap could last until 2020, despite improvements in the labor market. What does than mean for young people?
The “jobs gap” could persist until 2020 despite an improving labor market, according to a new report by The Hamilton Project, a Brookings Institute initiative that aims to expand economic opportunity in American through broad-based growth.
The jobs gap represents the number of jobs needed to restore employment to pre-recession rates of around 4.7 percent, and reflects jobs needed to replace those lost to the recession, as well as the additional jobs required to absorb new entrants to the labor market. According to The Hamilton Project, the gap stood at 11.4 million in February – 5.2 million from jobs lost since the beginning of the recession and another 6.1 million jobs that should have been created during the recession.
The gap will take eight years to close if the economy adds about 208,000 jobs per month – the average monthly rate for the best year of job creation in the 2000s, concludes the report. If hiring picks up to 321,000 jobs per month – the average monthly rate for the best year of job creation in the 1990s – the job gap could close four years from now in 2016.
Employer payrolls increased by an average of 245,000 jobs over the last three months, capping two consecutive years of job growth for the private sector, according to the report. Despite these gains, 12.8 million Americans are considered unemployed, according to data released last week by the Bureau of Labor Statistics or BLS.
Involuntary part-time workers – those who want full-time jobs, but can’t find them – account for another 8.1 million Americans. Another 2.6 million people are “marginally attached” to the work force – that is, they want work and have looked for a job in the last 12 months, the BLS said. Of these, 1 million are considered “discouraged” workers, people who want to work but have stopped looking for jobs because they believe none is available.
The picture is bleakest for young Americans, according to The Hamilton Project. The latest federal data reports that unemployment for teenagers exceeds 23 percent, compared to the overall 8.3 percent unemployment rate.
Suffering such disproportionately high unemployment rates, it’s no surprise that a significant share of young Americans identify job security as a top financial concern. A survey of 1,150 investors conducted by Millionaire Corner in February shows than 20 percent of individuals age 40 and younger worries most about job security and another 20 percent worries most about reducing their personal debt. The ability to save for the future most concerns 19 percent and nearly 17 percent worry about saving enough for retirement.
Concerns about job security subside for investors in their 50s and 60s as other concerns become more pressing. Only 13 percent of investors age 51 to 60 ranks job security as their most significant financial concerns. Retirement security tops their list and is followed by concerns about health care. Few investors in their 60s worry about job security, but are most concerned about having enough money to last retirement, inflation and the cost of health care.