2 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

Transcription

1 SEPTEMBER 2013

2 2 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

3 FAILURE TO LAUNCH Structural Shift and the New Lost Generation EXECUTIVE SUMMARY September 2013 Anthony P. Carnevale Andrew R. Hanson Artem Gulish

4 The lockstep march from school to work and then on to retirement no longer applies for a growing share of Americans. 4 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

5 New economic realities have created additional phases in the life cycle of learning, work and retirement. Moreover, the relationship between these phases is no longer linear. FAILURE TO LAUNCH: Structural Shift and the New Lost Generation 5

6 Young adults are launching their careers later. Wages relative to median wage 120% 100% 80% 60% 40% 20% 0% Age Figure 1. The age at which young adults reach the median wage increased from 26 to 30 between 1980 and ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, 1980, 2012, CPS UTILITIES, UNICON RESEARCH CORP. 6 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

7 YOUNG ADULTS LAUNCHING LATER Labor force participation rate, 20- to 24-year-olds 80% 78% 76% 74% 72% 70% 68% 66% 64% 62% 60% ANALYSIS OF DATA FROM THE FEDERAL RESERVE BANK OF ST. LOUIS, Figure 2. The labor force participation rate for young adults has declined since the 1990s, and is now at its lowest point since FAILURE TO LAUNCH: Structural Shift and the New Lost Generation 7

8 As blue-collar jobs have disappeared, young men have had an especially difficult time gaining traction in the labor market. Men, ages % 6% 8% 8% 10% 16% 54% 18% 23% 36% STEM Managerial/ professional office Food/personal service Sales/office support Blue-collar Figure 3. Between 1980 and 2010, the share of young men in blue-collar occupations declined from 54 percent to 36 percent, while the share in food/ personal service occupations increased from 10 percent to 18 percent. ANALYSIS OF IPUMS DATA 8 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

9 YOUNG ADULTS LAUNCHING LATER Earnings of men, ages 18 to 29, relative to earnings of all workers (18 and over) ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, , CPS UTILITIES, UNICON RESEARCH CORP. Figure 4. In 1980, young men made 85 percent of the mean wage; in 2012, they earn only 58 percent of the mean wage. FAILURE TO LAUNCH: Structural Shift and the New Lost Generation 9

10 The first decade of the 21st century was a lost decade for young adults, especially young men. 90% 88% 86% Employment rate 84% 82% 80% 78% 76% 74% 72% 70% Figure 5. The employment rate for young adults (ages 21 to 25) declined from 84 percent to 72 percent between 2000 and ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, , CPS UTILITIES, UNICON RESEARCH CORP. 10 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

11 YOUNG ADULTS LAUNCHING LATER Employment rate, 26- to 30-year-olds 100% 90% 80% 70% 60% 50% 40% 30% 20% 6% 14% 80% 15% 18% 20% 26% 65% 56% 26% 24% 50% Not working Part-time Full-time, full-year 10% 0% Men Women ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, , CPS UTILITIES, UNICON RESEARCH CORP. Figure 6. The share of men in their late 20s who work full-time declined from 80 percent to 65 percent between 2000 and FAILURE TO LAUNCH: Structural Shift and the New Lost Generation 11

12 While young adults at all education levels suffered, BA and graduate degree-holders suffered the least from the shocks of the lost decade. Share of young adults (26-30) employed full-time, full year 66% 53% 69% 55% 78% 70% High school Some college/aa BA Figure 7. High school graduates full-time employment rate declined 13 percentage points between 2000 and 2012, compared to 8 points for BA-holders. ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, , CPS UTILITIES, UNICON RESEARCH CORP. 12 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

13 YOUNG ADULTS LAUNCHING LATER Annual earnings, 26- to 30-year-olds (2012 $) $49,700 $48,500 $45,800 $41,700 $32,500 $27,500 $27,100 $24,200 High school Some college/ AA BA Gradute SOURCE: GEORGETOWN UNIVERSITY CENTER ON EDUCATION AND THE WORK- FORCE ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, , CPS UTILITIES, UNICON RESEARCH CORP. Figure 8. Young workers earnings declined across education levels between 2000 and 2012, but by less for college-educated workers. FAILURE TO LAUNCH: Structural Shift and the New Lost Generation 13

14 The lost decade exacerbated racial inequalities between young whites and young African Americans. Employment rate, 26- to 30-year-olds 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 9% 20% 71% 17% 13% 21% 22% 62% 65% 25% 27% 48% 20% 21% 59% 26% 22% 52% 0% White African American Hispanic Full-time, full-year Part-time Not working Figure 9. The white-african American full-time employment gap grew from 6 percentage points to 14 percentage points between 2000 and ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, , CPS UTILITIES, UNICON RESEARCH CORP. 14 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

15 YOUNG ADULTS LAUNCHING LATER African American 30% Hispanic 20% White 14% 0% 20% 40% Peak (2010) unemployment rate by race, 18- to 24-year-olds ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, 2010, CPS UTILITIES, UNICON RESEARCH CORP. 35% African American-white wage gap in 2012 for adults 26 to 30, up from 23% in 2000 Figure 10. Following the Great Recession of 2007, the peak unemployment rate for young African Americans was more than twice as high as the peak unemployment rate for whites. FAILURE TO LAUNCH: Structural Shift and the New Lost Generation 15

16 In contrast to young adults, older adults are working into later ages and earning more. Employment rate, 55- to 64-year-olds 64% 62% 60% 58% 56% 54% 52% 50% Figure 11. Between 1983 and 2012, the employment rate of 55- to 64-year-olds increased from 52 percent to 61 percent ANALYSIS OF DATA FROM THE FEDERAL RESERVE BANK OF SAINT LOUIS, FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

17 OLDER ADULTS DELAY RETIREMENT Wages relative to median wage Age ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, 1980, 2012, CPS UTILITIES, UNICON RESEARCH CORP. Figure 12. The relative wages of workers 65 and older were substantially higher in 2012 than FAILURE TO LAUNCH: Structural Shift and the New Lost Generation 17

18 Older women and college-educated adults are working at higher rates and delaying retirement. Employment rate, 60- to 64-year-olds 60% 55% 50% 45% 40% 35% 30% Men Women Figure 13. Between 1986 and 2012, older women s employment rate increased by 17 percentage points, compared to 4 percentage points for men. ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, , CPS UTILITIES, UNICON RESEARCH CORP. 18 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

19 OLDER ADULTS DELAY RETIREMENT Employment rate, 65- to 74-year-olds 25% 32% 38% 47% High school Some college/aa BA Grad ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, 2012, CPS UTILITIES, UNICON RESEARCH CORP. Figure 14. Among 65- to 74-year-olds, nearly half of graduate degree-holders are employed, compared to one-quarter of high school graduates. FAILURE TO LAUNCH: Structural Shift and the New Lost Generation 19

20 While older adults are working into later ages, they aren t crowding younger workers out of the labor market. However, entitlements for seniors are putting increasing pressure on investments in education and training. 30 Number of job openings created by retirements per 100 young adults (8 million job openings) 28 (14 million job openings) Figure 15. There are more job openings created by retirements per young person today than there were in the 1990s, when young people had high rates of employment. ANALYSIS OF CURRENT POPULATION SURVEY, MARCH, 1994, 2012, CPS UTILITIES, UNICON RESEARCH CORP. 20 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

21 OLDER WORKERS AREN T CROWDING OUT THE YOUNG Share of total government spending (federal, state, and local) 24% 22% 20% 18% 16% 14% 12% 10% Education Medicare/Social Security ANALYSIS OF DATA FROM THE BUREAU OF ECONOMIC ANALYSIS, Figure 16. Between 1970 and 2010, the share of public spending on Medicare and Social Security increased from 13 percent to 23 percent, while the share of public spending on education and training fell from 19 percent to 15 percent. FAILURE TO LAUNCH: Structural Shift and the New Lost Generation 21

22 22 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

23 Encouraging older adults to retire early wouldn t help young adults looking for work, it would hurt them. When older adults delay retirement, they are healthier, consume less public benefits, pay more taxes, and contribute to higher levels of economic growth. The relationship between young and old is positive sum, not zero or negative sum. To adapt to the new phases in the lifecycle of work and learning, the United States needs a new generational social compact for both young and older adults. The on-ramps and off-ramps into and out of the labor market need to be smoother and more efficient: Young adults will need to mix work and learning at earlier stages to accelerate their launch into full-time careers; Older adults need a less abrupt transition out of careers and into retirement that features a more flexible phase of work before full-fledged retirement. FAILURE TO LAUNCH: Structural Shift and the New Lost Generation 23

24 11th In postsecondary attainment among young adults (ages 25 to 34) 1st In total (public and private) spending on postsecondary education 24 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

25 At current productivity levels, the United States cannot afford all the postsecondary education it needs. Our ability to increase our postsecondary attainment rate depends on reforms that enhance the productivity of our education and training system. The first step toward higher productivity in the postsecondary system is greater transparency in the alignment between postsecondary programs and labor market outcomes. Greater transparency between postsecondary education and training curricula and career pathways is a relatively low-cost, self-regulating way to get more bang for the educational buck. FAILURE TO LAUNCH: Structural Shift and the New Lost Generation 25

26 60% 43% U.S. postsecondary attainment at current efficiency rate U.S. postsecondary attainment at efficiency rate of South Korea, Canada, or Great Britain Figure 17. If U.S. postsecondary education were as efficient as South Korea, Canada, or Great Britain, the postsecondary attainment rate would increase from 43 percent to 60 percent. ANALYSIS OF DATA FROM OECD, EDUCATION AT A GLANCE, 2012 (DATA FROM 2010) 26 FAILURE TO LAUNCH: Structural Shift and the New Lost Generation

27 The lockstep march from school to work and then onto retirement no longer applies for a growing share of Americans. New economic realities have created additional phases in the lifecycle of work and learning.

28 Failure to Launch: Structural Shift and the New Lost Generation is composed of a full report and an executive summary. All can be accessed at cew.georgetown.edu/failuretolaunch Whitehaven Street NW, Suite 5000 Washington, DC Mail: Campus Box , Washington, DC cew.georgetown.edu