Youth Labor Force Indicators in the Context of COVID-19

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Youth Labor Force Indicators in the Context of

COVID-19

August 27, 2020

The Coronavirus Disease 2019 (COVID-19) pandemic led to the current recession that began in February

2020 and has resulted in large job losses, from which the economy has only partially recovered. This

Insight discusses recent and longer-term trends in three key labor market indicators, and the potential

implications for youth in the current economy. It examines the

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labor force participation rate (LFPR)—the percentage of individuals in the population

who are employed and who are unemployed (i.e., the share of the population in the labor

force);

employment-to-population ratio—the proportion of individuals in the population who are

employed; and

unemployment rate—the percentage of individuals in the labor force who are

unemployed.

Recent Changes

Teens (16-19), young adults (20-24), and prime-age adults (25-54) were generally faring well in the labor

market at the onset of the current recession. Labor market outcomes deteriorated in the recession’s early

months, but partially rebounded by summer (Figure 1). From January to July 2020, the LFPR waned for

teens and young adults. During this period, teen and young adult unemployment rates peaked in April

2020 at 31.9% and 25.7%, respectively, before improving to about 20% in July. Prime-age workers also

experienced a rapid increase in unemployment through April, followed by a decrease. Employment for

teens and prime-age workers dropped 6 to 7 percentage points from January to July, compared to 13

percentage points for young adults.

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Figure 1. Labor Force Indicators by Age, January-July 2020

Source: CRS, based on seasonally adjusted Current Population Survey (CPS) data.

Figure 2 displays LFPR and unemployment rates for youth aged 16-24 and prime-age adults by sex from

January to July 2020. Female and male youth participated in the labor force at about the same rates over

this period and experienced similar decreases in LFPR. However, the unemployment rate for female

youth peaked at a much higher rate in April (30.3%) than for male youth (24.0%). By July, the rates were

about 18% for each group. These patterns of change were generally similar, but less pronounced, for

prime-age workers. Although in both January and July, for prime age workers, there was a greater

difference in male and female LFPR than there is for youth.

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Figure 2. Labor Force Indicators by Sex, January-July 2020

Source: CRS, based on seasonally adjusted CPS data.

Figure 3 shows unemployment rates for youth aged 16-24 by race and ethnicity, respectively, in selected

months in 2019 and 2020. Asian and Black youth generally had higher unemployment rates compared to

White youth. The change in unemployment rates grew for all three groups from February through May

2020 and then contracted slightly. Asian youth experienced the greatest percentage point increase in

unemployment from July 2019 (8.2%) to July 2020 (25.4%).

Hispanic youth, who can be of any race, had greater increases in their unemployment rates from 2019 to

2020 than non-Hispanic youth (Figure 4). The rate of unemployment for Hispanic youth was 21.7% in

July 2020, which was 10 percentage points higher than in July 2019.

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Figure 3. 2019-2020 Unemployment Rates by Race for Youth 16-24

Source: CRS, based on not-seasonally adjusted CPS data.

Note: The vertical lines represent the change in unemployment rates between 2019 and 2020 for the specified month.

Figure 4. 2019-2020 Unemployment Rates by Hispanic/Latino

Ethnicity for Youth 16-24

Source: CRS, based on not-seasonally adjusted CPS data.

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Note: The vertical lines represent the change in unemployment rates between 2019 and 2020 for the specified month.

Recent Trends in Context

Figure 5 displays monthly labor force data in the period immediately preceding the Great Recession

(2007-2009) through July 2020 of the current recession. It shows the drop in LFPR and employment, and

rise in unemployment, in the two recessions for youth aged 16-24 and prime-age workers.

The Great Recession led to steep decreases in labor force participation and employment, with record high

unemployment, for youth. Their withdrawal from the workforce appears to have been partially due to

increasing school enrollment despite increased financial pressures.

The employment gains for youth during the economic expansion have been eroded in recent months.

Youth unemployment was generally higher in 2020 than during and after the Great Recession. A

distinguishing feature of this recession, however, may be that youth cannot necessarily rely on schooling

as an alternative to work.

Figure 5. Monthly Labor Force Indicators by Age, January 2005-July 2020

Source: CRS, based on seasonally adjusted CPS data.

Policy Implications

Congress has historically been interested in youth connection to the labor force. As the pandemic

continues, questions remain about the prospects for employing young people, particularly in industries

experiencing the most job losses, and their ability to access supports such as job training and

unemployment insurance. Further, Asian and Black youth are more likely to be out of work than their

White peers. Unlike the Great Recession, when youth increased their enrollment in education, disrupted

educational access may result in fewer productive alternatives to work.

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The loss of employment may cause greater financial hardship in poor families, who often have relatively

lower savings and assets and in which youth contribute more to the families’ incomes. In 2018, youth in

families below the poverty line contributed 26% of their families’ income, compared to 9% for youth in

families at four times the poverty line or above (Table 1). Given the potential decline in employment and

income for low-income youth, Congress might consider policies to improve their prospects, such as

adopting flexibilities and additional supports for existing employment programs.

Table 1. Contributions of Youth to Family Earned Income, by Family Resources in Relation

to the Poverty Line, 2018

Income (Family Resources)

Category

Youth Population

(millions)

Total Percentage of Family

Earned Income Accounted for by

Youth

Below poverty line

6.3

26%

100-199% of poverty line

12.1

22%

200-299% of poverty line

8.9

17%

300-399% of poverty line

4.9

13%

400% of poverty line or above

5.8

9%

Source: CRS analysis of the Annual Social and Economic Supplement (ASEC) to the CPS, 2019.

Notes: Utilizes the Supplemental Poverty Measure. Family resources include federal

entitlements and benefits.

Author Information

Adrienne L. Fernandes-Alcantara

Specialist in Social Policy

Jameson A. Carter

Research Assistant

Disclaimer

This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff

to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of

Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of

information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.

CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United

States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,

as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the

permission of the copyright holder if you wish to copy or otherwise use copyrighted material.

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