Monday, July 18, 2016

Young workers hit hardest by slow hiring during recessions

Public Release: 16-May-2016
Paper: Young workers hit hardest by slow hiring during recessions
University of Illinois at Urbana-Champaign

The saying "Youth is wasted on the young" may ring hollow to young workers who were unable to find work or begin building a career during the Great Recession. When hiring slows during recessions, the brunt of job losses is borne by job-seekers in their twenties and early thirties, according to a new paper by a University of Illinois expert in labor economics.

"Younger workers are less likely to be hired during recessions and, when they are hired, they tend to find lower-quality jobs and earn lower wages," said Eliza Forsythe, a professor of labor and employment relations and of economics at Illinois. "More-experienced workers see neither of these effects. In fact, the evidence indicates that these more-experienced workers actually crowd young workers out of the labor market during recessions."


"When job seekers are plentiful, firms favor experienced workers - workers with longer resumes, workers whom they know have been productively employed before - because they're typically more immediately productive than younger, inexperienced workers," she said.

Not only is this harmful for young workers, it's also bad for the economy as a whole.

"Eventually, as older workers retire, firms won't be able to find the trained workers they need to help them grow." Forsythe said. "What happens is that we have these younger workers who should be developing skills, advancing in their careers. For young workers, it's really important to be able to move between jobs. But during a recession, that just grinds to a halt. Once the economy recovers, the labor market still has these young people who have been, essentially, underinvested in as workers."

Students who graduate during recessions have been shown to earn less than those who graduate at other times. Forsythe attributes these "missing" wages to a lack of job mobility. She said these young people will tend to be "underemployed" - stuck in low-wage, low-skill jobs with seemingly no path out.


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