In Jobless Youth, Nation Is Said to Pay High Price
By SHAILA DEWAN, NY TIMES
January 6, 2014
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Persistent high unemployment among young people is adding up to $25 billion a year in uncollected taxes and, to a much smaller degree, increased safety net expenditures, a new report says.
“The key takeaway here is that it’s not just the individuals who are suffering as members of our generation,” said Rory O’Sullivan, the policy and research director of the Young Invincibles, a postrecession youth advocacy group, which did the study. “When you have an entire generation of people that are out of work, it’s going to create tremendous costs for taxpayers both now and in the future.”
Fifteen percent of workers ages 16 to 24 are unemployed, compared with 7.3 percent of all workers. That does not include young people who are not working because they are in school, who are no longer looking for work or who were too discouraged to begin a job search. Much has been written about how much this will cost them in the long run, as they spend years trying to catch up.
The new report is an effort to quantify the financial effect now. Its authors determined how much young people would have paid in taxes had they been working, and how much less they would have collected in unemployment and other social welfare spending. Each jobless worker between 18 and 24 accounted for $4,100 a year, they concluded, and those between 25 and 34 accounted for $9,875, the study said.
Based on those figures, if youth unemployment were reduced to its prerecession rate, the study said, the federal government would recoup $7.8 billion, or $53 per taxpayer, and state and local governments would recoup $1.1 billion.
If all those discouraged young people, who are not counted as unemployed because they are not actively seeking work, were also in the labor force, the total figure would be larger: $25 billion. About 93 percent of that number comes from taxes that would have been collected, and the rest from averting social spending, the study said. The report estimated that effect per state taxpayer was greatest in Alabama, Kentucky and North Carolina.
The group intends to present its findings at a news conference on Tuesday with Senators Patty Murray of Washington and Cory A. Booker of New Jersey, both Democrats.
The report is the latest in several detailing the disproportionate effect of the recession on young people and their lifetime earnings. The findings have renewed interest in programs that long ago went out of fashion, like apprenticeships and vocational high schools. President Obama has said he will reward colleges and universities that demonstrate an ability to place graduates in paying jobs.
“Suddenly people are talking about youth,” said Anthony P. Carnevale, the director of the Center on Education and the Workforce at Georgetown, who wrote a foreword for the latest study. He said youth work programs went out of style in the 1980s, as the baby boom generation stopped needing them.
Now, struggles among white, middle-class young people have helped bring the issue back to the fore, he said. “They’re not getting traction,” he added. “The fear that’s the strongest of all is that young people won’t be middle class anymore.”
Still, Mr. Carnevale said, “Spending for retirement is crowding out investment in young people, especially human capital investment.”
Young Invincibles said that federal youth jobs programs had been cut by $1 billion a year since 2002, and recommended expanding the Labor Department’s registered apprenticeship program and AmeriCorps, a national service program that had more than half a million applicants last year for about 80,000 positions, Mr. O’Sullivan said. It also advocates restoring financing to Youth Opportunity Grants, which were aimed at at-risk youth and were ended in 2005.