Which leaves the young folks.
The big increase in labor-force participation among 16-and-17-year-olds comes after decades of declines, and fits well with anecdotal evidence of desperate employers taking chances on unexperienced teenagers and those teens being (rationally) less worried than adults about catching Covid on the job. The sharp decline among 18- and 19-year-olds is weird, and doesn’t really fit with other evidence such as enrollment declines at two-year colleges. The BLS does seasonally adjust the participation rates for both those groups, as well as for 20-to-24-year-olds, so it’s possible to view their trajectories over the course of the pandemic. The 18-19 line has certainly jumped around a lot, so I wouldn’t read too much into the recent decline.
Labor-force participation among those 20 through 24 has followed a steadier line. It’s been rising, but is still well short of the pre-pandemic rate. Explaining this, and the smaller but still significant participation declines among those in their late 20s and early 30s, has become something of a cottage industry over the past year.
Much of the talk has centered around a supposed attitude shift toward work described variously as the “Great Resignation” or “Lying Flat,” but hard evidence for this has been mostly wanting. (Goldman Sachs economist Joseph Briggs simply offered up a chart showing rising activity on the r/Antiwork subreddit, for example.) And while there is ample evidence that struggles with child-care during the pandemic have kept lots of women out of the labor force, women in their early 20s are a lot less likely to have kids than they used to be.
My own based-on-little-evidence theory is that the pandemic, and especially the total shutdown of spring and summer 2020, was so disruptive for young people finishing their educations and entering the job market that it’s taking a long time for them to catch up. Figuring out one’s initial path into a career isn’t easy in normal times, and having that path completely blocked for many months has got to have an impact.
I tried this explanation out on a couple of economists at companies in the job-search space, and met with some agreement. “It was a forced gap year, essentially,” said Nick Bunker, director of economic research at the Indeed Hiring Lab. “Things were so uncertain. There was mass unemployment in jobs that didn’t require a college degree.” Daniel Zhao, senior economist at Glassdoor Economic Research, pointed to sharply rising median wages for 16-to-24-year olds (10.6% over the 12 months ending in January, according to the Atlanta Fed Wage Growth Tracker) as an indication both of shortages of younger workers and, more positively, “some scarring effects from the Covid recession being avoided for new young workers in the labor force.”
Graduating in the midst of past recessions has brought negative effects on earnings that persist for as much as a decade. The rebound from the Covid-19 recession has been so rapid that perhaps that long-term scarring can be avoided—but it’s still a risk for hundreds of thousands of young Americans who have yet to find a way into the labor market.
Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of The Myth of the Rational Market.
