“NEET”: Why some young people are cut off from the labor market

When cracks in the labor market begin to appear, young people are often the first to feel it.

A recent report from the Federal Reserve Bank of St. Louis found that roughly 16% of young people ages 18 to 24 are not employed or enrolled in high school or college at that time, describing many of this group as “disconnected youth.”

Young people who are “not employed, educated or trained,” also known as NEETs, are dropping out of the labor force primarily due to economic discouragement. Weak employment networks, college degree requirements, lack of transportation and limited access to child care may also be contributing factors, according to a study by the St. Louis Fed.

The unemployment rate for 16-24 year olds rose to 9.1 percent in July, which is “typical,” according to Ali Bustamante, a labor economist and director of the Worker Power and Economic Security Program at the Roosevelt Institute, a liberal think tank based in New York City.

According to the U.S. Bureau of Labor Statistics, the youth unemployment rate in 2023 will be below 7%, but such a low rate is “symbolizing how robust the labor market was at the time,” Bustamante said.

“Nine percent is essentially what young workers can expect in relatively good economic times,” he added.

And yet, some young people in the United States are not working or learning new skills.

According to the International Labor Organization, about 11.2% of young people aged 15 to 24 in the United States will be considered NEET by 2023.

In other words, roughly 1 in 10 young people are “left behind and left behind in many different ways,” Bustamante said.

Although “that’s the typical norm,” he said, “people should expect these rates to be lower.”

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Julia Pollack, a labor economist at ZipRecruiter, said turnover rates are especially on the rise among younger men.

“The NEET trend is primarily a male phenomenon,” she says.

Pollack explains that this is partly due to declining opportunities in traditionally male-dominated occupations such as construction and manufacturing, but adds that “women’s school enrollment, educational outcomes and employment outcomes are generally on the rise.”

The St. Louis Fed also found that about 70% of disconnected young people have no education beyond high school.

Meanwhile, other young people who are actively looking for work are often well qualified but struggle to find work, making up a segment of the “newly unemployed,” according to a recent Korn Ferry report.

The Korn Ferry report said the “catastrophe” has created a flood of newly unemployed people — highly trained workers who are struggling to find employment opportunities.

“Employers are increasingly focused on retaining their existing talent and on talent mobility,” said David Ellis, senior vice president of global talent acquisition transformation at Korn Ferry.

This “talent hoarding” has resulted in fewer job openings even for well-qualified candidates, he said.

At the same time, companies are scaling back on new hiring, limiting entry-level opportunities.

While teen employment rates are at their highest in more than a decade, those in their early 20s are struggling to find work, Pollack explained.

“It’s the 20-24 age group that saw the biggest drop in labor force participation during the pandemic and has lagged ever since,” Pollack said.

Overall, hiring projections for the Class of 2024 are down 5.8% from last year, according to a report by the National Association of Colleges and Employers (NACE).

As more applicants compete for fewer jobs, people are also staying unemployed for longer: The number of people who have been unemployed for six months or more is now up 21%, according to a Korn Ferry survey.

Despite these trends in the job market, “all is not lost,” Ellis said.

“Don’t be shy about reaching out,” he advised. Reach out to former employers and colleagues on LinkedIn or via email to set up informational interviews. After the initial approach, ask for job prospects and contact information.

While you’re there, make yourself more visible by writing about hot topics in your industry and updating your resume to include keywords and so-called title tags that highlight key elements at the top.

Finally, Ellis advises not limiting yourself to roles that will get you a promotion or raise, but rather to a “career lattice” that includes lower-level roles where you can gain skills that will be useful in the future.