A Bad Entry-Level Job Market Is Everyone’s Problem
A scarcity of work deprives young people of important experience and the economy of influential consumers who might otherwise stimulate demand.
Photographers: Evan Sheehan and Alex Wallbaum for Bloomberg Businessweek; production by Breakfast for Dinner
The 5 million or so young people looking to enter the labor market in the early 1990s got a brutal reception. I was one of them, and I remember rejection letters to my job applications raining into my college dorm mailbox. “The prospect of a position becoming available is dim,” read an unusually blunt response on official letterhead from Time magazine. (I still have it.) The recession of those years, triggered in part by the savings and loan crisis of the late ’80s and the spike in energy prices due to the Gulf War in 1990-91, sent youth unemployment skyrocketing to 13.4%, according to data from the Federal Reserve Bank of St. Louis. Economists dubbed the subsequent period “the jobless recovery.”
Although companies today respond to candidates digitally rather than with the occasionally rude form letter—if they respond at all—the conditions for first-time job seekers then and now are similar. The unemployment rate for college graduates ages 22 to 27 rose to 5.6% at the end of last year; it was 4.1% at the end of 2022. “The labor market is generally softening, and new entrants are always the first place you see it,” says Jesse Rothstein, a professor of public policy and economics at the University of California at Berkeley.