Why the U.S. Has a Worse Youth Unemployment Problem than Europe

Meet the NEETs, the under-25s who don’t work but who also aren’t receiving professional training and are no longer in school

  • Share
  • Read Later
Mike Segar / Reuters

Job seekers stand in line to meet with prospective employers at a career fair in New York City on Oct. 24, 2012

The latest unemployment statistics released this week on both sides of the Atlantic show that the number of jobless is continuing to rise in Europe far above the rate in the U.S., and the picture is especially bleak for young Europeans under the age of 25. In the 27 E.U. nations as a whole, the youth unemployment rate rose to 22.8% in September, up from 21.7% the previous year. In Greece and Spain, that proportion is over 50%. In the U.S., meanwhile, the unemployment rate was essentially unchanged in October, at 7.9%, the Bureau of Labor Statistics announced Nov. 2. And the U.S. rate of unemployment among young people under 25 was 16%.

But such statistics are rather misleading because they don’t tell the whole story. They don’t include the millions of youngsters who are not in the labor market because they are continuing with their education or are engaged in training programs. If you take those young people into account, the picture is still grim everywhere, but the U.S. actually comes off as having a worse youth unemployment problem than Europe.

(MORE: The Jobless Generation)

The most marginalized group of young people are those who not only don’t have a job but are no longer in school, either. In the jargon of economists, these are the so-called NEETs, youngsters not in employment, education or training.

Their numbers have been rising everywhere, but they are especially prevalent in the U.S. According to the Organisation for Economic Co-operation and Development (OECD) in Paris, which has the best data on the subject, 14.8% of young Americans qualified as NEETs in the first quarter of 2011 (the most recent period available), up from 12.1% in the same period in 2007. In the E.U. as a whole, the figure was 13.2%, up from 11.5% in 2007.

Within the European numbers there are big variations. In Germany, Austria and the four Scandinavian countries of Denmark, Sweden, Norway and Finland, the figure is below 10%. Spain and Greece have high rates, as would be expected, of 17.6% and 18.2%, respectively, but the worst performer in Europe is actually Italy, with 19.5% of young people out of work and no longer in school or training. (A full set of statistics is available in the OECD’s latest Employment Outlook.)

Several factors set apart the countries with a relatively low proportion of NEETs. They all have particularly extensive professional training programs for young people. Germany’s apprenticeship schemes are the best known; they start early, at age 15 or 16, and mix classroom time with practical experience on the factory floor. The training lasts between one and a half and three years, and by the time they finish, most apprentices move straight into full-time employment. Some of them even end up as CEOs — Hermann Josef Strenger of the chemical giant Bayer, for example.

These nations also have state-funded higher-education systems that are virtually free, and so students have no need to go into debt, unlike in the U.S. And some of the Scandinavian nations, like Denmark, act tough with young people who refuse to participate in training programs — including reducing or cutting their unemployment benefits.

(MORE: The Declining Economic Might of the Once Coveted 18-to-34 Demographic)

On the other hand, the figures are so high for Greece and Spain in part because, compared with the U.S. and many of their European neighbors, a smaller proportion of young people are actually on the job market — about 30%, compared with 55% in the U.S.

“An unemployment rate of over 50% in Greece and Spain only indicates what is occurring among a relatively small fraction of the total youth population. If the other Greek and Spanish youth were, for example, participating in higher education, there would be less concern about their economic fortunes,” says Francis Fong, economist at the Canadian firm TD Economics, in a note that explains the NEET phenomenon. “Focusing solely on the unemployment rate can give an inflated view of the distress among the entire youth population.”

So why are young people in the U.S. so affected by this phenomenon? Jacob Funk Kirkegaard, a research fellow at the Peterson Institute for International Economics, says the NEET numbers probably reflect the depth of the labor-market contraction in the U.S. during the financial crisis, which has actually been worse than in parts of Europe. At the same time, “American youth have fewer education and training opportunities than in Europe — especially following the dramatic cuts to U.S. state and local government education budgets during the crisis.”

Whoever wins the U.S. presidential election on Nov. 6 might want to take a look at that.

MORE: The U.S. Economy Adds 171,000 Jobs in October, but Challenges Remain

17 comments
FrankfurtSirens
FrankfurtSirens

Europe has just as many young people in school as the US. When you are not looking for work, you are not counted as unemployed - this is reasonable, unless you are not looking because you have 'given up'.

The premise the author makes is totally flawed, unsurprisingly - he has no data to back it up.

Education is a very reasonable course of action to be taking - and if US has a better youth unemployment situation because we have more people in school - well - this would actually be a very good thing, and a very positive sign.

Truly sad.


katsy_peace8
katsy_peace8

It's tragic that U.S., being a country with extraordinarily expensive higher education, cannot guarantee its youth a safe flow into the job market. Students spend tens of thousands of dollars, take loans, study hard, only to find themselves jobless for years after graduating from the university. I think, a very contributing change would be for universities to guarantee a job position for those graduates, that have excelled academically. First, it would be a motivation for students to get a higher GPA. Second, it would provide them with some job experience. I'm talking about a 2-3 years of guaranteed jobs right after graduating. Of course, situation will not be solved this way. Changes need to be made on various levels and from various sides. Rolf Dorig in "Flexible Employment is Key" (http://www.project-syndicate.org/commentary/how-to-tackle-youth-unemployment-by-rolf-dorig)  presents more expert opinion on the situation and the ways to manage it. 

paleoroundtable
paleoroundtable

The Center For Immigration Studies (CIS) report titled 'Who Got Jobs During theObama Presidency? Native and Immigrant Employment Growth, 2009 to 2012' revealthat, "since President Obama took office, 67 percent of ALL U.S. employmentgrowth has gone to immigrants (legal and illegal). This president, like thosebefore him, has chosen not to reduce immigration despite the worst job marketsince the Great Depression."

haniyarae
haniyarae

Can we all agree that overpopulation is also a big issue here? We've added about 3 billion people since 1980 according to the UN projections. We haven't added 3 billion more jobs. 

Metsastajatyyppi
Metsastajatyyppi

If you feel yourselves capable, but doesent will be exploited, because you have MORALLY skills, so read this.

How power did it sure, that torturing, tiefing and killing continues. Again going with women by ace taken from Trumps mind, who surely will not any change happen (like Ros Perot didint), but taking it inside enigma keywords, gets on situation, where ace may come when ever to table, it to "maximise keep power manouvers able theatre role side" on situation, where The Change maybe still may come to table (everyone needs to do only 2 day/year/work to get everything), happen, and so on which "the change" must keep on so fine and social democrats side, and on AGONY being womanhood sex side they can get all they wote keep on killing party. So there are workers side ruling same kind of host leader "against" such one, who fits to first mentioned leaders political croup. To those, who do, can everything and even is majority, but who oppositive leader just likes keep inclined surface order and DOESENT BE MORE DEMOCRAT THAN EXPLOITERS ON "BOTH SIDES" ARE. So all continues even more worst. But WHERE IS COUNT. ONLY DIFFERENT ONE, WHO IS APLE TO CARE, BE LEADER, IS SUPERIOR ETC. ETC. ETC. Not mentioned anywhere, but surely rounded by thieves, torturers and killers. Rich "people" going with e will.

SephBay
SephBay

This article has non-sequitur arguments (which is typical of Time but the masochist that I am continued to read it. For one, Denmark's economy is practically the same size as either Michigan, Georgia, Virginia, North Carolina, or Massachusetts. Comparing the educational system of that European country to the entire US system is like comparing the above mentioned US states to the entire European economy. The same goes with the other European countries being compared to the whole US.... Gumbel and Time, your over reliance on ceteres paribus makes you blind to the realities of the global system.

JohnB1127
JohnB1127

As much as we might like to identify youth unemployment as a symptom of the economic problems from mid-2008 until now, this problem runs much deeper than that.  The replacement of manufacturing jobs with service industry positions is a philosophical change that began in the 1980s.  We've been digging the hole we're currently in for almost 30 years.  The intention of the service industry change was to turn us from a country of blue-collar workers into a country of white-collar workers.  Instead we have created a generation of well-educated and deserving young people who are competing furiously to get positions as deli-counter-workers and burger-flippers.  We need to pay more attention to how we can better serve these underutilized people so we can return the tax-base to a functional state. Unfortunately this is work that would take decades to complete, and with a political system that runs in 4-year cycles, there is no political-will to make any adjustment that would provide a lasting fix.

Jmsphat55
Jmsphat55

@TIME they don't want to work they want a hand out!

YesterdaysWine
YesterdaysWine

Why would you possibly take into account people in high school or college, or those who are continuing their training? Seems like a big, fat red herring to me. You can't cherry pick stats and then compare them to incongruous stats from other countries or super regions. seems like you'd do well to go back to school yourself and take a course on comparative statistics. I'm not even sure your stats are even accurate. In 2011, for the first time, more than 30% of people over age 25 have a bachelor's degree. Of course, during hard times the number tends to flatten among those actually in college at this moment, but nevertheless, the trajectory is up. The comparable number in Germany is 19%. I would be much more concerned with the tiers of college degrees earned (an paid for through debt). People who did very well, or well, in high school go to better colleges. Those who go to better colleges get better jobs regardless of their majors. As to technical training, there are a number of factors involved. De-unionization is foremost. However, the overall decline in the number of jobs in manufacturing is another. More and more factory jobs are actually high tech jobs that require not machine skills but computer skills. We also have much more reliable automobiles, obviating the need for legions of mechanics (who are also being replaced by computers for analytics). And, with the trough in construction, we have experienced a decline in training in the building trades. There are still ample opportunities for the willing young person to learn various trades. It's just not automatic anymore. If we were to front load early childhood - earlier even than 4 - with head start programs designed to break the poverty cycle, we would benefit within 10 to 15 years. Poverty-stricken children are behind and stay behind for the most part. By age 6 to 8, they are already a number of grade levels behind their more well off peers.

JohnDavidDeatherage
JohnDavidDeatherage

Minimum wage laws contribute greatly to the unemployment problem with young workers.

CrisSleightholm
CrisSleightholm

Point some fingers at the high schools around the nation that closed down their automotive, woodworking, plumbing, electrical classes in order to pay their football coaches absurd salaries. These shop classes were instrumental in teaching our youths good job paying opportunities. 

Miles Lacey
Miles Lacey

The unemployment statistics don't include those who've given up looking for work and those who never, or have ceased to, qualify for unemployment benefits (or insurance) are seldom counted in many countries hence the rate of unemployment may actually be higher in those countries than we're led to believe. It's also important to remember that the definition of unemployment varies so widely that any comparisons between the United States and European countries need to be treated with caution.

FrankfurtSirens
FrankfurtSirens

@katsy_peace8 

What you are talking about is Communism, and it doesn't work. There is no such thing - never has - and never will - be such a thing as 'safe flow into the job market'.

For starters, there are zillions of jobs available in fields like Engineering, Comp Sci for which people will not obtain the right education or won't bother, and zillions of jobs that people will not do because they consider it 'beneath them'.

It is not anyone's responsibility to provide you with a job.

Why don't you put yourself in the position of an employer: you run a painting company, you paint interiors. You have 12 staff, just as much as you can handle, about right for your market in your town. Now the government comes along and 'forces you' to hire 2 students for 3 years - that you didn't chose. Not only do you not have work for them - since it's an entitled position, one of them is lazy, causing problems. You are effectively paying for their salaries out of profit - which is your salary - i.e. your pocket, i.e. they would be a charity case - and a very expensive one at that. Most businesses cannot afford to take on 'required employees' - they would be bankrupt. If the painting business *could* take on employees - then it would gladly - it would be hiring, which is what most businesses could do when they possibly can because it's good for them.

Enough with the communist ridiculousness. Open a small business, find out how the real world works.


domallen2
domallen2

@haniyarae

Agree whole heatedly. In fact although many jobs have been created by advances in technology, engineering, etc. I'm guessing about as many if not more were lost. The cost of labor and benefits has made it well worthwhile for companies like the one I work for to automate far more than they would have ever done in the past.

domallen2
domallen2

@CrisSleightholm

Plus they make a person more self-reliant. I've saved a lot of money over my 51years fixing all the stuff you mentioned myself (to one degree are another, there have been some things I chose not to tackle on my own). It's not solely a money thing either; it is a lot easier when the heater element in your dryer buys the farm to just order one off the web, fed ex to your house, once it hits your porch in under an hour (that includes a good cleaning) you're up and running again. Beats the heck out of waiting around half a day for somebody who might show up and probably won't have the right part.