Tag Archives: Unemployment

Rising Unemployment among Youth (Ages 16-24) in the OECD

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In last week’s post on the December 2011 unemployment numbers in the OECD, we showed how the total unemployment rate across the OECD has remained relatively stable in recent months, ending December 2010 at 8.2%; the same rate as in November 2010. While some countries—i.e., Germany and the United States—have seen a consistent decrease in unemployment since September 2011, the majority of states have not been so lucky: Spain, for example, ended 2010 with a shocking 22.8% unemployment rate, more than 8% higher than the country with the second highest unemployment rate (Ireland, with 14.5%).

What we did not discuss at the time, however, was the disproportionate impact the economic crisis has had on certain age groups. Today, we look at unemployment trends among the youth (ages 16-24); trends that are much more alarming than the overall unemployment trends.

The first chart, below, displays youth unemployment rates from January 2000 through December 2011 for the EA-17 (e.g., the 17 European Union member states that have adopted the Euro as their currency) and the EU-27 (e.g., all 27 European Union member states). From a low of around 15% unemployment at the start of the economic crisis in 2008, youth unemployment has grown to over 21% in 2011 with no sign of abating.

Source: Eurostat

The following chart uses the same Eurostat data, but looks at within-country trends over the past 4 years. We’ve also included the United States in this sample.

Note: The data labels represent the unemployment rates in Q3-2011.

 

Viewing the data in this way shows just how dire the situation is for younger job seekers in many countries. In Spain, the youth unemployment rate rose from an already high 24.6% in 2008 to 47.8% by the third quarter of 2011, more than twice as high as the total unemployment rate of 22.8%. A similar trend is seen in the other Southern European countries, including Italy (from 21.3% in 2008 to 28.2% in 2011), Greece (from 22.1% in 2008 to 45.8% in 2011), and Portugal (from 20.2% in 2008 to 29.9% in 2011).

As for the United States, the youth unemployment rate increased from 12.8% in 2008 to 17.5% in 2011; well below the EU-27 average of 21.6% in 2011, but close to double that of Germany (8.6%), Austria (7.3%), and the Netherlands (7.6%).

In short, it is important to keep different demographic age groups in mind as we evaluate economic trends. From this data, it is clear that the youth have been particularly affected by the Great Recession, and the recent economic gains (at least in the case of the United States) have done little to improve the situation of this group.

 

Unemployment Rates across the OECD: December 2011

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On Tuesday, the Organisation for Economic Co-operation and Development (OECD) released the harmonized unemployment rates for December 2011, showing an unemployment rate across the OECD area of
8.2%; the same rate as the previous month. Similarly, the rate within the Euro area also remained unchanged at 10.4%, marking a continued high since the start of the economic crisis in 2008. These averages mask a great deal of cross-national variation, however, with some countries having extraordinarily high unemployment – i.e., Spain (22.9%), Ireland (14.5%), and Portugal (13.6%)—and others having relatively low unemployment—i.e., Austria (4.1%), the Netherlands (4.9%), and Luxembourg (5.2%).

As we noted in a previous article, unemployment in the U.S. fell to 8.3% in January 2012, marking the fifth consecutive month that the rate has declined. To put this trend in perspective, we wanted to look at the unemployment trends in other OECD countries. The following chart shows unemployment rates in selected OECD countries from September 2011 through January 2012 (note: January 2012 rates were only available for Canada and the U.S.):

Although there’s a lot going on in this chart, one trend is unmistakable: whereas most of the countries in the sample have seen a steady increase in unemployment rates over this period, only the U.S. and Germany have seen consistent declines in unemployment over this period. Furthermore, the rate in the U.S. is quickly approaching the OECD average, and is already significantly below that of the European Union.

In short, while the U.S. economy still finds itself in a big hole, the recent trends are very optimistic; something that cannot be said for very many of the other OECD member states.

Employment in the US: January 2012 BLS Figures

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Current Events 2012

This morning, the Bureau of Labor Statistics released its report on the U.S. employment situation for January 2012, showing once again positive signs of improvement in the U.S. labor force. As the chart above shows, the unemployment rate has fallen for the fifth month in a row: dropping from 8.5% in December to 8.3% in January; the lowest it has been since President Obama’s first month in the presidency (February 2009). (The chart is color coded red for months that President Bush was in office, and blue for President Obama).

In January, total nonfarm payroll increased by 243,000 jobs. Job growth was widespread throughout the entire private sector, with large increases in professional and business services (+70,000 jobs), leisure and hospitality (+44,000 jobs), and manufacturing (+50,000 jobs). Government employment, however, continues to stagnate: in the past 12 months, the sector has lost 276,000 jobs.

On the less positive front, the number of long-term unemployed (e.g., those who are unemployed for 27 weeks or longer) remained high in January at 5.5 million, accounting for 42.9% of the unemployed.

In short, as with the recent numbers on GDP growth for the 4th quarter of 2010, the economy continues to trend in the right direction.

 

Unemployment in California: As CA Goes, so Goes the World?

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In an economic news release published a few days ago, the Bureau of Labor Statistics reported that California’s unemployment rate in December 2011 was 11.1%, down from 11.3% in November 2011.  This marks the fifth straight month that unemployment has fallen in the state; a promising sign after years of economic stagnation.

While other states have also endured exceptionally high rates of unemployment—notably Nevada (12.6% in December 2011), Rhode Island (10.8%), and Mississippi (10.4%)—, the sheer size of the California economy makes developments there especially important for the rest of the U.S. economy. As shown by the chart below, California is responsible for a full 12% of the country’s Gross Domestic product, the largest contributor of all the states.

 

Similarly, California’s economy has world-class standing: if taken on its own, the state’s 1.9 trillion dollar economy would place it among the top ten economies in the world, ahead of Canada, the Russian Federation, Spain, Mexico, South Korea, and Australia.

 

 

So how important is California to the rest of the US economy? As the chart below shows, California’s unemployment rate, while generally higher than the United States on the whole, is almost a perfect mirror of the general national trends.

 

While Wall Street and the popular media focus predominantly on the fates of the PIGS—e.g., Portugal (number 37 in the world in terms of  GDP in 2010), Italy (number 8), Greece (number 32) , and Spain (number 12)—the close correlation between developments in California and developments in the US as a whole suggests the need to refocus our attention. As such, the continuing improvement in California’s unemployment rate should give us all a glimmer of hope as we slowly make our way on the path to recovery.