Youth crisis is really about the rise of NEETs

The rising unemployment rate among US workers aged 16 to 24 — it hit 10.5% in August, its highest level in a decade not counting the pandemic years — has added to the worry about the crisis of “disconnected youth,” also known as the NEETs: individuals Not Employed, Enrolled or in Training.

In 2024, 12% of 16- to 24-year-olds were NEET, and they’ve quickly become fodder in the economic culture wars. Some claim NEETs are a male problem. Others say the increase in NEETs is related to the rise in AI adoption (with the companion claim that AI is taking jobs from young workers). Still others say NEETs are the result of a failing system of higher education. And there are those who want to reclaim and destigmatize the term itself, according to the Tribune News Service.

These speculative diagnoses are a distraction. Economic research long ago established where NEETs come from. The question is why America fails to help them.

There are three primary reasons why a working-age adult — young or old — would be out of the labor force and not in some kind of educational or training program: They are discouraged by the labor market, have some kind of disability, or are a caregiver. These reasons would suggest that the highest rates of NEET youth would be among those with fewer job opportunities, the less educated, and women.

And that is exactly what the Federal Reserve Bank of St. Louis found last year in a comprehensive look at disconnected youth, which it defined as NEETs aged 16 to 24.

• Women (51.5%) make up a larger share than men (48.5%).

• 70% have a high school degree or less.

• A quarter come from families with less than $25,000 in income.

• More live in rural areas (20.2%) compared to metro areas (15.6%) or cities (17.1%).

• The lowest rate (13.9%) was among White youth, while the highest (21.3%) was among Black youth.

To be clear, there are trends and shifts within each major reason. Labor market discouragement can come from weakness in the overall job market, shifts in industrial composition, or barriers or constraints that affect specific workers. Disability trends depend on a lot of factors, such as addiction epidemics. Caregiving can reflect trends in fertility, aging and disability, as well as the price of child care.

Economists have spent considerable time studying these trends, research that took on a renewed sense of urgency when the first Baby Boomers started to retire 25 years ago and pulled down overall labour force participation. The literature, while vast, has a simple finding: There are a lot of Americans who cannot find or cannot take a job.

In comparison, there has been very little time or energy spent on ways to address this problem.

Consider young workers who can’t find a job even after months of searching. To keep them in the labor market, the US could create a “job seeker benefit” similar to unemployment insurance. The UK and Australia have such programs; the US version could require job-search counseling sessions, for example, to help inexperienced workers learn about the market or suggest training programmes. If policymakers were feeling bold (or maybe just practical?), they could add regulations to protect all job seekers, such as requiring firms to notify candidates about their application status in a timely fashion — which is also a way to ensure that beneficiaries are in fact searching.

Many workers with a disability or care requirements, on the other hand, have a preference for part-time or remote work. Again, there are models to be found in America’s peer countries, many of which protect the right to work part time or from home. That’s one reason that labor force participation is much higher in Europe than in the US.

Of course there are broader, bolder policies that could help these workers, such as paid family and medical leave and universal child care, both of which would help caregivers who want to work. Criminal justice reform would help produce fewer people with a felony history who face discrimination in the labour market.