Experiences and Perspectives of Young Workers
Young adults in the United States have experienced higher rates of unemployment and lower rates of labor force participation than the general population for at least two decades, and the Great Recession exacerbated this phenomenon.1 Despite a substantial labor market recovery from 2009 through 2014, vulnerable populations--including the nation's young adults--continue to experience higher rates of unemployment.2
Changes in labor market conditions, including globalization and automation, have reduced the availability of well-paid, secure jobs for less-educated persons, particularly those jobs that provide opportunity for advancement. Furthermore, data suggest that young workers entering the labor market are affected by a long-running increase in the use of "contingent" or "alternative" work arrangements, characterized by contracted, part-time, temporary, and seasonal work.3
In light of these trends, the Federal Reserve Board's Division of Consumer and Community Affairs began exploring the experiences and expectations of 18- to 30-year-old Americans entering the labor market. Staff reviewed existing research and engaged external research and policy experts to identify the potential economic implications of these labor market trends on young workers.
This initial exploration raised several questions about the experiences of young workers that were not fully explained by existing data. In response, the Federal Reserve conducted its first Survey of Young Workers over November and December 2013 to develop a deeper understanding of the forces at play. The findings from this report were published in 2014.4
In December 2015, the Federal Reserve conducted a second Survey of Young Workers to further explore labor market issues and trends among this population. The 2015 Survey of Young Workers was administered by GfK using its Internet panel.5 The 2,035 survey respondents ranged in age from 18 to 30. Details about the survey, its methodology, and limitations can be found in the body of the report and in a methodological appendix.
This report serves two principal purposes. First, it summarizes insights from the 2015 Survey of Young Workers and related research in the field. Second, it frames policy and research issues for future consideration by the Federal Reserve Board and others.
In this Section:
Unless otherwise noted, this report presents findings from the December 2015 survey. Key findings include the following:
Outlook and Expectations
Young adults showed an increase in optimism about future job opportunities from the 2013 survey to the 2015 survey.
- In 2015, the majority of young adults (61 percent) are optimistic about their future job opportunities, showing an increase in optimism from 2013 (45 percent).
- In the survey, the likelihood that a young adult is optimistic about future job opportunities increases with higher levels of educational attainment. Furthermore, young adults who are enrolled in school are more optimistic than young adults who are not enrolled in school.
- Young adults with a paid job are more optimistic than those without a paid job.
Among young adults, steady employment remains more important than higher pay.
- In 2015, young adults continue to have a strong preference for steady employment (62 percent) over higher pay (36 percent). However, the percentage of respondents who preferred steady employment decreased from 2013 (67 percent).
- Among respondents who prefer steady employment, 80 percent would rather have one steady job than a stream of steady jobs for the next five years.
Young adults whose parents have obtained a bachelor's degree are not confident their standard of living will be higher than that of their parents.
- Most young adults are not sure how their standard of living will compare with their parents' standard of living.
- Young adults with at least one parent with a bachelor's degree (or higher) are more likely to believe their standard of living will be lower than their parents (4 percent) when compared with young adults whose parents have a high school education or less (1 percent).
Value of Education
Twenty-eight percent of respondents are currently enrolled as students in a certificate or degree program.
- Most students are enrolled in degree programs, including associate's degrees (23 percent), bachelor's degrees (55 percent), and graduate degrees (9 percent). Furthermore, 8 percent of the students are enrolled in a certificate or technical degree program.
- In the survey, most undergraduate students are identified "nontraditional" because they are over age 23, enrolled in school part time, working full time, and/or financially independent.6
Ten percent of respondents are "non-completers," meaning they are not currently enrolled in a certificate or degree program they started.
- Most non-completers intend to re-enroll and complete the certificate or degree program that they started.
- Thirty-seven percent of non-completers withdrew from their program more than two years ago.
Students use a variety of sources to finance postsecondary education. 7
- Sixty-two percent of respondents with postsecondary education worked while in school to finance all or part of their most recent education.
- Fifty-two percent of respondents with postsecondary educational experience have parents that contributed financially to their education.
- Forty-six percent of respondents incurred debt to pay for some portion of their education or training.
In 2015, young adults believe there is greater value in their postsecondary education than those in 2013.
- Between 2013 and 2015, the portion of respondents who believe the financial benefits of their most recent postsecondary education outweigh the cost increased from 43 percent to 54 percent.
- Furthermore, unlike in 2013, the analysis does not show that the value placed on education is correlated with whether or not a respondent completed their certificate or degree, has a paid job, or has a temporary or permanent job.
Forty-one percent of respondents believe they have the level of education and training needed for the type of job that they would like to hold in the next five years.
- Young adults with a graduate degree are the most likely to believe they have the necessary level of education.
- Meanwhile, young adults who lack postsecondary credentials are less likely to believe they have the necessary level of education.
Young adults report that the high cost of education and a lack of information about connections to jobs and careers are barriers to enrolling in postsecondary educational programs.
- Among young adults who are interested in additional education but not enrolled, cost is the most frequently cited reason for not enrolling.
- After cost, a lack of time and the schedule of course offerings are noted as barriers to enrollment in additional education.
Connecting Education and the Labor Market
More than 30 percent of young adults did not receive information about jobs and careers in high school and college (if applicable). 8
- Sixty-six percent of young adults received information about jobs and careers during high school. And, 69 percent of young adults received such information in college (among those who attended college).
- Among young adults who received information about jobs and careers in high school, college or both, the information most often came from teachers and counselors.
Many employees are not employed in jobs aligned with their education. 9
- Less than half (45 percent) of employees work in a career field that is closely related to their educational and training background.
- Employees engaged in some fields of study, including engineering, are more likely to align their education and work.
Many young adults gained early work experience during high school, college, or both.
- Fifty-three percent of young adults had a paid job during high school, and 77 percent of young adults had a paid job during college (among those who attended college).
- Twenty-six percent of young adults who held an internship during college said that the internship led to a paid job.
Young adults do not have a standard method of searching for a job.
- At every level of educational attainment, the top strategy for job searches was to contact the employer directly.
- Young adults with a bachelor's degree searched more intensely, as they were far more likely to employ this strategy (61 percent) than those with a certificate or technical degree (44 percent).
Profile of Employees
Permanent employment that is long-term and not temporary employment is correlated with a positive outlook and job satisfaction.
- Seventy-eight percent of employees have a permanent/long-term ("permanent") job.
- Sixty-eight percent of employees with a permanent job are optimistic about their future job opportunities compared with 43 percent of employees with a temporary job.
- Fifty-seven percent of employees with a permanent job are very satisfied with the benefits they receive from their employer compared with 29 percent of employees with a temporary job.
Full-time employment is also correlated with a positive outlook and job satisfaction.
- Seventy-five percent of employees in the survey have a full-time job.
- Sixty-five percent of full-time employees are optimistic about their job future compared with 54 percent of part-time employees.
- Full-time employees are more likely to consider their main job to be a "career" or a "stepping stone to a career" than their part-time counterparts.
Many part-time employees would prefer more work hours.
- Among part-time employees surveyed, 49 percent were identified as underemployed, as they are working part time because of economic conditions.10
- Meanwhile, 42 percent of part-time employees prefer part-time work.
Employees expect to have fewer paid jobs in the coming year than they have held in the past year.
- Sixty-three percent of employees held one full-time job in the past year, yet 80 percent of employees expect to have only one full-time job in the coming year.
- Among employees who have multiple jobs, these employees would prefer to work more jobs simultaneously than they have experienced in the past year.
Employees in 2015 are more satisfied with their pay and benefits than in 2013.
- In 2015, employees are more likely to be "very" or "somewhat" satisfied with their salary and wages than respondents with a paid job in 2013.
- The percent of young workers who have health insurance increased from 2013 (70 percent) to 2015 (82 percent).
- Likewise, the percent of young workers who received paid time off for sick leave, holidays, or both from any of their paid jobs increased from 2013 (59 percent) to 2015 (62 percent).
Although most employees can cover their household expenses, many would struggle if faced with an emergency.
- Seventy-three percent of employees are able to cover their monthly household expenses with their household income.
- Among young workers, the ability to go without a paycheck temporarily improved between 2013 and 2015.
Many employees receive financial support from family.
- Many employees, including some employees who report they cover their household expenses, receive financial support from their families.
- In addition, 8 percent of employees use government programs to support their households.
Young adults are forming new households.
- As adults, 43 percent of employees have formed a new household with their immediate family (i.e., spouse/partner), and 20 percent have formed a new household alone or with a roommate.
- Nearly half of employees are responsible for paying their full mortgage or rent.
Policy and Research Implications
In this Section:
Improve Alignment between Education and the Labor Market
With the labor market's growing demand for formal educational attainment, choosing a postsecondary program is the first substantial investment decision for many young people.11 The survey highlights the association between postsecondary education and positive labor market outcomes, ranging from optimism about one's job future to higher earnings. Responses to the survey underscore the importance of young workers receiving appropriate information that enables them to select an educational program that maximizes their job opportunities. Future workers need quality information that is accessible and, if possible, standardized for easy comparisons across institutions. Additionally, strategies to track the employment and earnings of program graduates over time should also be considered.
Increase Opportunities for Non-degree Education
Aside from college and university degrees, more workers could gain cost- and time-efficient skills through postsecondary career technical education (CTE). However, young adults interested in CTE face many challenges, including a lack of CTE high schools, a decentralized CTE system, and a lack of work-based learning programs.12
Despite these challenges, CTE in the United States has some valuable assets, including comprehensive high school and open-access community colleges.13 Providing students with information about CTE options earlier could help them prepare to make the most of their educational investment.
Provide Assistance and Protections for Workers with Alternative Work Arrangements
Despite young adults' desires for long-term job employment with a single employer, research shows an increase in alternative work arrangements. Because alternative work arrangements are increasing in the face of young adults demanding more financial security, policies and strategies that will provide workers with stability under the changing labor market conditions should be considered. Alternative workers are concerned with issues including, but not limited to, income volatility, loss of benefits, paid time off, opportunities for advancement, and legal protections.
Seek Opportunities to Improve Job Growth
It is important to note that the high rate of unemployment among young workers is not a result of only education, job searches, or individual characteristics. High rates of unemployment and low rates of participation among segments of the population could be improved by greater economic growth.
1. Bureau of Labor Statistics (2014), Current Population Survey (CPS), Unemployment by Age, Sex, and Marital Status, Seasonally Adjusted, table A-10, www.bls.gov/web/empsit/cpseea10.htm. Return to text
2. Heidi Shierholz, Natalie Sabadish, and Nicholas Finio, The Class of 2013: Young Graduates Still Face Dim Job Prospects, Economic Policy Institute briefing paper no. 360 (Washington: EPI, April 2013), www.epi.org/publication/class-of-2013-graduates-job-prospects/ . Return to text
3. U.S. Department of Labor, Commission on the Future of Employee-Management Relations (Washington: Department of Labor, 1994), www.dol.gov/_sec/media/reports/dunlop/section5.htm. This report refers to contingent work and alternative work arrangements as "alternative work arrangements" and refers to contingent workers and alternative work arrangement workers as "alternative" workers. For a further discussion of "alternative work arrangements," see Barbara J. Robles and Marysol McGee, "Exploring Online and Offline Informal Work: Findings from the Enterprising and Informal Work Activities (EIWA) Survey," Finance and Economics Discussion Series 2016-089 (Washington: Board of Governors of the Federal Reserve System, October 2016), www.federalreserve.gov/econresdata/feds/2016/files/2016089pap.pdf. Return to text
4. Board of Governors of the Federal Reserve System, In the Shadow of the Great Recession: Experiences and Perspectives of Young Workers (Washington: Board of Governors of the Federal Reserve System, 2014), www.federalreserve.gov/econresdata/2013-experiences-and-perspectives-of-young-workers-201411.pdf. Return to text
5. KnowledgePanel® is a large-scale online panel based on a representative random sample of the U.S. population. GfK supplies a free computer and Internet service to participating households that lack Internet access. See http://www.gfk.com/solutions/consumer-panel/ . Return to text
6. The National Center for Education Statistics uses the following definition: "The criteria chosen to identify nontraditional students pertain to choices and behavior that may increase students' risk of attrition and, as such, are amenable to change or intervention at various stages in a student's school life. With this intention, three sets of criteria were used to identify nontraditional students: (1) enrollment patterns, (2) financial and family status, and (3) high school graduation status. See https://nces.ed.gov/pubs/web/97578e.asp. Return to text
7. In this report, postsecondary education refers to experience in a certificate or technical degree program, associate's degree program, bachelor's degree program, master's degree program, and/or professional or doctorate degree program. In this report, respondents with postsecondary education have not necessarily completed a certificate or degree. Return to text
8. In the survey, respondents with postsecondary education (including those who have not completed a certificate or degree) were asked about their "college" experience. Return to text
10. Underemployed, or "part time for economic reasons" or "involuntary part time," includes persons who indicated that they would like to work full time but were working part time (one to 34 hours) because of an economic reason, such as their hours were cut back or they were unable to find full-time jobs. See http://www.bls.gov/cps/lfcharacteristics.htm. Return to text
11. Anthony Carnevale, Tamara Jayasundera, and Ban Cheah, The College Advantage: Weathering the Economic Storm (Washington: Georgetown University, Georgetown Public Policy Institute, August 2012), https://georgetown.app.box.com/s/vzqem30apzdt4e3vmo9n . Return to text
12. Malgorzata Kuczera and Simon Field, A Skills beyond School Review of the United States, OECD Reviews of Vocational Education Training (Paris: OECD Publishing, 2013), www.oecd.org/employment/askillsbeyondschoolreviewoftheunitedstates.pdf . Return to text
13. Ibid. Return to text