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Board of Governors of the Federal Reserve System
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Experiences and Perspectives of Young Workers

Policy and Research Implications

The Survey of Young Workers provides some insights into the experiences of young workers, while raising questions about others. The findings described in this report are intended to help frame future discussion among researchers, policymakers, and practitioners working with young adults entering the labor market. This section identifies several key policy and research implications of the study.

Aligning Education and the Labor Market

Connecting education and the labor market is increasingly important for young workers. With the labor market's growing demand for formal educational attainment, choosing a postsecondary program is the first substantial investment decision many young people will make. Young adults need to understand the risks and rewards associated with their choice of a postsecondary institution and field of study. As the cost of certificates and degrees grows and the labor market demands shift, prospective students need more information to guide their choices and to ensure higher returns on their investment. Furthermore, aligning education more closely with careers promotes student success.49

Creating channels of communication that allow educational institutions to better meet the needs of a changing labor market will provide better opportunities for young workers as well as employers. Furthermore, aligning education more closely with careers promotes student success, as people with a sense of where they are going are more likely to achieve their desired goal.50

The survey highlights the association between postsecondary education and positive labor market outcomes, ranging from optimism about one's job future to higher earnings. Hence, it is key that young workers receive quality information that enables them to select an educational program that maximizes their job opportunities. The decision is further complicated for the majority of potential students who do not have the personal resources to pay for their education upfront or lack the ability to earn a full scholarship.

Therefore, policies and strategies should be considered to track the employment and earnings of program graduates over time. Future workers need quality information that is accessible and, if possible, standardized for easy comparisons across institutions.

In light of the need for greater alignment between education and the labor market, the Federal Reserve Board will follow the quantitative research in the Survey of Young Workers with a qualitative study. The objective of the upcoming research is to gain a more detailed and nuanced understanding of how young adults gain information about jobs and career as well as how they search for jobs. This study will occur during 2017.

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Increasing Opportunities for Non-degree Education

Aside from college and university degrees, more workers could gain cost- and time-efficient skills through postsecondary CTE. Unfortunately, young adults interested in CTE face many challenges. First, relatively few U.S. high schools offer vocational programs targeted for a particular profession or occupation. As a result, high school students tend to undertake particular CTE courses as part of their general high school diploma, rather than move directly to a job.51

Second, compared with other countries, the CTE programs in the United States are so highly decentralized, it may not make sense to conceive of a CTE "system." Like other U.S. workforce programs, the variety of diverse CTE institutions are difficult to navigate because they are relatively autonomous, ascribe to multiple accreditation bodies, lack national skills or occupational standards, and are substantially the role of the private for-profit sector.52

Third, options for work-based learning, such as apprenticeships, are weakly integrated into the U.S. CTE offerings. For example, the apprenticeship system only caters to a percentage of workers and is seldom used outside of the construction sector.53

Despite these challenges, CTE in the United States has some valuable assets that could be used to develop more robust training options. For example, the design of the CTE system is inclusive as high schools are comprehensive and postsecondary CTE in community colleges is normally open-access.54 Providing students with information early about CTE options could help them prepare to make the most of their educational investment.

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The Pursuit of Steady Employment

The importance of steady employment was well-documented in the Survey of Young Workers. Despite young adults' desires for long-term job employment with a single employer, research shows an increase in alternative work arrangements. In fact, a 2016 study by Katz and Krueger contends that all of the net employment growth between 2005 and 2015 occurred in alternative work arrangements, with the greatest portion in hiring through contract companies.55 Because contingent work can be unstable, or may afford fewer worker protections depending on a worker's particular employment arrangement, it tends to lead to lower earnings, fewer benefits, and a greater reliance on public assistance than standard work.56

Because alternative work arrangements are increasing in the face of young adults demanding more financial security, policies and strategies should be considered that will provide workers with stability under the changing labor market conditions. Contingent workers are concerned with issues including, but not limited to, income volatility, loss of benefits, paid time off, opportunities for advancement, and legal protections.

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Additional Job Growth Would Benefit Young Workers

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. Rather, high rates of unemployment and low rates of participation among segments of the population could be improved by greater economic growth.

Overall, labor market developments remain healthy. However, despite strong job gains, the unemployment rate has flattened out at approximately 5 percent over the past six months in part because of an increase in the labor force participation rate. Trends in labor force participation add another element of uncertainty. The participation rate fell sharply after the 2009 financial crisis, faster than its apparent trend. It has been encouraging to see the participation rate improve over the past two years relative to estimates of its trend. Despite this relative improvement, the performance of the U.S. economy on this dimension has been poor.57

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49. Carnevale, Jayasundera, and Cheah, The College AdvantageReturn to text

50. Ibid. Return to text

51. Kuczera and Field, A Skills beyond School Review.  Return to text

52. Kuczera and Field, A Skills beyond School Review.  Return to text

53. Ibid. Return to text

54. Ibid. Return to text

55. Katz and Krueger, The Rise and Nature of Alternative Work ArrangementsReturn to text

56. U.S. Government Accountability Office, Contingent WorkforceReturn to text

57. Jerome H. Powell, "Recent Economic Development, the Productive Potential of the Economy, and Monetary Policy" (speech at the Peterson Institute for International Economics, Washington, D.C., May 26, 2016), to text

Last update: February 2, 2017

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