Welcome to the Letter from the Chief Economist.
I remember when I graduated high school, part of the excitement for me and my classmates was getting started with our lives. Some stayed nearby and others moved away; some joined the workforce right away and others of us continued our education (I personally started at the University of Athens, not far from home). When I catch up with old friends, I’ve enjoyed hearing about what they've been up to.
The point is this: we were going to school or starting jobs. But it turns out not that everyone does.
A few weeks ago, we ran an analysis and found that as many as one in six young adults age 18 to 24 are neither in school nor working, a number that grew by 1 million from 2019 to 2021, and we shared those insights in a cover story for Newsweek.
The increase in disengagement for 18-19 year olds from 2019 to 2021 was 30%, even higher than the overall rate of 27%.
The immediate cause would seem to be the disruption of the pandemic, which forced everyone to reconsider and reprioritize their decisions about work and the future. It would also be reasonable for the high school classes of 2020 and 2021 to be skeptical about taking on student debt in exchange for online classes and a disjointed on-campus experience—but that doesn’t explain why those students wouldn’t go to work in jobs with long-term prospects instead.
The risk for these “disconnected” individuals is that falling behind early creates a gap that’s very difficult to close. Despite mounting student debt and other challenges, college graduates still earn substantially more than peers with just a high school diploma—and that divide is growing. And when the job market finally cools—whenever that may be—less educated workers will be more likely to lose their jobs to layoffs and have a harder time finding new ones.
As my colleague Layla O’Kane said in the story: "People who are not working nor in school are potentially missing out on some really formative skill building years.”
Getting the right people to the right jobs is always a challenge, but it’s even more complex for this current generation. Solving these problems will require collaboration and innovation from businesses, schools, communities, and, of course, the individuals themselves. I’m interested to see where it goes—and with Lightcast data and insight, we’ll be ready to contribute to a solution.
Indicator after indicator keeps telling the same story: despite the Federal Reserve’s efforts to cool the economy and push down inflation, the labor market just keeps on running as strong as ever. A few weeks ago, we saw in the monthly Employment Situation that unemployment had reached its record low (again), and more recently, the monthly CPI showed inflation was running hotter than expected.
Today, it’s jobless claims, which reached a three-week low this week at 214,000 (while the previous number was revised downward, as well).
At risk of repeating myself: this is great for employees, who are enjoying high demand for their work and have any number of jobs to choose from, but a challenge for employers looking for talent and an even bigger challenge for the Fed and its efforts to put the brakes on this historically tight labor market. It’s difficult to imagine anything except more interest rate hikes going forward.
In The Papers
This week, the OECD (Organisation for Economic Co-operation and Development) released a new paper on digital skills and how their use is transforming the world of work as it moves more and more online. You can read “Skills for the Digital Transition: Assessing Recent Trends Using Big Data” online here.
To understand which new digital jobs are being created, and which new digital skills are being added to existing jobs, the best tool for the OECD would be a comprehensive library of data that collects and scrapes millions of job postings from thousands of online sources every day. Well, we’ve got just the thing.
Using Lightcast data, the OECD was able to put together a big-picture look at the digital transformation of the workplace, which will help policymakers in its member countries better understand the current state of their workforces and also help guide their plans to train and develop their labor markets for how work is changing.
Whether it’s for economic leaders in Brussels or 19-year-olds at home, I’m glad to see our data continue to be used to help everyone unlock new possibilities in the labor market.
Until next week,
Lightcast Chief Economist