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Youth jobs picture bad and not getting much better

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While the national job market continues to mend, one group has been slower than others to enjoy the benefits.

Young people continue to see their rate of employment creation lag the rest of the economy, setting up challenges not only for the economy generally but also for policymakers specifically.

The Federal Reserve's mandate to create full employment looks a lot closer to fruition for older adults than it does for the younger cohorts, who find themselves working not only in smaller numbers but also at jobs beneath their skills and educational qualifications.

"Younger workers tend to face higher unemployment rates across the business cycle and suffered disproportionately during the Great Recession," Goldman Sachs economists David Mericle and Chris Mischaikow said in a recent report on the subject."

The report suggests that workers between the age of 16 and their early 20s are working part-time for economic reasons or are "marginally attached to the labor force," in other words, they have not looked for a job in the past month at levels much higher than others.

The full level of unemployment, when adding marginally attached and underemployed workers, is higher by 7 to 8 percentage points from the prerecession rate for most age groups from 16 to 23, according to Goldman data. (The count pits the so-called U-3 number, or rate the government publicizes, against the U-6, sometimes called the "real unemployment rate" as it is a more encompassing measure that includes those who didn't look for work in the past four weeks or were underemployed.)

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"Since then, headline unemployment rates broken down by age—which are included in the official employment report—suggest that the gap with the rest of the labor force has largely normalized," the Goldman note said. "In contrast, media reports and surveys of young workers, including a recent Fed report, suggest that the job market remains especially challenging for the young."

Unemployment for those age 16-19 specifically was at 17.5 percent in March. That compares to a 10-year low of 14 percent in May 2006 and a high of 27.2 percent, most recently hit in October 2010 (though it plunged in the following month to 24.8 percent).

The jobless rate for all adults is 5.5 percent, compared with a recession high of 10 percent, according to the Bureau of Labor Statistics. The "real," or U-6 rate, for all adults is 10.9 percent, compared to its recession high of 17.1 percent.

In 2014, 8.9 percent of those between 16 and 19 were working part time involuntarily, while the 20-to-34 group was at 6.8 percent, compared to 5 percent for the entire workforce, according to the National Employment Law Project.

"They always bear the brunt in any recession," said Irene Tung, senior policy researcher at the NELP.

Wage growth, however, has been outpacing the national average. Male workers 16 to 24 years old were making 2.3 percent more at the beginning of 2015 than the year before, while females in that group saw weekly pay grow 6.2 percent. For all workers 16 and over, the gain was just 1.5 percent.

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Fed Chair Janet Yellen, according to many who watch the central bank's movements and are familiar with her thinking, believe she watches U-6 rates closely. Having such a high "real" rate for young workers presents another obstacle to a central bank looking to normalize interest rates after 6 1/2 years of keeping them near zero for the Fed's target funds rate, which many other rates are patterned after.

The Fed itself is conscious of the disturbing trends in youth employment.

The central bank's New York branch produced a report in 2014 that Goldman referenced showing the post-Great Recession problems. Whereas underemployment rates for new college graduates is around 33 percent, it has risen in recent years to 44 percent.

"We find that recent graduates are increasingly working in low-wage jobs or working part time," the New York Fed report said. "We conclude that while elevated rates of unemployment and underemployment may be typical for recent college graduates, finding a good job has indeed become more difficult."