More than one third of 18 to 24 year olds reported no income through wages or a salary in 2022, according to a recent report out of the St. Louis Fed. That figure is up from about 22% in 1990.
Why it matters: A new generation of workers are dropping out of the workforce before they even begin, despite a resilient labor market, while also struggling with mental health.
- Some are finding their college degrees don't translate well to skills-based jobs that employers are hiring for.
- About half of workers with a bachelor's degree are "underemployed," or working jobs that don't make use of a degree within a year of graduating, according to a February Burning Glass report.
"Employees struggle when they don't feel valued," Lisa Severy, a career counselor at the University of Phoenix, told Axios.
- "And that's kind of hard to do when you're working non-traditional hours, non-traditional work environments, multiple jobs."
State of play: The youth mental health crisis "can act as a barrier to income and wealth creation" and contributes to this group's challenges in seeking and holding jobs, the Fed report said.
- Gen Z has entered the job market, so far, during Covid and then the subsequent "tightest labor market since World War II," the report said.
- 18 to 24 year olds, unlike other generations, feel that their current period of financial instability is unlikely to end, according to a 2022 McKinsey survey.
Between the lines: Employers are increasingly focused on skills-based hiring over schooling, said Josh Millet, founder and CEO of talent success company Criteria.
- "The idea is that you should focus, when hiring people, on the actual abilities and skills they have rather than their educational credentials or the amount of relevant experience they have," he said.
Reality check: The 2022 labor market was the strongest on record.
- And the employment-to-population ratio among 20 to 24 year olds has been higher in the past couple of years than it was in the 2010s, according to the Bureau of Labor Statistics.
- But the real incomes of young adults remained essentially unchanged as zero-wage adults make up an increasing proportion of the age group, per the St. Louis Fed.
- The unemployment rate doesn't include youth who don't have a job and aren't in school because they're not considered to be actively job hunting.
Go deeper: What remote-first Gen Zers want at work
