A larger share of people under the age of 35 are collecting unemployment insurance than before the pandemic, a shift that is likely the result of demographic changes and the trend of jobs that can be done remotely.
In 2019, nearly half of those receiving unemployment were over the age of 45, but that number has fallen to 45.8% this year. Younger people now make up more than 31% of beneficiaries, a notable increase from before the pandemic, according to data compiled by Bloomberg.
The shift, though subtle, speaks to both changes in the labor market and demographic changes, according to Chris Kayes, a professor of management at George Washington University.
Kayes pointed out to the Washington Examiner that as baby boomers begin to retire, the younger generations (particularly those under the age of 35) are starting to make up a larger proportion of the country’s workforce.
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While baby boomers for years made up the largest overall share of the U.S. population, in 2020, millennials overtook the generation to become the one with the most members.
Millennials, and the even younger Generation Z, are also more inclined toward different work sectors than older workers.
For instance, the technology sector has become an increasingly popular career path for younger workers. The changing career landscape might be contributing to the trend of younger people applying for unemployment, according to Kayes, who gave the example of someone in the technology space who might be laid off because their job was moved offshore.
“There is some concern that entry-level jobs, so people that are, say, 21 to 27, are really going to be a group that’s going to be most affected by any kind of potential recession because those are the kind of jobs … that are easier to offshore or there are other kinds of technologies that may take the place of the jobs that that group does,” he said.
While the possibility of a recession and its effect on the labor market looms large, for months now, the jobs market has been tight, and employers have worked to hold on to employees. That has given more power to workers to decide where they want to work and more leverage to exact concessions.
On balance, younger workers can choose to be pickier than they used to before the pandemic. So another factor might be that more younger workers have opted to collect unemployment benefits because they feel confident they can find a job but are just holding out until they find the one that is best for them.
The pandemic brought about the widespread acceptance of remote work. Many young workers, free from the idea of working for a singular company for years, left their positions during the pandemic for remote ones, or, as their company began to shift back to in-office work, decided to find new employment.
Workplace flexibility is a major factor for younger employees. A LinkedIn survey from earlier this year found that a whopping 72% of Generation Z employees said they have left or considered leaving their job because of inflexible work policies. A vast majority of millennials said the same.
“This group was much more willing to leave their jobs. They had less at stake because they hadn’t invested the years and years that maybe some of the older generations had with a particular employer or a particular job,” Kayes said.
In 2021, nearly three-fifths of young adults up to the age of 24 lived in their parental home, a number that ballooned during the pandemic, given the availability of remote work. The ability to live somewhere rent-free might have also contributed to young workers feeling more inclined to collect unemployment benefits while job searching rather than just taking the first job offer they receive.
While there has been a shift in the proportion of young people applying for unemployment, the future is less certain as fears of a recession percolate.
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Many economists describe two consecutive quarters of negative gross domestic product growth as recessionary, and the United States this year has experienced just that. Nevertheless, with negative GDP growth usually comes higher unemployment, and that has not yet come to pass.
The economy added 528,000 jobs in July, and the unemployment rate unexpectedly fell to 3.5%, matching the ultra-low level it was at prior to the pandemic.
