June 23, 2021
Young adults tend to get hit harder during recessions and experience more long-term consequences from downturns in comparison to older workers. Previous analysis from CEPR has found that young people were hit hard by the pandemic and were largely employed in sectors that did not allow remote work options and would not be as quick to recover from the pandemic’s shock. Young adults remain disproportionately affected by the economic shock.
To better understand the impact of the pandemic on adults in their early 20s, it is useful to look at trends in the share of 20- to 24-year-olds who are not in work or school. Internationally, this is known as the “NEET rate” because it typically measures the share of an age group that is not in employment, education, or training. While we use the same acronym here, the data we use do not capture people in short-term training programs.
Table 1 compares the number and percentage of 20- to 24-year-olds who were not in work or school in the first quarter of 2020 with the number and percentage in the first quarter of 2021. In the first three months of 2021, about 3.81 million 20- to 24-year-olds, on average, were not in work or school, an increase of 740,000 compared to the same time last year. The NEET rate for 20- to 24-year-olds increased from 14.7 percent to 18.3 percent over the same period.
| Jan-Mar 2020 | Jan-Mar 2021 | |||||
|---|---|---|---|---|---|---|
| Number not in work or school (1000s) | Share not in work or school (%) | As a share of all not in work or school (%) | Number not in work or school (1000s) | Share not in work or school (%) | As a share of all not in work or school | |
| Total | 3,070 | 14.7 | 100 | 3,810 | 18.3 | 100 |
| Female | 1,603 | 15.3 | 52.2 | 1,932 | 18.5 | 50.7 |
| Male | 1,467 | 14 | 47.8 | 1,878 | 18 | 49.3 |
| Hispanic | 771 | 16.2 | 25.1 | 949 | 19.7 | 24.9 |
| Black | 654 | 20.9 | 21.3 | 796 | 24.8 | 20.9 |
| White | 1,421 | 12.8 | 46.3 | 1,768 | 15.9 | 46.4 |
| Asian | 160 | 10.4 | 5.2 | 206 | 14.3 | 5.4 |
| Other | 64 | 20.5 | 2.1 | 95 | 31.7 | 2.5 |
Source: Authors’ analysis of the monthly Current Population Survey (accessed through IPUMS)
As seen in Table 1, there is relatively little difference in current NEET rates by gender but significant differences by race and ethnicity. About one-in-four Black 20- to 24-year-olds were neither in school nor working during the first quarter of 2021 compared to about one-in-five Hispanics and one-in-six whites.
The increase in NEET rates for 20- to 24-year-olds between 2020 and 2021 appears to be driven exclusively by large employment declines and offset slightly by a modest increase in school attendance. As Table 2 shows, the employment rate for 20- to 24-year-olds was about 5.6 percentage points lower in the first quarter of 2021 than in 2019, while the percentage in school is up by nearly 1 percentage point.
| Employed | In school | NEET | ||||
|---|---|---|---|---|---|---|
| Year | Male | Female | Male | Female | Male | Female |
| 2019 | 67.9 | 66.1 | 33.1 | 38.1 | 13.9 | 15.8 |
| 2020 | 60.5 | 58 | 32.6 | 37.5 | 19.4 | 20.8 |
| 2021 (1st q.) | 62.1 | 60.7 | 33.7 | 39.3 | 18 | 18.5 |
Source: Authors’ analysis of the monthly Current Population Survey (accessed through IPUMS)
The next two figures track NEET rates for 20- to 24-year-olds by gender (Figure 1), and race and ethnicity (Figure 2) since 2005. As Figure 1 shows, before the NEET rate spiked in 2020, it had been trending downward over the long-term. In 2005, 17.5 percent of young people were not in education or employment compared to 14.8 percent in 2019.
Figure 1
Figure 1 also depicts a gradual narrowing of the gender gap in NEET rates since 2005. Although young women’s NEET rates remained higher over the whole period examined, men’s NEET rates climbed at a faster rate in both the Great Recession and the pandemic recession.
In 2005, there was close to a 7 percentage point difference between male and female NEET rates; by 2021 that number fell to about half a percentage point. The initial narrowing of the gap was mostly due to a large increase in young men’s NEET rates during the Great Recession.
From 2011 onward, some of the narrowing between the young men’s and young women’s NEET rates can be explained by a steady decrease in the NEET rate for women. By 2019, young women’s NEET rate was about 2 percentage points higher than young men’s. In 2020, the NEET rate for both groups increased sharply, but with a larger increase for young men that narrowed the gender gap. Compared to 2005, the narrowing is almost exclusively due to a narrowing in the gender gap in young adults’ employment, which has decreased from 7.2 percentage points in 2005 to 1.4 percentage points in 2021.
Figure 2 tracks NEET rates for 20- to 24-year-olds by race and ethnicity. The NEET trend for Asian adults in their early 20s more or less mirrored that of their white peers. In 2005, however, Black young adults’ NEET rate (25.5 percent) was almost twice as high as it was for their white counterparts (13.5 percent). The NEET rate gap between Black and white young adults narrowed in the 2010s, but the NEET rates for Black young adults at its lowest point (19.6 percent in 2019) was still about 1.5 times higher than it was for their white counterparts (12.9 percent).
During the pandemic in 2020, Black young adults experienced the largest increase in NEET rates (7.6 percentage points), compared to 4.4 percent for white young adults. Despite the pre-pandemic progress and the current gradual decline in NEET rates among all groups, there is still a striking difference between the Black and white NEET rates.
Figure 2
As shown in Figure 2, young Hispanic adults have also seen a steady decline in NEET rates. Between 2005 and 2019, there was a 5.8 percentage point decrease in the Hispanic and white NEET rate gap. In 2019, the Hispanic and white NEET rate gap was at 3.6 percentage points. However, in the past few months of 2021, it seems to have returned to 2019 levels after a sudden increase in 2020. Although the NEET rate gap between Hispanic and white young adults has narrowed since 2005, young Hispanic adults still face higher rates of not being employed, or in education and training.
Conclusion
Although our analysis reveals that 20- to 24-year-olds have experienced a steady decline in NEET rates since their April 2020 peak, there were still roughly 740,000 more young adults not in work or school in the first quarter of 2021 compared to the first quarter of 2020. Taking a longer-term perspective, the gradual declines in the percentage of young adults who are not in work or school, and the narrowing of disparities by gender, race, and ethnicity are good news, but considerable racial and ethnic disparities still remain. Moreover, the progress on reducing racial and ethnic disparities had been disrupted by the pandemic.
The American Rescue Plan will help improve the employment and educational prospects for young adults. But current and ongoing recovery efforts need to do more to ensure that young adults in today’s diverse working class can improve their long-term prospects in the labor market and prosper in the years ahead.
