Why 400K+ Americans in their 20s aren't working

Workers in their 20s are missing from the workforce — hundreds of thousands of them, Bloomberg reported March 17. It's hard to pin down a reason why. 

Workers of "prime age" — between 25 and 54 — bounced back to a pre-pandemic, pre-recession participation peak in February. Now, their labor force participation rate is 83.1 percent. 

However, two groups are participating less and less: people between the ages of 20 and 24, and those 55 and older. 

It is easier to explain why workers 55 and older are declining. Most baby boomers are now at or past retirement age, and the smaller Generation X is filling in behind them. Additionally, COVID-19 hit this age group particularly hard. 

However, Gen Zers still sit 1.1 percentage point below their pre-COVID workforce participation rates, according to data from the Bureau of Labor Statistics. More than 400,000 Americans in their 20s are missing from the workforce — even those in their late 20s are seeing declines in participation and employment. 

This could be due to the pandemic, in part. Hiring was interrupted, and those untenured workers earlier in their careers were subject to layoffs. Twenty-somethings may be scarred by these harsh preliminary experiences in the labor market, and COVID-19 safety nets may have been generous enough to keep them out of it. Some may have also been tapped as caregivers for younger and older family members. 

However, labor demand is high with pay on the rise for younger, low-wage workers. 

"For those in their 20s, the crosscurrents seem to have resulted so far in declines," Bloomberg columnist Justin Fox wrote. "Reversing them will probably require continued strong labor demand, which given the unsettled financial and economic environment of the moment might not be in the cards."

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