skip navigation

Friday, October 31, 2014

[ – ] Text Size [ + ]  |  Print Page

Cascade: No. 79, Winter 2012

Spotlight on Research: Early Labor Experiences of Young Men: Underlying Factors and Later Consequences*

Unemployment has deleterious effects on the overall health of the economy. Also, unemployment is debilitating to those experiencing it. For young entrants into the labor force, their early employment/unemployment experiences may be especially critical to their later labor market success. Thus, the initial transition-to-work period may foretell future employment status and wages/income. This is a particularly crucial juncture for young minority males who generally experience high rates of unemployment. Conventional wisdom suggests that higher educational attainment plays a prominent role in labor market and economic outcomes. A study by Michael Stoll draws on research in this area and examines the “influence of educational attainment and race/ethnicity on labor outcomes during the initial transition to work and over the first stage of young men’s working careers.”1 The following is a summary of his paper.

Background

Marvin M. Smith, Ph.D., Community Development Research AdvisorMarvin M. Smith, Ph.D., Community Development Research Advisor

Stoll pointed out that the “economic and labor market difficulties of less-educated men who are new entrants into the labor market are a growing social concern.” He noted that “research has pointed to growing employment difficulties and slow or negative wage growth for many in this group, especially less-educated Black men.” According to the author, these problems could result in increased difficulties in maintaining an attachment to the labor market, which in turn might lead many to leave the labor force altogether. Moreover, intermittent employment “also slows young men’s accumulation of work experience and job contacts, thus further eroding future labor market advances.”

Stoll observed that these recent trends are in stark contrast to those in earlier periods. “From the early 1900s through the 1960s, the real earnings of less-educated male workers grew markedly.” This, he indicated, was a result of several factors such as productivity gains, relative shortages of less-skilled workers, and expanding unionization and federal government minimum wage legislation. The author pointed out that the gains from these helpful influences subsided in the 1970s, thus giving rise to the labor market difficulties experienced currently by those with limited education. However, he noted that “those with advanced degrees have experienced unprecedented gains over the same period, leading to growing gaps between those with and without significant educational attainment.” In order to gain a better understanding of the “recent labor market and economic performance of young men during their initial transition to work,” Stoll focused on the following two questions:

  • How does labor market advancement differ across educational levels for young men finished with schooling during the first stage of their working careers?
  • Do these potential advances vary by racial/ethnic groups?

Before embarking on his analysis, the author indicated that most of the causes of, or explanations for, growing disparities in labor market performance by educational level and racial/ethnic groups reported in the literature can be attributable to supply-side or demand-side factors. He explained that “supply-side explanations refer to the characteristics, behaviors, and choices of the individuals themselves,” while demand-side explanations relate to the actions of employers. Among the most prominent supply-side explanations, Stoll cited “differences in skill and educational attainment levels (especially relative to the rising level of skill requirements of jobs), differences in the quality of social networks, cultural or urban underclass behavior, and crime, especially given the growth in incarceration of men, particularly less-educated, minority men, and employers’ leeriness to hire such men.” Prominent explanations on the demand-side “include a spatial mismatch between the location of employment opportunities and the residential locations of certain groups; racial discrimination, aggregate demand, or the slackness of labor markets at any given period of time; and job competition from other workers such as immigrants or women, among others.”

Data and Methodology

For his analysis, Stoll used 1990 U.S. census data and data from the 2006–2007 American Community Survey. He “analyzed microdata records for men who (a) were between the ages of 16 to 26 in 1990, (b) were not enrolled in school, (c) had attained up to a bachelor’s degree, and (d) had no work-related disability.” As measures of labor market advancement and economic well-being, the author used the employment rate, average hourly wages, the number of hours per year, average total income, and the poverty rate. In the absence of longitudinal data, Stoll used his two data sources to construct an overall “synthetic” cohort of men for study purposes. This was accomplished by “identifying a cohort of men in 1990 (as previously defined), then selecting this same cohort in 2006–2007 by extending their ages by the 15–16 year period examined.” This resulted in a cohort of men who “were estimated to be between the ages of 32–33 and 42–43 in the 2006–2007 period.” According to the author, this represents the beginning of most men’s prime working and earning years.

Results

Stoll assessed the labor market and economic advances of young men in the study sample by comparing the key indicators mentioned above between 1990 and 2006–2007, stratified by educational levels (no high school degree, high school degree, some college, associate’s degree, or bachelor’s degree). He found several key findings over the study period:2

  • Employment rates, average wages, and income rose for all educational attainment groups. The total amount of hours worked increased as well; poverty rates declined across the board.
  • Outcomes for all key indicators improved as sample members acquired more education.
  • While most positive outcomes increased with each educational level, they increased at a more rapid pace the higher the educational level achieved.
  • There were large racial and ethnic differences in these outcomes even within educational levels.
  • Except for employment, the gains for most key indicators grew more significantly for native-born whites than for native-born racial/ethnic minorities, and these gains (or racial gaps) grew over time with increased educational levels.

Policy Implications

Stoll’s analysis underscored conventional wisdom that increased educational levels enhance labor market outcomes. In addition, he documented that improvements in outcomes, over time, are much more dramatic for those with college degrees and that the “advances made by young white men greatly exceed those for other groups, especially for racial and ethnic minorities.” The author observed that “for racial and ethnic minorities, a limited education is a double disadvantage in that initial outcomes are considerably inferior compared to those with more educational attainment; further, over time, increases in these outcomes (from various factors such as job experience or job changes) are much more limited.” This gives rise to a paradox, namely, that more education absolutely improves the labor market and economic outcomes of native-born racial minorities, but “racial gaps in these outcomes widen over time, leading to greater degrees of racial inequality.”

However, the author hastened to note that this does not mean that investment in schooling for racial minorities is futile. Instead, Stoll suggested that interventions are warranted to counteract market frictions that serve to limit the returns to schooling for minorities in the labor market. In particular, he recommended a different set of workforce development approaches to address the needs of those out of school. These include targeted public policies that “better link racial and ethnic minorities to jobs for which they are qualified [reduce spatial and skill barriers], that increase their competitiveness in local labor markets [effective employment and training programs], and that reduce market frictions that affect labor market success [lessen employment discrimination].”

  • * The views expressed here are those of the author and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.
  • 1 Michael Stoll, “Labor Market Advancement for Young Men: How It Differs by Educational Attainment and Race/Ethnicity During the Initial Transition to Work,” Journal of Education for Students Placed at Risk, 15 (2010), pp. 66–92.
  • 2 The key findings are taken from the Stoll article.