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Stock Market Recovers While Youth Unemployment Rate Remains Stagnant

Jan 23, 2014

by Suada Kolovic

Stock Market Recovers While Youth Unemployment Rate Remains Stagnant

Six years after the recession began, the stock market is officially recovering. And while that’s great news for investors, it hasn't translated into a thriving work force for recent college graduates. In fact, the unemployment rate for millennials ages 18 to 29 in the U.S. has remained in the double digits and the percentage of young workers without employment is close to double what it was when the recession first hit. But why?

The New York Times reported that with millions still out of work, companies face little pressure to add employees while productivity gains allow them to increase sales. The result: a solidified golden age for corporate profits. So while buoyant earnings are rewarded by investors and make American companies more competitive globally, they are not converting into additional jobs at home. It’s also important to note that the Federal Reserve has played a crucial role in propelling the stock market into record heights, even if that wasn’t the intention. The Federal Reserve has made reducing unemployment a top priority but in practice, its policy of keeping interest rates low and buying up the safest assets to stimulate the economy means that investors are willing to take on more risk in search of better returns. “The Federal Reserve has done a good job stimulating financial conditions and lifting the market,” said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch. “It’s been less successful in stimulating job growth.”

What are you thoughts on the unemployment rate among recent college graduates? What can be done to change the not-so-current trend? Let us know in the comments section.

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