Tax Credits Are a Start, but Youth Need More

by Rachel Metz, Research and Data Manager

When looking at outcomes for residents, the District is often a tale of two cities--one Black and one white--and when it comes to youth unemployment it is sadly no different. Youth employment is not just about putting spending money in the pockets of teenagers or college kids. District youth are often working to support themselves or their families, and the high cost of living means that it can be harder for them to make rent, stay in the city, much less pay for education or build assets. This results in higher poverty, adds more stress to families and their communities. The long-term consequences can be just as severe, as youth employment is a reliable predictor of future earning potential. Denied opportunity now can reinforce inequalities over the course of a lifetime. 

Youth unemployment has always been higher than in the adult population, but these disparities have only been exacerbated by the pandemic. Young residents were the most likely to lose their jobs during the COVID-19 economic downturn. While a full breakdown of the data is not available yet, it’s safe to assume that Black and brown youth were the hardest hit. Even beforehand, from 2015 to 2019, just over half of Black youth ages 16-24 had employment income compared with more than three-quarters of white youth (56% vs. 81%).

From 2015-2019, an average of two-thirds of  youth ages 16-24 (roughly 57,000 individuals) had employment income from the past year. Many young people are in school and may choose not to get a job at the same time. But in 2019, 8% of Black  youth ages 16-19 and 19% of youth ages 20-24 were not enrolled in school and not employed. The racial disparity reinforces the tale of two cities--only 1% of white youth ages 16-19 were neither enrolled in school nor employed in 2019.

While employment was a challenge for District youth prior to the COVID-19 pandemic, only a small fraction of young people claimed unemployment insurance benefits. Because young workers were disproportionately employed in the hospitality and service industries, however, they were particularly hard hit when it came to job loss during the pandemic. In the early months of the pandemic (April through July 2020) 30 times as many youth under age 22 filed for unemployment as did so during the same period the prior year - an average of 2,836 per month during the early months of the pandemic compared to 95 per month in the same period of the prior year. For youth ages 22-24, unemployment claims went up 18 times between these time periods (5,302 per month compared to 288 per month in the same period pre-pandemic). For workers in other age ranges, the increase, while still massive, was more modest – 10 times as many filed for unemployment in the early months of the pandemic compared to the same period a year prior (61,277 versus 6,251).

Guaranteed Jobs

For many years the District  has invested in programs such as the Marion Barry Summer Youth Employment Program, Youth Innovation Grants, Pathways for Young Adults, Youth Earn & Learn, SERVE DC, and other smaller-scale initiatives that either offer part-time or short-term (a few months at most) job opportunities or workforce training. While these no programs are a start, the District should think bigger about how to meet the pressing economic needs of young people. A guaranteed jobs program that offers fair pay and benefits that covers a young person’s early progressional years is one such possibility.

Guaranteed Basic Income

A major goal behind a guaranteed jobs program should be to provide young people the economic opportunities they want, and to drive down the poverty rate, but it should not be the only tool in the tool box. A guaranteed basic income would also help reduce poverty, close the youth income gap and give young people greater freedom to explore the educational and professional opportunities they are interested in. One variation  for supporting young people’s economic stability is the expanded earned income tax credit (EITC). Previously, we noted that the American Rescue Plan allowed young adults to access the earned income tax credit (EITC) in new ways. Specifically, it expanded the federal EITC to include young adults aged 19-24 who do not have children and who are not in school (those in school may be counted as a dependent for their family’s EITC calculation). In addition, qualified foster youth and homeless youth aged 18-24 can now claim the credit even if they were students. That expansion is absolutely important, and we’re glad that the proposed Build Back Better Act would extend it by a year beyond the initial one (and hope Congress acts to make that expanded eligibility permanent). However, that change only helps youth with employment income, and with many youth struggling to get a job - particularly during the pandemic, our young people need more support. 

Investing in a guaranteed income program or a large-scale youth jobs program can help offset the human, social, and economic costs of not addressing youth unemployment and poverty. Roughly half of District young people ages 14-24 live in families with incomes below twice the federal poverty line. In a city as expensive as the District, the money from either a youth basic income program or from increased youth employment could make a real difference in helping families make ends meet. And for youth, opportunities early on can have a long-lasting impact. Young people who are neither in school nor working are less likely to be employed and to earn more money, while having a job as a teenager can lead to better paid work as an adult. As the District works to rebuild its economy, we must consider how to better support Black and brown young people, who were hardest hit during the pandemic, and work to ensure they have opportunities to create successful futures. 

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