When Do They Settle Down?

Young People in the U.S. Labor Market

by Jacob Alex Klerman, Lynn A. Karoly

Research Brief

What happens when young people leave high school and enter the labor force? There is a widely held perception that American high school graduates "mill about," holding many jobs and not settling into stable employment until their mid-to-late twenties. This early-career instability raises policy concerns about lost training and productivity: Supposedly, leaving a job courts risk of unemployment, job leavers lose the firm-specific human capital they have developed, and high turnover discourages firms from training young people. Despite the certainty implied by a proliferation of school-to-work programs, this perception is not based on empirical evidence, and research results are contradictory.

Jacob Klerman and Lynn Karoly recently completed a study on this subject, using a different measure than others have used. According to their report, The Transition to Stable Employment: The Experience of U.S. Youth in Their Early Labor Market Career, "At least among high school graduates and those who enter the labor market with additional postsecondary schooling, there is evidence of stable employment early in the labor market career."

Although their results validate the perception that young people hold many jobs, they also show that most high school graduates have a job that will last a year or more before they turn 20. Consequently, some current school-to-work programs are addressing a problem that doesn't exist for most male high school graduates. However, Klerman and Karoly found that the problem is very real for high school dropouts and minorities.

Trying Out and Settling Down in the Labor Market

The study used data from the National Longitudinal Survey-Youth (NLS-Y) to reexamine the school-to-work transition among young U.S. men and women who entered the labor market in the early 1980s. Some of the findings for static measures could be seen as evidence of instability among young male workers:

  • Until they turn 22, at least 20 percent of high school graduates are neither working full time nor in school in a given week. The percentage of high school dropouts stays that high until they turn 26.
  • By 24, the typical high school graduate (that is, the person at the median of the job distribution) has had about five jobs; the typical high school dropout has had almost six.

The problem with drawing conclusions from these measures is that they are static, whereas the school-to-work transition is, by definition, dynamic. To capture the dynamics of employment, the study used a different measure: what percentage of high school dropouts, high school graduates, people with some college, and four-year college graduates have ever held a stable job (a job lasting at least one, two, or three years) at different ages and years since leaving school.

Klerman and Karoly argue that this measure provides better evidence of stability than tenure in a current job: How long a job has lasted at a given point is not how long it may ultimately last. Further, changing jobs or taking "stop-gap" jobs may be part of a career path leading to long-term stable employment. Changing jobs may be good if the new job provides a better match between the employer's skill requirements and the youth's interests and skills. Moreover, people usually change jobs to get higher income. They may take stop-gap jobs while waiting for the one that provides a better match or more pay.

Using this measure, the analysis challenges the perception that the typical high school graduate does not settle into a long-term job until his mid-twenties: "For the NLS-Y cohort, the median male high school graduate entered a job that would last . . . more than a year shortly after his 19th birthday, a job that would last more than two years shortly after his 20th birthday, and a job that would last longer than three years while he was 22. If we exclude those who return to school—taking themselves out of the transition from school to work—the entrance into stable employment occurs even earlier, at ages 19, 20, and 21 for one-, two-, and three-year jobs, respectively."

A Harder Time for Some Groups

Employment Stability Increases with Years of Education

Again, these figures are for the median graduate, which means that half of the graduates begin stable jobs sooner and half later. There is also considerable difference across the education groups defined above. As the figure shows, five years after leaving school only 21 percent of the high school dropouts (HSDO) had ever held a job that lasted three years, whereas 55 percent of college graduates (CG) had done so; high school graduates (HSG) and those with some college (SC) fall between the two extremes.

Clearly, high school dropouts have the worst experiences. The picture is about equally bad for minorities. The study found few ethnic differences in the transition within the education groups. However, more blacks tend to be among those who take longer, despite the fact that they hold fewer jobs than whites and Hispanics do in their early careers. One might infer that blacks have fewer jobs because they stay longer in a job. Unfortunately, it is probably because, at any given time, black men are more likely to be neither working nor in school.

Similar patterns hold for women. Only female college graduates move into stable employment as quickly as their male counterparts. For the other education groups, women's decisions to drop out of the labor force for childbearing or childrearing may explain some of the transitional differences.

The picture for high school dropouts became even grimmer when Klerman and Karoly considered trends for young people entering the labor market after the early 1980s. They found that the trends were relatively stable for young men with at least a high school diploma. In contrast, dropouts have become even less likely to be working full time and more likely to be neither working nor in school, and more of them are taking longer to get stable jobs.

Implications for Policy

The study's results bring into question some assumptions underlying particular school-to-work initiatives, especially the belief that the typical high school graduate spends a lot of unproductive time before settling into a career-type job in his mid-to-late twenties. That assumption has led some initiatives to focus on linking graduates with employers and other means of encouraging job tenure. This focus is quite appropriate for minorities and high school dropouts, the subpopulations that have problems settling into stable employment. However, for the typical student, the initiatives should emphasize—as many programs do—improving skills for the workplace. The greatest challenge for school-based programs is reaching potential dropouts early enough to keep them in school and help them avoid a prolonged period of milling about.

This report is part of the RAND Corporation research brief series. RAND research briefs present policy-oriented summaries of individual published, peer-reviewed documents or of a body of published work.

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