Mixed signals from the economy and the labor market in recent years have fueled worries over the prospects of young adults. At a virtual briefing, PPIC researchers Daniel Payares-Montoya, Julien Lafortune, and Sean Cremin discussed findings from a new report examining young adult milestones across generations, in particular, around work and education.

Effective policy to address concerns depends on understanding who is at risk and what may be driving trends. “Unemployment trends explain some of these concerns,” Payares-Montoya said. Rates have climbed steadily for the past two years among Californians between the ages of 16 and 24, but Payares-Montoya stressed that rates have gone up for all age groups, not just for young adults—and rates are lower than in other recent periods.

Young Californians are entering the workforce later, which may be due to recent cohorts staying in school longer. Payares-Montoya noted that about one-third of those born in the late 90s have earned a bachelor’s or advanced degree at age 24 compared to 21 percent of those born in the mid-80s. For most students, a degree “represents their best chance of achieving economic prosperity in the labor market.”

Meanwhile, the number of young adults who are out of work and school has fallen, although it remains higher than 2019, Payares-Montoya said. Fewer are disconnected than in prior decades and the situation tends to be temporary—only 4% of young adults born in the early 2000s are out of school or work continuously for two years.

“Higher family socioeconomic status in early high school, better math performance, expectation to attain a higher degree, and completing high school,” Cremin said, all correlate with better outcomes as young adults reach their twenties.

Furthermore, some young adults are faring better than others at age 24. “Women are less likely than men to be out of school or work today,” Cremin said. And while differences persist along racial and ethnic lines, some gaps between groups have narrowed over time.

The progress made among recent cohorts may be driven by period effects, Lafortune explained. That is, today’s young adults may have entered the workforce amid the decade of robust economic growth that followed the Great Recession as compared with those who started work amid the Dot Com Recession.

Higher numbers of young adults today are employed and fewer are disconnected; gender differences in the labor force have narrowed as have differences by race and ethnicity. Yet Payares-Montoya sounded a cautionary note, acknowledging that people may not feel that they or the young adults in their lives are doing well. Alongside uncertainty around how the labor market may respond to AI, forces related to affordability such as “the housing situation in the state, energy prices, and health care costs … could be shaping what people think of their current situation.”

“What people are concerned about is … economic security and well-being,” Lafortune said, “and that is harder to measure.” An important question for policy is whether a framework exists for considering young adult achievements beyond school and work.