Unemployment has long been regarded as a key economic indicator, and the latest numbers are noteworthy — particularly for young adults.
The unemployment rate for 16 to 24-year-olds climbed to 10.5% in August, the highest point in nearly four years. The 0.5% increase from July comes amid economic instability and advances in AI technology that threaten to upend the labor market.
The overall unemployment rate also rose slightly in August to 4.3%, a number not hit since October 2021.
Marquita Walker, interim chair of labor studies at the IU School of Social Work, attributed much of the increase to instability caused by the Trump administration.
“I don’t know that there’s an industry you can go to right now — manufacturing, finance, environmental, health care — that hasn’t been impacted in some form or fashion by some of these administrative executive orders,” she said.
Since his inauguration, President Donald Trump has issued many executive orders impacting the economy, immigration and more. Notably, he began imposing tariffs in February, citing his authority under the International Emergency Economic Powers Act, which allows the president to regulate economic activity “to deal with any unusual and extraordinary threat” to the country’s economy.
Under the Trump administration, the average U.S. tariff has grown from less than 2.5% at the beginning of his term, to more than 18%, according to the BBC. Trump’s authority to impose these tariffs has been challenged in court, and the legal battles are ongoing, with the Supreme Court agreeing to review the legality of most of the tariffs in November.
Implementation of tariffs has been inconsistent. Changing deadlines and abrupt pauses on reciprocal tariffs has fueled confusion for business owners.
The uncertainty surrounding tariffs and Trump’s executive orders, Walker said, makes business owners reluctant to invest in new workers.
“Facilities aren’t able to project in three months, six months, a year, what their needs are going to be, and so they’re not going to hire people if they believe or assume that within a short time frame they’re not going to need those workers,” she said.
Walker predicted that in the coming months, unemployment will continue to increase. That means new college graduates may not be able to find jobs in their field and may see themselves accepting lower-paid jobs than expected, she said.
Compared to historic unemployment numbers, today’s unemployment rate is not alarmingly high, said Uric Dufrene, the Sanders Chair in Business at IU Southeast. But there are other signs of a tightening job market. The US only added 22,000 jobs in August and lost jobs in June. In comparison, the three-month average for jobs added in the first quarter before Trump implemented tariffs was 111,000 per month, according to News Nation.
“The last time we saw numbers like that, we have to go back to the Great Recession, 2007-2009,” Dufrene said.
It’s typical for the unemployment numbers for young people to be higher than the overall unemployment rate, Dufrene said. But as the economy slows down, the gap will widen. Employers will be reluctant to hire and when they do, they’ll hire those with greater experience.
“Young people tend to be employed in sectors that are more cyclical: leisure, hospitality, retail,” Dufrene said. “So these are sectors that when the economy is slowing down, it’s where consumers tend to pull back.”
A college degree is still valuable, Dufrene said. Employment for recent college graduates ages 22-27 is consistently higher than employment for all workers of the same age.
To stand out in a downturned job market, Dufrene suggested college students and recent grads focus on developing marketable skills, such as familiarity with software systems used in their field of work.
“There has to be a conscious effort on the part of graduates and students to think about, ‘What are the skills I need to be developing to make sure I’m competitive in the marketplace?’” Dufrene said. “Focus on developing the kinds of skills and competencies that are in demand by employers.”