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Cowen-Institute-LOGO-High-Res-200x106Opportunity youth are young adults aged 16-24 years who are neither connected to school nor work. If linked to education and employment opportunities, these young adults have the potential to add value to their communities.

The Cowen Institute published its first data guide on opportunity youth in 2012 to provide policymakers, practitioners, and the general public with data on this unique population. This guide is a comprehensive examination of opportunity youth at the national, state, and metropolitan levels from a cost and demographic perspective.

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Key Findings

  1. Nationally, 13.8% of 16-24 year olds are estimated to be opportunity youth, but in New Orleans, that number is 18.2%.
  2. Opportunity youth are generally less educated, less likely have health insurance, less likely to have been recently employed, more likely to have children, and more likely to have a disability.
  3. The states with the highest estimated rates of opportunity youth are Louisiana, West Virginia, and Mississippi. The south has the highest estimated rate of any region in the country.
  4. New Orleans has the third highest estimated rate of opportunity youth in the country, behind only Memphis and Las Vegas.
  5. The annual cost of opportunity youth to taxpayers in the US is $77 billion. In New Orleans, opportunity youth cost taxpayers $360 million dollars each year.


Table of Contents

About Opportunity Youth

oy_ratesNationally, an estimated 13.8 percent of 16-24 year olds are disconnected from both school and work, which is down from 14.7 percent in 2010.

Compared to the average 16-24 year old, opportunity youth generally have less formal education, are less likely to have health insurance, less likely to have been recently employed, more likely to have children, and more likely to have a disability. African-Americans, Hispanics, and young men are also more likely to become opportunity youth than Whites, Asian-Americans, and young women. However, nationally, there are more White opportunity youth than any other race or ethnicity.

Young people tend to disconnect after high school age. While 13.8 percent of all 16-24 year olds are disconnected, that rate increases to 17.9 percent when only 19-24 year olds are considered (compared to 5.3 percent for 16-18 year olds).

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Opportunity Youth rates tend to increase and decrease with unemployment rates.



Opportunity Youth in U.S. States

state-excerptWhile youth disconnection is present across the country, there are regional differences in the extent of disconnection. On average, Southern states have the highest disconnection rates, followed by Western states. Northeast states have the third highest rates, while Midwest states have the lowest.

The variation among states is also quite high. The opportunity youth rate in the state with the highest estimated rate (Louisiana) is about 2.5 times as high as the state with the lowest estimated rate (Nebraska).

region-mapOpportunity youth rates tend to be higher in states with poor education outcomes and high poverty rates.

Indeed, 2013 state-level opportunity youth rates typically increase when both reading and mathematics eighth grade National Assessment of Educational Progress (NAEP) scores decrease.3 Poverty rates are even more strongly associated with opportunity youth.4

Louisiana has consistently struggled relative to other states with poverty and education, which likely contributes to its high rate of opportunity youth. Research from Opportunity Nation, a national initiative focused on the expansion of economic mobility, ranked Louisiana 46th in the country for opportunity based on economic, education, and community factors.



Opportunity Youth in U.S. Cities

city_high_low2There is significant variation among the 50 largest metropolitan statistical areas (MSAs) in the country.5 In the MSA with the highest estimated rate of opportunity youth (Memphis), more than one in five young people are disconnected. In contrast, fewer than one in ten young people are disconnected in the MSA with the lowest estimated rate (Boston). The New Orleans metro area has the third highest estimated disconnection rate.

Among the 50 largest MSAs, there is little relationship between population size and opportunity youth. Cities of all sizes experience youth disconnection.

This is also not a phenomenon that exists only in cities and their surrounding areas. There is no statistically significant difference between the national opportunity youth rate in MSAs and in areas not located in MSAs.



Costs to Society

annual_costFailing to reconnect opportunity youth leads to significant taxpayer and social costs as well as lower long-term economic growth. These high costs make intervention cost-effective.

Direct costs to taxpayers from opportunity youth include increased government spending on crime, health care, and welfare. Helping young people reconnect to school and work can result in significant taxpayer savings. Each opportunity youth costs taxpayers roughly $13,900 each year and an average total cost of $64,940 between the ages of 16 and 24 while disconnected.6

cost_excerptThe costs accumulate each year that an opportunity youth remains disconnected with an estimated lifetime cost of $235,680 for young people who never reconnect. Given that the New Orleans metro area had an estimated 26,000 opportunity youth in 2013, the annual cost to taxpayers is approximately $360 million.

If the percentage of opportunity youth in the New Orleans metro area were cut by just five percentage points, taxpayers would save an estimated $100 million each year and the savings would be multiplied over time as these youth remain connected to work. By means of comparison, the entire proposed New Orleans 2015 general fund city budget was $537 million.7

 



Opportunity Youth in New Orleans

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Opportunity youth in the New Orleans metro area generally have backgrounds that resemble opportunity youth nationally. Both groups tend to be under-educated and from low-income households.

While the disconnection rate among each race and ethnicity is similar, the percentage of opportunity youth in the New Orleans area by race and ethnicity is quite different. The majority of opportunity youth locally are African-American, while White and Latino youth make up a smaller percentage locally than they do nationally.

The dropout rate among all 16-24 year olds is also higher in New Orleans, which has led to a disproportionately high number of low-skilled workers. Research has shown that in Louisiana, middle skills jobs (i.e. those for workers with some college training or an associate degree) are more plentiful than the supply of middle-skill workers and projections indicate that this demand should remain steady through 2018.8

Going forward, to maximize the potential of our city’s youth, it will be critical to retain students through high school, to increase the rate at which young people receive some training beyond secondary school, and to reconnect young people who have disconnected from work and school. Doing so will increase the likelihood that more young people will be well positioned for living-wage jobs locally and nationally.



Learn More

Visit www.coweninstitute.com to learn more about opportunity youth and the Cowen Institute’s work. Visit the websites listed below for more information.

Organizations

American Youth Policy Forum: http://www.aypf.org/resource-search/

Aspen Opportunity Youth Incentive Fund Network: http://aspencommunitysolutions.org/the-fund/opportunity-youth-network/

Jobs for the Future: http://www.jff.org/

National Youth Employment Coalition: http://www.nyec.org/

Opportunity Nation: http://opportunitynation.org/

Reports

Civic Enterprises: A Bridge to Reconnection: A Review of Federal Funding Streams Reconnecting America’s Opportunity Youth

Civic Enterprises: The Economic Value of Opportunity Youth

The Data Center: New Orleans Kids, Working Parents, and Poverty

McKinsey Center for Government: Education to Employment: Designing a System That Works

Measure of America: One in Seven: Ranking Youth Disconnection in the 25 Largest Metro Areas

National Youth Employment Coalition: Building Capacity for Reconnecting Opportunity Youth

Endnotes

1Unless otherwise specified, all opportunity youth estimates are from the Cowen Institute’s analysis of 2013 American

Community Survey PUMS data.

2New Orleans Metro Area consists of the following parishes: Orleans, Jefferson, Plaquemines, St. Charles, St. James, St. John, St. Tammany, and St. Bernard.

3Correlation is stronger than -0.7.

4Correlation is stronger than 0.8 using poverty estimates from 2011-13 data.

5Metropolitan Statistical Areas are determined by the Office of Management and Budget and are adjacent areas of high social and economic integration.

6Cost estimates are from Clive Belfield, Henry Levin, Rachel Rosen, The Economic Value of Opportunity Youth, January 2012.

7City of New Orleans, “2015 Annual Operating Budget,” 2015.

8Achieve, Inc., “The Future of the U.S. Workforce,” (2012):2-17.

Notes on Methodology

This analysis used 2013 American Community Survey (ACS) Public Use Microdata Sample (PUMS) data to identify the rates of opportunity youth. Opportunity youth are identified as 16-24 year olds who are neither working nor in school. The same data were also used to estimate the demographics. Each Metropolitan Statistical Area (MSA), which are delineated by the Office of Management and Budget (OMB), was identified by the corresponding Public Use Microdata Areas (PUMAs).

The Census Bureau classifies Hispanic origin as an ethnicity and not a race, which means that individuals of Hispanic descent are classified as White, African-American, or another race. In this analysis, rates of disconnection by race are identified exclusive of young people who identify themselves as Hispanic and all people of Hispanic origin are grouped together. This means, for example, that “White” is actually “White, non-Hispanic” and African-American is actually “African-American, non-Hispanic.”

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