A fast and powerful recovery in jobs is especially good for younger employees

There is little doubt that the economy is stronger today than it was 4 years ago. But are people higher off than before the pandemic? Looking at employment alone, it’s clear that the rapid and powerful recovery in jobs has meant that employees aged 25 to 44 at the beginning of 2020 are literally higher off 4 years later. And they fared a lot better than employees of their peak earning years on the eve of the Great Recession in 2007. Older, prime-age employees, those ages 45 to 54 immediately before the pandemic, experienced greater profession stability and later transition into retirement than before. This was the case for cohorts of the identical age before and through the Great Recession.

The economy and labor market recovered remarkably quickly after the initial decline when the economy was shut down within the spring of 2020. It took lower than two and a half years – until June 2022 – for total employment to exceed the pre-pandemic level of February 2020. Not only that. The economy remained strong until the winter of 2024. For example, the unemployment rate remained below 4% for 26 months. This is the longest such period in greater than half a century.

This rapid and powerful labor market recovery was excellent news for employees of all ages, but especially younger ones. Consider the employment prospects of employees of their peak earning years – ages 25 to 54 – at the beginning of the pandemic. These employees were mostly out of college and never yet retired. Most of them, about 80%, were working when the economy stalled. It might be assumed that they intended to proceed working for the foreseeable future. At the identical time, it might even be assumed that the profession patterns of younger employees who’re strengthening their ties to the labor market look different than those of older employees who’re step by step withdrawing from the labor market. The following evaluation subsequently divides the prime-age workforce shortly before the pandemic into three groups: those aged 25 to 34, those aged 35 to 44 and people aged 45 to 54.

Let’s start with the youngest group (see image below). Their employment rate fell from 80.9% in February 2020 to a low of 72.1% five months later. By April 2022, lower than two and a half years later, their employment levels had recovered and commenced to exceed pre-pandemic levels. Their employment rate remained above pre-pandemic levels over the subsequent 12 months and a half, until February 2024.

Compare this to the fate of the personnel who were in the identical age group just before the Great Recession. Their employment rate fell from 79.1% in December 2007 to a low of 73.9% two years later in February 2009. As of December 2011, their employment rate had still not recovered to pre-recession levels and stood at 75.7 %.

In other words, 0.6% of employees on this age group had found more jobs this time in comparison with before the pandemic, while 3.4% fewer employees were employed at the identical time after the Great Recession. That’s a difference of 4 percentage points. If the job market had developed after the pandemic because it did after the Great Recession, 1.8 million fewer people on this age cohort – i.e. those that were 25 to 34 years old shortly before the pandemic – would have had a job in February 2024 than on the time .

The pattern is comparable for the center age group (see figure below). Their employment fell sharply and recovered quickly. Four years after the beginning of the pandemic, their employment level was also 0.6 percentage points higher than at the beginning of the pandemic – 81.5% in comparison with 80.9%. Their counterparts fared much worse through the Great Recession. At the tip of 2011 – 4 years after the beginning of the pandemic – their employment level was 4.3% lower than in December 2007 – 76.7% in comparison with 81%. This represents a spot of 4.9 percentage points when comparing post-pandemic performance to that through the Great Recession. If the pandemic job market had developed the identical way because the job market after the Great Recession, 2.0 million fewer people in these age groups would have had a job in February 2024 than was the case.

Employment levels for those aged 45 to 54 just before the 2 recessions fell in each cases (see chart below). This should not be surprising. After all, the oldest in these age groups began to retire 4 years after the 2 recessions began. However, the decline in employment was much less pronounced and occurred later after the pandemic than after the Great Recession. By December 2011, the employment ratio for these age cohorts had fallen by 6.9 percentage points, while after the pandemic it fell by only 3.5 percentage points – a spot of three.4 percentage points. Furthermore, the share of the workforce on this age cohort fell almost repeatedly after the Great Recession, while largely recovering losses quickly before declining in recent months, likely indicating a gradual transition to retirement for the oldest cohorts on this group .

The rapid and powerful recovery of the labor market after the pandemic has led to more job opportunities for employees who were 44 years old or younger when the pandemic began. This also meant widespread employment opportunities and delayed retirement for prime-age employees ages 45 and older in comparison with the Great Recession. Many of those that were of their peak earning years at the beginning of the pandemic undoubtedly experienced painful downturns of their careers because the economy ground to a halt. However, these disruptions were short-lived and were offset by quite a few employment opportunities in a brief time period. Ultimately, all cohorts of prime-age employees enjoyed way more stable careers for many of the 4 years after the pandemic than did the identical age groups after the Great Recession. Millions of employees had significantly higher profession prospects after the pandemic than after the Great Recession due to repeated public investments to stabilize the labor market.