SUMMARY

One frequently heard criticism of the U.S. educational system is that it fails to provide a smooth transition from school to work for those students who proceed directly from high school graduation to the labor market. Such young people are often characterized as facing a "floundering period"--from high school graduation through their mid-twenties--during which they move in and out of the labor force, holding numerous jobs, none for very long, and experience interspersed periods of non-employment. Instead of settling into longer-term jobs, these youth are portrayed as "milling about" or "churning"--i.e., not holding any job for very long and having no clear career progression (e.g., Osterman, 1980; Commission on the Skills of the American Workforce, 1990; Rosenbaum et al., 1990; Prewo, 1993; Osterman and Iannozzi, 1993). In contrast, foreign education systems are often characterized as involving a close relationship between schools and employers. Formal institutions, such as apprenticeships in Germany, and informal institutions, such as the "contracts" between Japanese schools and employers, help students in other countries gain the skills employers want, then help the students make smooth transitions from school to work (Hamilton, 1990; Rosenbaum and Kariya, 1989; Prewo, 1993).

In this report, we explore whether the above characterization of the transition from school to work is accurate for most U.S. youth. To do so, we use longitudinal data on a recent cohort of young adults from the National Longitudinal Survey--Youth (NLS-Y). We stratify by schooling attainment when the young adults first permanently leave school (which we call school-leaving groups) and compute static measures of labor market behavior--the percentage employed, in school, working part time, and neither working nor in school. We then turn to more dynamic measures--the number of jobs held and, our preferred measure, age at entrance into the first job that will last various lengths of time--specifically one, two, and three years. We view the time to reach tenure in a job of one, two, and three years as the period of "settling down" into stable employment, which is measured by job duration. Although we do not examine the characteristics of those jobs with extended tenure (e.g., wages or other aspects of job quality), we think our approach offers one useful way to begin to characterize the amount of milling about in the labor market by U.S. youth.

Findings

Consistent with the previous literature, we found that young U.S. men hold a large number of jobs in their first few years in the labor market (even after excluding jobs held in addition to full-time schooling). We also confirmed the results documented in previous research that a large share of young males are neither in school nor working full time after leaving school. This not-in-school/not-working status is especially prevalent among those who leave school prior to obtaining any post-secondary education.

Settling Down Occurs Earlier

Nonetheless, our analysis of age at entrance to a job lasting Myears provides little support for the conventional wisdom that the typical male high school graduate does not settle into a long-term employment relationship until his mid-twenties. For the NLS-Y cohort, the median male high school graduate entered a job that would last more than one 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 1-, 2-, and 3-year jobs, respectively.

Diversity Is Exhibited Within and Across School-Leaving Groups

There is, however, considerable diversity within the school-leaving groups (SLGs) we examined. The above characterization holds for the male high school graduate at the middle (50th percentile) of the job-duration distribution. Thus, half of the men in this school-leaving group achieve stable employment at an even faster pace, while the other half proceed more slowly. For instance, male high school graduates at the 75th percentile of the job-tenure distribution do not reach a 1-, 2-, or 3-year-tenure job until the ages of 20, 23, and 25, whereas those at the 25th percentile attain these milestones two, five, and six years earlier, respectively.

There is also heterogeneity across school-leaving groups. While the median high school graduate entered his "three-year job" while he was 22, the median high school dropout, who first entered the labor force several years earlier, did not enter that job until he was 23. In contrast, the median college graduate--who entered the labor force four years later than the high school graduate--entered his "three-year job" shortly after turning 23.

Racial and Ethnic Groups Reveal Sharp Contrasts

There are sharp contrasts, as well, between black, Hispanic, and white men. At any point in time, black men are more likely to be neither in a job nor in school than are Hispanic or white men, and their rates of full-time employment are correspondingly lower. From a dynamic perspective, young black men in their early career hold fewer jobs compared with white men, and Hispanic men usually fall somewhere in between. Despite these differences, when we examine the transition to stable employment for the typical, or median, male with at least a high school degree, the patterns are remarkably similar across the three race/ethnic groups. However, at the lower tail of the distribution, black male high school graduates make the transition more slowly than whites, and minority high school dropouts lag behind their white counterparts in the transition to stable employment.

Women's Experience Differs from Men's

The early career transition for women differs, in turn, from that of men. While women hold fewer jobs on average compared with men at the same age, they do not always make a transition more rapidly into a job that will last one, two, or three years. This difference between the experiences of women and men is especially large for women high school dropouts and high school graduates.

Which Concept of Job Duration Is Used Makes a Difference

We further document that the proportion of young people who could be considered as "milling about" is sensitive to the concept of job durationused. Our concept--ever having entered a job that would last M years--presents a more favorable view of the transition than analyses based on whether the current job will last Myears, or whether the current job has already lasted M years. And, we believe that our concept is the most natural one, because it is based on the experience of ever holding a job for a given tenure. We are inclined to believe that, compared with our concept, whether a current job has lasted or will last that long is of less importance: According to standard search models, some job turnover follows from the process of trying out different jobs, thereby producing better matches between an individual's skills and the needs of the employer.

Stability Through Time Differs for Some Groups

Most of the cohort of youth surveyed in the NLS-Y entered the labor market in the early 1980s. Considerable interest (and concern) has been expressed about whether, compared with earlier cohorts, this cohort has had a harder time making the transition from school to work. Similarly, there are concerns that the transition has become even more difficult, because the NLS-Y cohort entered the labor market in the early 1980s. To address this issue, we analyzed supplemental data from the Current Population Survey (CPS) to place the experiences of the NLS-Y youth cohort in the context of the experiences of earlier and later birth cohorts.

For young men with at least a high school degree, the picture that emerges is one of relatively stable early labor market experience during the last 25 years. The fraction of high school graduates, those with some college, and college graduates engaged in work or school between the ages of 19 and 29 changed little during the 1970s and 1980s. Likewise, job-tenure distributions for young men in the mid-1980s (the period covered by the NLS-Y data) look similar to those for the early 1970s and for the early 1990s. Thus, we conclude that our NLS-Y-based characterization of the transition to stable employment is likely to reflect the experiences of earlier and later cohorts of U.S. youth.

The lowest schooling group, high school dropouts, is the exception to this general picture of stability through time. Compared with earlier cohorts, young dropouts are increasingly less likely to be working full time and more likely to be neither working nor in school. At the same time, the job-tenure distribution for these less educated youth appears to have worsened through the 1970s and 1980s, with the largest effect being most apparent at older ages and longer-tenure points. These results imply that our NLS-Y-based characterization of the transition to stable employment for high school dropouts is probably too pessimistic for the early 1970s and too optimistic for the early 1990s.

Conclusions

The early career is a dynamic period, with transitions in and out of the labor force, and between jobs of various durations. The employment histories provided in the NLS-Y reveal that this period can be characterized as one in which numerous jobs are held but in which the time until one of these jobs lasts several years occurs relatively soon after leaving school. Our analysis relies upon a different and, we argue, preferable measure compared with previous studies. As a result, we find less support for the common perception that the typical high school graduate mills about in the labor market until well into his twenties. By our estimates, he will enter a long-term job (two or three years at least) in his early twenties--not the mid- or late twenties claimed by some other analysts. While the median high school graduate does not move immediately from school to a job lasting several years, making the transition to more stable employment does not appear to be a major problem. Such longer-tenure jobs may be "dead-end" by other criteria (absolute earnings, benefits, job satisfaction, earnings growth), but not by their longevity.

From a policy perspective, these results contradict the stylized facts underlying current school-to-work initiatives, many of which are predicated on the belief that the school-to-work transition involves periods of milling about that last into the mid-twenties. For most high school graduates, however, we found that stable employment (as defined in this analysis) is attained relatively quickly (by the early twenties). Thus, programs to encourage the transition to longer-tenure jobs may be based on erroneous perceptions of the school-to-work transition of most (but not all) high school graduates.

At the same time, our analysis indicates that youth who leave school before completing a high school degree may be the more appropriate target of such initiatives, because they take considerably more time to achieve longer tenure with a given employer. Finally, these results cast doubt on the suggestion that employers may be reluctant to provide training to young workers because they are concerned that young workers will leave before the firm recovers the cost of training. At least among high school graduates and those who enter the labor market with additional post-secondary schooling, there is evidence of stable employment early in the labor market career.