Unemployment Insurance: The Hidden Barrier Keeping Young Men Out of the Workforce

Research has shown that the introduction of experience rating can significantly affect employment rates. When Washington State implemented the system in 1985, the unemployment rate for young, entry-level workers increased by 2.5 percentage points, driven almost entirely by young men. This trend wasn’t seen in neighboring Oregon, which already had experience rating in place.

“If you are going to get taxed for any employees that get laid off, you’re going to be a lot more hesitant about hiring,” I noted in my analysis. This sentiment reflects the broader issue: employers are cautious about hiring young men, fearing the financial repercussions of potential layoffs.

Why Young Men Are Disproportionately Affected

Young men tend to outnumber women in economically vulnerable industries like manufacturing and construction. During economic downturns, these sectors are often hit hardest, leading to higher layoff rates. Employers in these industries are particularly sensitive to their experience ratings and may avoid hiring young men to minimize their UI taxes.