Cover Story October 8, 2009, 5:00PM EST

The Lost Generation

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More job training would help as well. In April the British government guaranteed that starting next January, all people under age 25 who have been unemployed for more than a year will have a job offer, training, or a paid workplace experience.

The U.S. has been slower to beef up job programs for the young, partly because of massive budget deficits. The Obama Administration is again considering a plan proposed during the campaign to give $3,000 tax credits to employers for each new hire, although an Administration spokesman says talks with Congress are only preliminary. An argument in favor of action: The current generation of young people is larger than the one that follows. Dartmouth's Blanchflower points out that even if programs are left in place after the recession ends, they will serve fewer people and therefore become less costly.

One possible example for the U.S. to follow is Germany's apprenticeship program, which guides young people from high school into skilled blue-collar jobs. Young-adult unemployment in Germany has risen less than in most other developed countries.

Young people have figured out how to avoid horrid blanks on their résumés. Enrollments are breaking records at such schools as Cincinnati State Technical & Community College and LaGuardia Community College in New York. With no job in sight, Shireen Rahjou, 23, of Boca Raton, Fla., is working toward a master's degree in public relations. She recently landed a paid internship—O.K., not a job, but a foot in the door—at a PR firm in Miami.

With jobs scarce, Stanford's Sutton says some of his students plan to start their own businesses. Schools should encourage that instead of churning out "passive regurgitators," argues Kate McKeown, an adjunct professor of entrepreneurship at Fordham University's College of Business Administration.

Meanwhile, though, the tide of youth unemployment keeps rising. "We're seeing further deterioration," says Stefano Scarpetta, who heads the employment-analysis division of the Organization for Economic Cooperation & Development, a forum for rich countries.

The unemployment crisis among the young is not as dramatic as the financial crisis of a year ago. But it may turn out to have longer-lasting effects.

With Mark Scott in London, Ellen Gibson and Lindsey Gerdes in New York, Carol Matlack in Paris, and Kenji Hall in Tokyo

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Tackling the Job Crisis

The system for moving young people into the workforce was functioning poorly in many nations even before the global economic downturn began, says a new report from the Organization for Economic Cooperation & Development. The 26-page report, called "Helping Youth to Get a Firm Foothold in the Labour Market," was prepared for an OECD meeting in Paris on Sept. 28-29. The most urgent priority is to prevent unskilled dropouts from losing touch with the workforce altogether, according to the report. "For disadvantaged youth lacking basic education," the document says, "a failure in their first experience on the labor market is often difficult to make up."

To view the report, go to http://bx.businessweek.com/unemployment/reference/

Coy is BusinessWeek's Economics editor.