Nine out of ten young people who aren't in employment, education or training want to work, but a third of them believe that they will never be given the chance.
A survey by lecturers' union UCU showed the cost youngsters were paying by dropping out of society, with more than a third (37%) saying that they rarely leave the house, a third experiencing depression and 15% reporting that they had mental health problems.
88% wanted only to be working or studying, and 71% believe that they could be contributing more to society if they got the right support.
More than a thousand young people were contacted, and the findings explode again the myth that unemployed people are workshy and want to stay on benefits, an idea that underpins much of the government's policy in the area.
Half believe that boosting their skills and experience would help them get work, while around the same number want confidence-boosting help, and 29% believe the jobs they could do simply don't exist.
With nearly one million under-25s out of work or education and each one costing the country £56,000, UCU's findings should refocus policy makers' attentions on solutions to the problems of the group.
UCU president, Simon Renton, said: "This report lays bare the deep personal impact that sustained unemployment has on young people. It is truly heartbreaking to see so many people who want to contribute more to society but are left feeling their outlook is desperate and hopeless.
"The individual human tragedy is only part of the story as young people outside education or work cost the country millions of pounds every year. We need to give our young people a commitment of proper guidance and stable, properly rewarded jobs, or educational opportunities.
"This will mean central and local government, employers, schools, colleges and universities working together. It will cost money, but the alternative is to consign hundreds of thousands of young people to the scrapheap and leave society to pick up the both the social and economic bills caused by their inactivity."