Teens taking on new work roles but not everyone is included

Recently, much attention has been lauded on the U.S. achieving a record 90-month (seven-year) stretch of continuous monthly job creation that has resulted in a historically low unemployment rate of 4.1 percent.

In addition to being a consistent measure of the strength of the economy, having a tight labor market is also associated with improving the job prospects for typically hard-to-employ populations, such as those with fewer skills and less experience, including teens. But has this rising tide of economic activity actually lifted all boats in the labor market?

{mosads}If one were to only look at the unemployment rate, that answer would be yes, but teen employment is more nuanced than that. As of March 2018, the unemployment rate for youth aged 16 to 19 years was 13.9 percent, below the rate that prevailed prior to the Great Recession and the lowest it’s been since 2001.

However, the unemployment rate only reflects the number of teens that find a job without considering whether teens choose to look for work. Youth choose not to work for many reasons, such as attending school and participating in extracurricular or volunteer activities that look good on college applications. They also get discouraged by poor job prospects or low pay like adults do.

Since 2001, the share of teens participating in the labor force has been falling and today stands at 35.5 percent, still below its pre-recession level and far below the historical peak of 59.3 percent in August 1978.

If recent history is any indication, teen participation is likely to have leveled off by now after the Great Recession, similar to the trend after the past two downturns. So it remains to be seen whether the share of teens employed will also level off as in past cycles or will continue to climb.

Since the end of the Great Recession in 2010, the employment-to-population ratio for teens has increased 5 percentage points and now stands at 30.7 percent — roughly halfway to its pre-recession peak of 35.0 in October 2007.

Thus, employers are hiring the backlog of teens that had been unemployed, but, given the participation figures, it is not the case that teens are rushing into the labor market.

Certainly, the uptick in the employment-to-population ratio for teens is encouraging and is likely the combination of several important factors on both the supply and demand side of the equation. On the supply side, at historically low levels of unemployment, there simply aren’t enough adult workers to fill all of the open positions.

Rather than raising wages, it’s more cost-effective to fill entry-level positions with teens who are often earning the minimum wage or at least half of what an adult would earn in the same position — and without the need for health care and retirement benefits.

Plus, teens offer a flexible labor force that is often the last to be hired when times are good and the first to be fired when times are bad.

On the demand side, there are certain type of jobs that are in high demand where youth have the necessary skills needed — again at the right price. For example, jobs such as certified nursing assistant are in high demand as an aging population requires more hands-on care.

The job requires just six weeks of training and is compatible with teens who have experience in other caregiving roles such as a lifeguard or as nannies.

Yet, the profession suffers from chronic high rates of turnover due to low pay, few benefits, high physical demands and lots of “scut” work — stuff that teens are used to dealing with at the bottom of the job ladder.

Other jobs, such as those in manufacturing, are facing high replacement rates as older workers retire. In the past, manufacturers have had difficulty attracting younger workers due to the industry having a reputation as a dead and dying profession with dirty jobs and frequent layoffs.

To combat that image, manufacturers have been heavily recruiting teens out of vocational programs for machinist jobs that require some technical aptitude to program machinery to manufacture high-precision aircraft components and medical devices.

Finally, even with the uptick in teen hiring spurred on by the strong job growth over the past several years, it’s not the case that all youth are benefitting equally.

Although African-American teens have seen their employment-to-population ratios return to their pre-recession peaks, as of March 2018 the rate was still 10 percentage points below whites.

Even more striking is the labor market experiences of youth by educational attainment. Non-college bound youth experience unemployment rates (14.8 percent) that are nearly twice as high as those of college-bound youth (8.3 percent) as employers are looking to hire the most skilled teens.

Unfortunately, non-college bound youth are the ones who are likely to benefit more from early work experiences — particularly those that might then lead them to further vocational or technical training beyond high school.  

In an attempt to level the playing field, policymakers in many large cities across the U.S. have turned to summer jobs programs to provide early work experiences to inner-city, low-income youth who may not otherwise have access to these opportunities.

Early research in cities like Boston, Chicago and New York has demonstrated that such programs can boost employment and wages during the summer and also have longer-term impacts on youth, including better school attendance, higher standardized test scores and fewer crimes committed during the year after participation.

In most cases, the largest gains were observed for non-white youth, suggesting that summer youth employment programs may have the capacity to reduce inequality across traditionally disadvantaged groups.

Whether it’s through the private-sector employer or a public-sector program, a strong labor market is a great time to expand employment among the least skilled. The question remains for how many and for how long.

Alicia Modestino is an associate professor at the School of Public Policy & Urban Affairs and Department of Economics and associate director of the Dukakis Center for Urban and Regional Policy at Northeastern University.