Why American teenagers are less likely to find a summer job

The following story was published by MarketWatch.com on May 14, 2018 and written by Jacob Passy, a personal-finance reporter for MarketWatch. Click here to view the original publication of this story on MarketWatch.com.

Unemployment is lower than it’s been in 17 years, but that doesn’t necessarily mean teen workers will have an easier time getting a job this summer.

Last summer, Americans between the ages of 16 and 19 gained nearly 1.3 million jobs during the months of May, June and July, according to a recent analysis of data from the U.S. Bureau of Labor Statistics by staffing firm Challenger, Gray & Christmas. While roughly in line with the average since 2006, that figure was almost 4% lower than the previous year despite the fact that June represented the strongest monthly jobs gain for teens since 2007.

And in the coming months, Challenger expects that summer employment growth will remain stagnant for teens. That’s in line with predictions from researchers at the Drexel University Center for Labor Markets and Policy, which estimates that 30.9% of teens will have a summer job in 2018, up from 30.5% last year.

Overall, far fewer teens are looking for work these days. The labor-force participation rate, a measure of the share of people with jobs or looking for employment, was 35% for teens last July. Comparatively in 2000, when the U.S. economy last came close to achieving full employment, the labor-force participation rate for this group was nearly 53%.

The Great Recession hit teens particularly hard, though the decline in teen employment predates the recession to some extent. “This has been a slow jobs recovery, and teens are always at the bottom of the labor market queue,” said Paul Harrington, an education professor and director of the Center for Labor Markets and Policy at Drexel University.

Older workers are filling traditional teen roles

Fewer teens are able to find the types of jobs that were once popular with teen workers. In the late 1990s, one in four food service workers during the summer was a teenager, now that figure is just one in six. Similarly, in 2000 a fifth of retail workers handling sales and customer service in the summer months were teens. These days, that share has dropped to one-seventh of all retail workers.

Many of the lower-paying jobs in the retail and hospitality sectors that used to be filled by teenagers are now held by foreign-born adults and older workers, including those past retirement age, according to the report from Drexel. Part of the reason for this shift is that these workers are viewed as having more appealing behavioral traits and social skills, such as being more likely to show up to work on time or having years of experience interacting with customers, Harrington said.

And teens could lose out big time though if they are unable to get work in these sorts of jobs, because they act as crucial learning opportunities to develop the sorts of skills employers want. “Jobs that are customer-facing, those that require teens to interact with colleagues in an office setting or even lead children in summer activities, help develop skills that employers routinely seek in new hires,” said Andrew Challenger, vice president of Challenger, Gray & Christmas, in the company’s report.

They’re trading work for school

So what are these young people doing if they aren’t working? First, the good news: Many of them are going to school. Many high-school students are turning to summer classes and community service to pad college applications, Harrington said. And over time, the number of people going to college has increased.

While on the surface school seems like a fine trade-off for work, it could have consequences down the road. Summer and part-time jobs that teenagers historically worked help build skills needed for future employment. There’s one school of thought that work is a substitute for school, and that kids who have to work are worse off than those who can go to school instead, Harrington said.

But he says that’s not always the case. “Work is a strong complement for going to school. It predicts improved employment experiences and higher wages and reduces the likelihood of future unemployment,” he added.

And many high school graduates who don’t attend college are unemployed—particularly if they live in an area with a high poverty rate or if their parents are unemployed. High-poverty areas often have fewer jobs available, and unemployed parents won’t be able to offer their children a network of potential employers for a first job.

Minimum wage hikes could be hurting teen workers

State and local laws regarding employment and wages can also have a negative effect on teen workers. Nearly every state has some restriction on how late at night teenagers can work, so employers might not hire a high-school student if they need an evening shift covered.

And minimum wage hikes also may prevent young people from getting jobs by effectively pricing them out, because employers will want more skills for the money they pay their staff, according to findings from researchers at the Mercatus Center at George Mason University.

But things could start looking up for younger workers. Though there is disagreement on what actually constitutes full employment, signs that the labor market is tightening are good for teenagers who work in lower-wage jobs.

When the job market begins to favor workers over employers, wages at the lower end of the spectrum often see the most growth, said Elise Gould, a senior economist with the Economic Policy Institute, a nonprofit think tank in Washington, D.C. As a result, more teenagers could begin looking for work.