How Youth Unemployment Drags Down Economic Recovery
When Yanek Kondryszyn was a sophomore in high school, he got a job at a local law firm in Spokane, Washington. For three years, he was able to work alongside patent attorneys who were doing high-profile cases for companies like Microsoft, Amazon, and Boeing. That was in 2005. Today the college junior would have trouble finding a job as a barista.
Over the past few years, teen employment has fallen through the floor. In March 2011, the teen unemployment rate was 23.6 percent, according to the Bureau of Labor Statistics. This is a drop from the 38 percent employment rate in 2000, according to Andrew Sum, the director of the Center for Labor Market Studies at Northeastern University. “I have never seen a percentage that low in my entire life,” said Sum.
Teens aren’t huge contributors to GDP, but they can have a pronounced impact on the economy that can show up years later. Teens are the next wave of the American workforce. The fact that few of them are working now can impact future labor productivity and education levels. The current generation of teens is coming of age with far less work experience than their predecessors.
That can have an outsized impact, as something as simple as a summer internship can spark future ambitions and career visions that can shape a young person’s professional career.
Teen employment is particularly vulnerable when the economy is struggling. Teens without degrees and experience are often the first to go when a company downsizes. But some are now concerned that the teen employment rate has fallen so dramatically that it might not recover with the economy.
Historically, the employment rate for U.S. teens has risen and fallen with business cycles. The rate declined significantly during recessions but rose significantly during periods of recovery and job growth. But that pattern broke down during the past decade. From 2003 to 2007, even as the larger economy grew, teen employment posted only modest gains. Teen employment recovered, but the recovery was slow and erratic, lagging behind the employment recovery of other groups.
Ten years ago, a high school student would have no problem getting a job at McDonald’s. The chain marketed itself as a great place to work a first job, going to great lengths to be legally allowed to hire 16-year-olds and offering teens flexible shifts that they could fit into their school schedules.
Today, the average McDonald’s employee is not worrying about balancing his shift and biology homework. “Over the past three years, the employees who we’ve hired have been mostly in their mid-20s” said Alberto Estrada, the assistant manager at the McDonald’s on Venice Blvd.
On April 6, McDonald’s announced it will be hiring 50,000 new workers on a single day, a push that is marketed to adults looking for full-time jobs. "A McJob is one with career growth and endless possibilities," the company said in a statement. That’s a shift from previous efforts to sign up high-school kids.
“In the 90s, you would have found teenagers in restaurant, retail sales, and mall jobs,” said Sum. But now these teens face competition from three separate forces: older workers looking to subsidize their falling income, recent college graduates who can’t find work, and, in some parts of the country, illegal immigrants.
Many companies have had to cut internship programs for students. The British Broadcasting Corporation had to suspend its internship program for 2009 due to spending cuts. Many of the nation’s premier law firms cut their summer internship programs by 30 to 50 percent in 2009, according to Law.com. The FBI canceled its internship program for 2010. These are fields where students have an opportunity to build unique skill sets and to work alongside professionals, rather than other teens.
The shrinking opportunities for young people today can impact how productive they become as workers later in life. When you don’t work as a 16- or 17-year-old, you will do a lot less work as a 19-year-old, and even less as a 25-year-old,” said Sum. Urban youth have been hit particularly hard.
In Los Angeles, a mere 13 percent of teens held jobs. In cities like Philadelphia, Boston, and New York City, only 3-4 percent of high school students are employed, said Sum. Compare this to 1998, when New York City’s youth labor-force participation rate was 27.2 percent, according to a 2001 report by Alan G. Hevesi from the New York City Office of the Comptroller.
Neil Sullivan is the director of Boston Private Industry, a non-profit that places high school kids into private and publicly-funded jobs. “Ten years ago, things changed dramatically,” said Sullivan, “After 9/11, there was around a 5 percent drop in teen employment. But instead of recovering, the rate went stagnant. Then 2008 hit.” At this point, about half the jobs teens were able to find on their own disappeared, according to Sullivan. That prompted what Sullivan called a “youth depression.”
The situation was exacerbated by the mass layoffs that came with the 2008 financial crash. An aging American workforce began sliding into jobs that would have been occupied by the next working generation.
Those teens hit hardest are from low-income families. Nationally, only 7 percent of teens from families who qualified as low-income were working last year, said Sum. For this group, high school jobs are the gateway to other opportunities, such as college or a full-time job.
Upper-income teens need jobs too, but for them, not getting a job isn’t the determining factor as to whether they will go to college or not. But statistically, upper-income teens are more likely to find jobs. “If you are from an upper income family, you are 5 times more likely to work,” said Sum. “The kids that most need the work exposure, get it the least.”
The social implications of teen unemployment can be severe. “Teens are more likely to become involved in delinquent behavior or criminal activity when they do not have the opportunity to be working or going on to school,” said Sum. A study done by MIT economics professor Jonathan Gruber shows that the rate of teen pregnancies, drug experimentation and gang involvement increases when the teen unemployment rate shoots up.
Another problem is that there is a shortage of jobs in diverse and specialized industries. “It’s not just that kids are working a lot less, it’s that the range of jobs they are getting is narrower than ever before,” said Sum. The three primary industries where teens find jobs are restaurant, retail, and arts and entertainment, according to Sum. Fewer and fewer teens are able to secure jobs in construction, office support, banking, and other professional businesses.
Sullivan said that his organization has had success placing students into certain specialized industries. For example, the Red Sox recently hired teen workers, as well as several Boston hospitals. If teens can’t get a job in a hospital, it follows that fewer will pursue the medical track (assuming they can even afford college), then ten years down the road, the hospitals could face a shortage of medical personnel.
A few decades ago, high school and college students would get summer and part-time jobs to pay their way through college. In today’s economy, this is almost unheard of. College is more expensive, jobs are scarcer, and financial aid is needed but less available. A growing demand for college intersects the falling availability of scholarship money.
Times have been tough on the benefactors too, and there has been a decreased availability of scholarships and funding for programs that help low-income students afford college. Fulfillment Fund is an LA nonprofit organization that works with Los Angeles public high school students. In 2009, they cut the scholarships by half and tightened requirements for students.
“People just need to realize how bad it’s gotten for kids, and it’s time for someone to step up,” says Sum.
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