Unemployment rate: Recovery leaves teens behind

The March unemployment rate fell slightly for all workers and women, blacks, Hispanics, and Asians. For teens, unemployment rose. Why are fewer teens getting jobs?

Employment grew at a disappointing rate in March, adding some 80,000 jobs fewer than what a consensus of economists had expected.

At least it was growth – 120,000 new jobs – and a tick down in the unemployment rate. But the recovery has left behind one important if less vocal class of worker: teenagers. Economists and advocates across the political spectrum are using words like “sobering” and “crisis” to describe historic levels of teen unemployment.

Last month, one quarter of young Americans age 16 to 19 was out of work. That's the highest rate in more than a year and, except for a run of more than a dozen months immediately after the Great Recession, the highest on record going back to 1948. Government and private groups are working on solutions. But with summer less than two months away, the numbers cast a dark shadow over the summer job prospects of US teenagers.

“Young people got beat up really bad in the last decade,” said Andrew Sum, director of the Center for Labor Market Studies at Northeastern University in Boston. “People say, 'Well, things are recovering,' but young people have not gotten one new job in the last two years. Fewer kids are working today then were two years ago.”

The persistence of the problem extends nationwide, although there is a large disparity among states and cities, with low-income urban areas and minorities the hardest hit. In March, the unemployment rate for Hispanics in the 16 to 19 age range was 30.5 percent, and for blacks it was 40.5 percent.

The Great Recession can explain some of the decline in job opportunities for young people. During the mid-2000s, the overall teenage unemployment rate ranged between 14 and 18 percent. Then, the downturn hit and teen unemployment began to rise, peaking at 27 percent in October 2009 (overall unemployment peaked three months later at 10.6 percent). Since then, the recovery has created more than 1 million new jobs for adults and brought the unemployment rate down to 8.2 percent. But there's been no recovery for teens. For the past 41 months, the national average unemployment rate for teens has remained above 20 percent – a postwar record.

One factor behind the stark numbers is that the overall base of teen employment is eroding. For one thing, fewer teens are entering the workforce.  That's not always a bad thing. The January issue of the Department of Labor's Monthly Labor Review cited an increase in school attendance, including summer school, as a major reason behind the decline in overall youth employment.

They also are facing more competition from adults, who are now more eager for jobs that they might have dismissed a few years ago. “If you look at the labor force participation of older workers, they are becoming a large contingent of the labor force," says Michael Saltsman, research fellow for the Employment Policies Institute, a research organization in Washington, D.C.

Also, new technologies are shrinking the number of available hourly jobs. ‘We’re at a transition point,” Mr. Saltsman says. Jobs like bagging groceries or working the counter at the local drugstore are increasingly being replaced by automated self-checkout counters and automated price checkers.

The concern about teen unemployment runs across the political spectrum, because research suggests that a job helps teenagers learn job skills and earn more in later years. A National Bureau of Economic Research study from 1995 found that high school seniors employed 20 hours per week were, six to nine years later, expected to earn approximately 11 percent more annually than their unemployed peers. A 2006 Journal of Human Resources study found that periods of unemployment, even as a teenager, were more likely to adversely affect the future successes of the job seeker later in life.

"The value of  a summer job is more than just a paycheck, it’s the skills they pick up,” says Saltsman, whose conservative Employment Policies Institute is managed by a communications firm with ties to the restaurant, tobacco, and food industry. “It’s probably too early to write this generation off, but it’s something to be concerned about when you have young people who get discouraged and say they’d rather spend the summer hanging on the couch instead of out there learning something."

President Obama, a Democrat, has also called attention to the problem: “America’s young people face record unemployment, and we need to do everything we can to make sure they’ve got the opportunity to earn the skills and a work ethic that come with a job,” he said, when announcing his summer jobs initiative in January.

The president's “Summer Jobs +” initiative is an effort to encourage private-public partnerships and reach a goal of at least 250,000 teens hired this summer. So far the White House says it has received pledges from companies including AT&T, Bank of America, and CVS/Caremark that amount to 180,000 jobs. The number of jobs partners have pledged varies greatly, however, from just a dozen paid positions to thousands.

Jamba Juice, a national food and beverage chain, has pledged to hire at least 2,500 young people and recently hosted a national hiring day in 80 cities across the country. “The issue with teen unemployment is a compelling story,” says Kathy Wright, vice president of human resources, in an e-mail. “It made sense that the private and public sector work together to help put youth to work and we felt it was something that we could help out in doing. “

Others are not impressed with the White House plan. “The program [Mr. Obama] put out, let’s be honest, it’s a pretty pathetic initiative,” says Mr. Sum, the Northeastern University professor.  He says a better solution would be to offer government-funded tax incentives or wage subsidies to companies willing to take on teen employees. Also, brokers need to be put in place to help connect out-of-work youths with hiring managers.

Brokers like TeenForce, a northern California start-up, serve as a go-between for low-income and at-risk teens in Santa Clara County. Acting as a hybrid matchmaker, human-resources representative, and payroll office, TeenForce streamlines the hiring process for area teens and employers alike. The teens are paid by the nonprofit directly, so employers don’t have to deal with paperwork or insurance.

“It makes it very convenient for employers,” Mr. Hogan says. “Our model is definitely designed to be replicated, and scalable. Just as any community would want to have an YMCA, our vision is every community would want a TeenForce jobs program, because they work. Our vision is to demonstrate that there is a better way, that kids have value, their labor has value, and that businesses will pay for it.”

In the short term, teens who do want a job when school lets out need to start thinking about possibilities, and be prepared to get creative.

While fast food and retail may seem like the obvious places for teens looking for work, Rick Parker, senior vice president in marketing at Snagajob, an hourly employment network site, recommends applying for positions in more unexpected sectors, like car care, for example.

Snagajob conducts an annual survey of over one thousand hiring managers nationwide, in advance of the summer season, to get a feel for current trends in the hourly labor market. This summer, it’s all about timing.

“We're seeing that hiring mangers are hiring earlier this year than they have, in the past. Eighty percent will complete their summer hiring by Memorial Day,” Parker said. “If teens want the best paying jobs, the best types of jobs, they should be looking early, in fact they really already should be looking.”