Teenage wasteland?

Chris Farrell From chief economics correspondent Chris Farrell

What a miserable start to the long Labor Day weekend, our yearly national tribute to the American worker. Federal statisticians reported that the nation lost 54,000 jobs in August and the unemployment rate rose a fraction to 9.6 percent. The government’s broadest measure of unemployment-and-underemployment-and-marginal-employment also increased to 16.7 percent. While the private sector added 67,000 jobs, the pace of hiring remains anemic thirty-four months after the start of the Great Recession.

That’s bad news for the job prospects of most workers. But the unemployment numbers have been positively dire for teenagers, the worst hit group during the Great Recession. The jobless rate for teenagers between 16 and 19 years old was 26.3 percent in August, up from around 15 percent before the recession struck.

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Now that the summer is over it’s worth taking a closer look at teens and jobs.

It isn’t surprising that teens have had a tough time finding work. Who hasn’t? And teens by definition don’t have many skills to offer wary employers. The hike in the hourly minimum wage from $5.15 in 2007 to $7.25 in 2009 may have hurt a bit. Yet much economic research into the impact of an increase in the minimum wage on employment shows it has had little effect.

Still, the decline in youth employment has been precipitous. A closer look at the numbers suggests it’s a tale of two America’s: The teenage haves and the teenage have-nots.

For a majority of youngsters the decline in teenage unemployment reflects a long-term trend toward increased investment in schooling. College enrollment rates are at record levels with more than 70 percent of recent high school graduates going to college. That’s up roughly 25 percent over the past quarter century. More than half of those ages 16-19 were enrolled in summer school sometime during June through August in 2009, close to three times higher than 20 years earlier, too. Better off parents are willing to pay for extra-curricular activities that may enhance a college resume, such as community service.

The real concern lies with lower income teenagers, especially from African-American and Hispanic families. Minority youths are concentrated in urban areas, while many low-wage entry-level jobs are in the suburbs (think food court). The growing ranks of the poor living in the suburbs tend to congregate in job-sparse low-income neighborhoods, too. Yet car ownership rates are low among the poor and for those dependent on public transit the systems often offer sparse coverage.

The Great Recession has cast a spotlight on the slow, steady erosion in the teenage job market. For those on the middle to upper rungs of the socioeconomic ladder, there’s little cause for alarm to the extent that the lack of employment reflects greater investment in education. But the hostile job market is potentially disastrous for the long-term prospects for young adults from low-income families. The financial barriers to college are steep and among some minority groups the high school graduation rate is low, about 55 percent for Hispanics and 51 percent for African Americans. These young adults aren’t even learning on-the-job skills that can pay off over a lifetime.

  • Gerald Myking

    I couldn’t help but notice the other news items today about 95,000 illegal immigrants in Minnesota. I wonder if that could be a factor?