No Summer Recovery for U.S. Teens: A New Record Low Employment Rate in the Summer of 2010

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The labor market problems of U.S. workers intensified substantially during the so-called Great Recession of 2007-2009, and the labor market recovery has come close to a standstill in recent months. Earlier this year, a Summer Recovery was projected by members of the Obama administration. Unfortunately, for America’s teens and young adults, the summer offered no respite from the deep declines in their labor market fortunes over the past decade and especially since 2007.

During the months of June and July, the average employment rate (not seasonally adjusted) for the nation’s teens (16-19) was only 29.9 percent, the lowest summer teen job holding rate recorded by the U.S. Bureau of Labor Statistics in the past 62 years.

The magnitude of the decline in teen employment rates needs to be placed in proper perspective. At the outset of the decade, in the summer of 2000, slightly over 52 percent of the nation’s teens held a job in June and July. This employment rate declined steeply during the recession of 2001 and the largely jobless recovery of 2002-03. By the summer of 2004, only 42 percent of the nation’s teens held a job, and the employment ratio stayed in the 41-to-43 percent range for the next three years.

Following the onset of the recession of 2007-2009, the 2008 summer employment rate for teens fell below 40 percent, then declined below 30 percent this summer for the first time in the post-World War II era. No other age group has come close to experiencing such a dramatic decline in its employment rate over the past decade.

Part of the severe weakness in labor market conditions for the nation’s teens this summer is related to the failure of the Congress to provide funding for a summer jobs program for low-income teens and young adults. Last summer, a teen jobs creation program funded under the Workforce Investment Act put nearly 400,000 14- to 21-year-olds to work in public and private nonprofit agencies. Low-income minority youth were the primary beneficiaries of this program.

While the House of Representatives did vote to provide up to $1 billion in support for such a program this summer, progress in passing the legislation stalled in the Senate, and no political consensus was reached on putting the nation’s youth to work despite their dire straits in the labor market.

While teens overall have experienced extraordinarily steep declines in their employment rates over the decade, their employment prospects still differ widely across subgroups defined by race-ethnicity, family income and geography. Black and Hispanic youth from low- to low/middle-income families, most youth living in large central cities, and those in rural poverty areas have fared the worst by far.

 In June of this year, nearly 30 of every 100 teenagers held some type of job. These employment rates of teens differed considerably across family income groups, typically rising with family income. The rates ranged from a low of only 20 percent among teens living in families with annual incomes under $20,000, to 25 percent for those residing in families with incomes between $20 and 40 thousand, and to highs of 37 to 38 percent among those in families with incomes between $75,000 and $150,000. Only nine of 100 black, low-income youth were employed, as were only 15 of every 100 low-income Hispanic teens, versus 41 of every 100 white teens in upper middle income families.

The magnitude of the teen summer jobs gap that exists today is overwhelming. In the summer (June-August) period of 2000, the teen employment rate was 51.7 percent versus the 29.9 percent rate during the first two months of this summer. Given the near-17 million teens in the civilian population, the economy would have had to generate 3.7 million net new jobs to restore the teen summer employment rate of 2000. Last year’s federally-funded summer jobs program was only large enough to close less than one-tenth of the teen jobs gap.

There are those labor market observers who over the years have questioned whether teens really want to work. Articles have been written about those teens who hang out at the retail malls or work only on their tans, but we do not find this casual storytelling very convincing.

We analyzed the first six months of the 2010 Current Population Surveys to estimate the pool of underutilized teen labor: the official unemployed, the “hidden unemployed” (wanting a job but not actively looking in the past 4 weeks), and the so-called underemployed, i.e., those working part-time (under 35 hours per week) but desiring full-time jobs. The average monthly pool of underutilized teens over this six-month period was 3.066 million and came close to 3.5 million in June. The underutilization rate for all teens over this period was 43.6 percent (nearly three times as high as that for adult workers 25 and older), and it reached as high as 64 percent for low- income teens and black teens living in the nation’s central cities.

The desire for additional teen jobs is quite overwhelming. A major new national campaign to put our teens back to work both year-round and during the summer is critically needed. A concerted effort on the part of private for-profit, nonprofit, and public sector employers will be needed to accomplish this important objective.

Andrew Sum is director of the Center for Labor Market Studies at Northeastern University.  Joseph McLaughlin is a senior  research associate at the center.