With school out for the summer, teens are finding all sorts of ways to forget what they learned during the year, according to year-round schooling advocates. But less than a quarter of older teens are putting their time off to its traditional use by temporarily trading report cards for paychecks.
As recently as the summer of 2001, 42 percent of 16- to 19-year-olds worked. Except for a slight dip in the late 1950s and early 1960s, summer youth employment was between 40 and 50 percent every year from the time record-keeping began in 1938 until the early years of this century. Over the past decade, however, each summer has seen fewer employed teens than the one before. This summer’s 24 percent employment rate sets a new low.
At first glance, the decline in teen employment seems to be more due to cultural changes than to economic ones. After all the media attention to helicopter parents, it would be unsurprising if fewer young people were expected to shoulder their own expenses. However, at the same time the teen employment rate has fallen, the teen unemployment rate has risen, recently hitting 24.5 percent. Adding the percent of older teens who are employed to those who are looking for work, the result – 48.5 percent – is not that different from past years’ employment figures. The change is not that fewer teens want to work; it’s that fewer of those who want jobs have them.
So what is to blame for teens’ difficulty finding work? My guess is the minimum wage. During the time period over which teen employment has fallen, the federal minimum wage has gone from $5.15 to $7.25, and many states’ minimums have risen even higher.
All these minimum wage increases were introduced with the same goal: helping low-earning workers, including young people. In reality, however, they have made hiring unskilled workers unaffordable for many businesses. The wages for these jobs were low, in most cases, because that was what supply and demand supported. By trying to artificially create higher-paying jobs, lawmakers have instead legislated low-paying jobs out of existence. Stores have replaced cashiers with self-service cash registers and call centers have replaced live operators with recordings.
The loss of these jobs has been particularly difficult for young people, who are least likely to have job skills and experience. Of people making the minimum wage or less in 2006, the year before the most recent increase began to be phased in, one-fourth were between the ages of 16 and 19.
Casey Mulligan, an economics professor at the University of Chicago, examined the effects of the minimum wage increase on summer work through statistical analysis in a 2010 New York Times column. She looked at year-to-year and seasonal changes in the ratios of part-time to full-time work for states that were affected by the minimum wage increase as compared to states that were not affected (due to already-higher minimums). Affected states saw a bigger year-to-year decline in the ratio of part-time to full-time work during the summer months, she found, indicating that the increase had caused part-time summer jobs to dry up.
In the past, unemployed teenagers at least had the chance to acquire job skills by taking internships, even without pay. Last year, however, the Department of Labor began a crackdown on unpaid internships, claiming that most work-without-pay arrangements violate the Fair Labor Standards Act. In a fact sheet, the Department says that internships can be exempt from minimum wage laws only if, among other things, “the employer that provides the training derives no immediate advantage from the activities of the intern.”
As one would expect, the number of internships available to students immediately dropped. When businesses were forced to pay, they wanted workers who were worth the money, and many young people simply do not have the job skills to provide $7.25 per hour worth of value. That’s unfortunate because, with neither lower-paying jobs nor unpaid internships available, there is no easy way for those who lack job skills to get them. Attempting to enter the full-time job market without the work experience provided by internships puts young people at a distinct disadvantage. According to a study by the National Association of Colleges and Employers, 42.3 percent of college seniors who had held an internship received at least one job offer, compared to only 30 percent of those with no internship experience.
In the short term, the main consequences of teen unemployment will be borne by teenagers who, as they move into the full-time job market, will find that their past idle summers make it more difficult for them to compete with more experienced workers. In the longer term, however, all of us will be affected by the aftermath of the joblessness faced by today’s youth. As I have written here, our country’s demographic makeup means that a labor shortage is practically guaranteed in the next few decades. Depriving young people of opportunities to build job skills now will exacerbate that labor shortage by creating a scarcity of experienced workers. The result will likely be a decline in productivity just when our nation needs to maximize its output to support the ever-expanding pool of baby boomer retirees.
Young people need real job experiences in the real world, and some of them need to make real money. Unless we make it profitable for companies to employ teens and feasible to offer internships, the only work experience many young people will get this summer and next is handing out résumés.
Posted by Larry M. Elkin, CPA, CFP®
With school out for the summer, teens are finding all sorts of ways to forget what they learned during the year, according to year-round schooling advocates. But less than a quarter of older teens are putting their time off to its traditional use by temporarily trading report cards for paychecks.
As recently as the summer of 2001, 42 percent of 16- to 19-year-olds worked. Except for a slight dip in the late 1950s and early 1960s, summer youth employment was between 40 and 50 percent every year from the time record-keeping began in 1938 until the early years of this century. Over the past decade, however, each summer has seen fewer employed teens than the one before. This summer’s 24 percent employment rate sets a new low.
At first glance, the decline in teen employment seems to be more due to cultural changes than to economic ones. After all the media attention to helicopter parents, it would be unsurprising if fewer young people were expected to shoulder their own expenses. However, at the same time the teen employment rate has fallen, the teen unemployment rate has risen, recently hitting 24.5 percent. Adding the percent of older teens who are employed to those who are looking for work, the result – 48.5 percent – is not that different from past years’ employment figures. The change is not that fewer teens want to work; it’s that fewer of those who want jobs have them.
So what is to blame for teens’ difficulty finding work? My guess is the minimum wage. During the time period over which teen employment has fallen, the federal minimum wage has gone from $5.15 to $7.25, and many states’ minimums have risen even higher.
All these minimum wage increases were introduced with the same goal: helping low-earning workers, including young people. In reality, however, they have made hiring unskilled workers unaffordable for many businesses. The wages for these jobs were low, in most cases, because that was what supply and demand supported. By trying to artificially create higher-paying jobs, lawmakers have instead legislated low-paying jobs out of existence. Stores have replaced cashiers with self-service cash registers and call centers have replaced live operators with recordings.
The loss of these jobs has been particularly difficult for young people, who are least likely to have job skills and experience. Of people making the minimum wage or less in 2006, the year before the most recent increase began to be phased in, one-fourth were between the ages of 16 and 19.
Casey Mulligan, an economics professor at the University of Chicago, examined the effects of the minimum wage increase on summer work through statistical analysis in a 2010 New York Times column. She looked at year-to-year and seasonal changes in the ratios of part-time to full-time work for states that were affected by the minimum wage increase as compared to states that were not affected (due to already-higher minimums). Affected states saw a bigger year-to-year decline in the ratio of part-time to full-time work during the summer months, she found, indicating that the increase had caused part-time summer jobs to dry up.
In the past, unemployed teenagers at least had the chance to acquire job skills by taking internships, even without pay. Last year, however, the Department of Labor began a crackdown on unpaid internships, claiming that most work-without-pay arrangements violate the Fair Labor Standards Act. In a fact sheet, the Department says that internships can be exempt from minimum wage laws only if, among other things, “the employer that provides the training derives no immediate advantage from the activities of the intern.”
As one would expect, the number of internships available to students immediately dropped. When businesses were forced to pay, they wanted workers who were worth the money, and many young people simply do not have the job skills to provide $7.25 per hour worth of value. That’s unfortunate because, with neither lower-paying jobs nor unpaid internships available, there is no easy way for those who lack job skills to get them. Attempting to enter the full-time job market without the work experience provided by internships puts young people at a distinct disadvantage. According to a study by the National Association of Colleges and Employers, 42.3 percent of college seniors who had held an internship received at least one job offer, compared to only 30 percent of those with no internship experience.
In the short term, the main consequences of teen unemployment will be borne by teenagers who, as they move into the full-time job market, will find that their past idle summers make it more difficult for them to compete with more experienced workers. In the longer term, however, all of us will be affected by the aftermath of the joblessness faced by today’s youth. As I have written here, our country’s demographic makeup means that a labor shortage is practically guaranteed in the next few decades. Depriving young people of opportunities to build job skills now will exacerbate that labor shortage by creating a scarcity of experienced workers. The result will likely be a decline in productivity just when our nation needs to maximize its output to support the ever-expanding pool of baby boomer retirees.
Young people need real job experiences in the real world, and some of them need to make real money. Unless we make it profitable for companies to employ teens and feasible to offer internships, the only work experience many young people will get this summer and next is handing out résumés.
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