More Adults Stuck In Low-Paying Jobs, Teens Are Left Out

Investor's Business Daily

Call it the labor market version of aging in place: Since 2000, jobs traditionally done by teenagers, such as retail and food service, are increasingly shifting to older workers.

The number of people aged 20-24 working in retail has risen 24%, while the number of those in food service has shot up 57% during that time. Meanwhile, the number of teens working retail jobs has plunged 47%. And the shares of people 65 and over working in retail and food service are up 52% and 55%, respectively, over that period.

It's a twist that concerns economists. Because jobs in areas like restaurants and retail are lower-paying, those who start their adult careers in such industries may be doomed to a lifetime of lower wages. And closing off opportunities to younger people while leaving older ones stuck in place stifles economic mobility.

For Heidi Shierholz, an economist at the liberal Economic Policy Institute, the age shift signals workers have been left behind even as productivity has soared over the past few decades.

"Low-wage workers are older and more educated," she said. "Those things are associated with higher levels of productivity and they are just not seeing the fruits of it.

Older workers in low-wage, low-skill industries may well be working at the best jobs they can find. As the Great Recession took hold, they probably also felt increasingly stuck in place.

The number of people voluntarily leaving their jobs plunged during the recession, from an average of 2.88 million per month in 2007 to as low as 1.76 million in 2009. "Quits" stayed low during much of the recovery. They finally began to pick up over the past year, to 2.47 million in April, but that's significantly below pre-recession levels.

'Hunkering Down'Keith Hall, a former Bureau of Labor Statistics commissioner now at George Mason University's free-market Mercatus Center, thinks the trend says something worrisome about mobility.

"People are hunkering down, afraid to quit jobs," he said.

"Two-thirds of jobs that open up are replacement jobs, people moving on, leaving openings for other people to move into," Hall said. "If you're young and you're looking for a job, you aren't just looking in expanding areas, you're looking to replace people who have moved through their careers.

But job growth has been concentrated in lower-wage industries. Lower-wage industries accounted for 22% of job losses in the Great Recession, but 44% of hiring in the recovery, according to research from the National Employment Law Project.

"As a result of unbalanced employment growth, the types of jobs available to unemployed workers, new labor market entrants and individuals looking to move up the career ladder are distinctly different today than they were prior to the recession," noted NELP researchers in a brief about their findings.

That's a problem for today's young workers, who are entering a sluggish economy after the worst downturn in generations. The lucky ones get jobs, but often of lower quality than in normal economic times. Some may simply drop out altogether.

"It's a terrible game of musical chairs where some don't get a chair," Shierholz said.

Poor Start LingersWhat's more, "The path you get on when you first enter the labor market is sticky," Shierholz said.

Everyone who starts work in a poor economy can expect lower wages. But that baseline sticks with workers even when conditions improve. Those who began their careers during the early '80s recessions saw 10-15 years of curtailed wages, Shierholz said.

To be sure, some of the age shift reflects an older popula tion. And one reason fewer teens are working is that college enrollment has shot up from 14.6 million in 2003 to about 20 million in 2013, according to National School Clearinghouse data. More enrollment is a good thing — unless graduates can't find appropriate jobs that pay well.

The promise of college has always constituted what Shierholz calls "an implicit contract." It's a huge investment in time, money and foregone wages, she said, but Americans keep taking the plunge because "there's a broad understanding that on the other side there will be a job available that will make it worth it.

If job gains continue to be concentrated in low-paying, low-skilled areas, that contract may have to be rethought. It may also call for rethinking other policies, including minimum-wage increases, Hall said. Advocates of raising the minimum wage point out that many low-wage workers are older and may have families or their own homes. But that misses the point, Hall said.

"You get people who have experience and education in jobs traditionally held by youth," he said. "The solution to me is not to force up wages in those jobs but to get better job creation or more appropriate jobs. To have people moving down into job mismatches because they can't find better is a problem. Anything that raises the cost of hiring for a business is a problem.

These trends coalesce around the class of 2014.

"They entered when the recession had officially been over for a year," Shierholz pointed out. "There's no way they could have predicted how bad it would be."

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