Teen Employment Has Plunged 42% Since 2000 Highs

As chief operations officer at the San Jose Silicon Valley Chamber of Commerce, Stephanie Caldwell knows her California region's high education levels helped buffer the worst of the recession's job losses. But the affluent community still suffered. "During the recession we were hit hard. Teens were having trouble finding jobs," she said. "After- school and summer jobs were definitely being taken by older people. Go to any Starbucks (SBUX) and you can see that. Hopefully with the economy picking up, that's starting to change.

Teen employment has plummeted in a trend that long predates the Great Recession, worrying economists across the political spectrum. In the current labor market, any black mark can doom a worker: lack of education, inexperience, even a presumed sense of not needing the work enough. Teens are at the bottom of the totem pole, with all those strikes against them.

"Most businesses don't wake up and say, 'I've got a job to fill. Let me go find an inexperienced worker with no transportation,'" said John Hogan, CEO of the San Jose-based advocacy group TeenForce, which tries to make that a more palatable choice for employers.

"We have a large cohort of youth with no work experience, even in their 20s," said Keith Hall, a former commissioner at the Bureau of Labor Statistics. "There's a big chunk of people who are long-term unemployed who have never had a job. There's almost certainly more who are discouraged.

'Shocking' Decline

The scope of the situation is "shocking," said Hall, now at George Mason University's Mercatus Center, a research think tank. Among teens, 26.9% have jobs vs. 46.3% in April 2000.

The drop in labor-force participation among people ages 16 to 24 equates to 2 million people not in the labor force who would have been in the past, he said.

The share of teens who held any paid job at any point in the year fell from 55% in 2000 to 28% in 2011, according to a Brookings Institution research paper. The researchers also found that only half of high school graduates not enrolled in post-secondary education worked at all in 2011.

That lack of work experience can doom young workers for future opportunities, just as it hurts adults who are out of work for extended periods.

"Teens and young adults with work experience in the previous year were more likely to be employed," the Brookings researchers wrote, "lending support to the idea that ... recent employment history (is) a strong predictor of current employment.

Not Just Teens

The teen trends are part of a broader reshaping of the entire labor market. Brookings noted what it called a "great age twist" from 2000 to 2011.

"Individuals under 54 were less likely to be working in 2011 than in 2000, with the sharpest declines among teens and young adults, while those 55 and over were more likely to be working in 2011," researchers wrote.

Hall said that the Great Recession took its own kind of toll on older workers, who are hanging on to jobs as worries about retirement portfolios and old-age social benefits swirl.

"The baby boomers hanging in is helping the economy now," Hall said. "But at some point those folks are going to retire, and the number of people working vs. those being supported is going to go way down.

That makes it critical to start filling jobs with younger people so they can get used to working.

Work? Whatev ...

Some analysts aren't convinced that fewer teens working represents a true crisis.

"Today more and more teens are encouraged to get other kinds of alternative experiences," said John Challenger, CEO of the outplacement firm Challenger, Gray & Christmas. "Going to work in the local retail store, like we used to, is not as valuable.

Challenger cites all kinds of activities that are growing priorities for teens, including volunteer work, traveling, summer school and internships. It's not clear that they are better than traditional types of teen jobs, he said, but "the fact of the matter is that it's changed and that's probably both good and bad.

From a different perspective, the real crisis may be in the overall labor market, not just for one age group.

For less affluent youths, an unpaid internship or volunteer experience may not be an option.

And teens who want work are vying against older but less-educated people, along with immigrants and seniors who must keep working even after retirement. Those job opportunities — even in the military — are being "decimated," Challenger said. "I do think that we have a difficult problem: what to do with our unskilled, nonhigh school degree workers.

When the Silicon Valley Chamber of Commerce had a part-time administrative position to fill in 2013, TeenForce convinced it to hire a college sophomore.

"Work's good for kids," said TeenForce's Hogan. "Too many youth are graduating high school and going to college, though they're not sure why and coming out of college disillusioned because it didn't prepare them for the job market.

Hogan is a former mortgage banker who started TeenForce after retiring. He has fond memories of his own teenage jobs, he said, including making T-shirts and flipping burgers. TeenForce has helped over 300 teens, many of them foster children or otherwise disadvantaged, get jobs.

Many economists believe that broader, more systemic changes are needed to twist the job market back into shape.

Liberals and conservatives support the earned income tax credit, and many think it should be expanded, said Martha Ross, a Brookings fellow who collaborated on the research paper.

Hall notes that minimum-wage hikes may result in lost jobs. He says policymakers need to seriously address the problem of the long-term unemployed, with a particular focus on the young.

Hogan also wants change from the private sector, especially with employing youth who otherwise have few options.

"They can convert those young people from being users of services to taxpayers," he said.