People@Work: A Teenage Wasteland for Employment Opportunity


June employment data released by the Labor Department earlier this month proved to be disappointing for economists and job-seekers alike. After months of gains, total nonfarm employment fell by 125,000, after the government laid off some 225,000 temporary census workers, and the nation's overall unemployment rate drifted slightly lower to 9.5%

But among one group of workers, those aged 16 to 19, the jobless rate is about triple that -- 29%, according to non-seasonally adjusted data from the Bureau of Labor Statistics. Just as alarming, teen job growth in June sank to its lowest level since 1951, according to analysis by employment-services firm Challenger, Gray & Christmas.

Employment within the age group grew by just 497,000 jobs in June, down 29.4% from 698,000 during the same month a year earlier, Challenger says. Overall, teen summer employment has grown by just 503,000 this year, a drop of 38% from the 809,000 teen jobs added in May and June 2009.

"This could end up being the worst teen summer job market in employment records going back to 1948," says Challenger CEO John A. Challenger. "With data now suggesting that consumers are pulling back on spending, it is unlikely that a late hiring surge will salvage the dismal summer job situation for the nation's youngest workers."

Long-Term Effects

In the short term, the effects of a lack of employment for teens are pretty evident. Teenagers, on average, have high levels of disposable income, which helps fuel America's consumer-driven economy. Without money in their pockets, teens won't be able to buy clothing, new electronic devices or even eat out regularly, further exacerbating an already slow recovery.

But there are longer-term implications as well, says Michael W. Brandl, professor of finance at the University of Texas at Austin. "If teenagers -- especially those from low-income or even working-class families -- can't get summer jobs, that means they will have less work experience in the future," he says. "Labor economists have shown again and again that work experience is an important factor in lifetime earnings."

Further, decreased earnings over a lifetime have the potential to affect the whole economy, not just the workers bringing home those reduced wages. Then there's college. Without income from summer employment, teens will have to find other sources of money to help pay for their degrees. And if they can't, the result could be that some will put off starting or continuing college or will abandon the idea altogether.

Call to Action

Studies show that while a college education can be an expensive investment, the positive returns are many, including higher lifetime earning power, reduced instances of poverty, lower unemployment rates and more, Brandl says.

Solving the problem of teen unemployment won't be easy. A program such as the Depression-Era Civilian Conservation Corps, which put about 3 million young men to work in the 1930s, could go a long way toward putting youth to work in public works projects. CCC provided work experience and income to a generation of inner-city youth who might have otherwise been lost, Brandl says. But there's little appetite among Washington lawmakers to fund such a program today.

Still, Brandl says, with teen unemployment at its highest in 50 years, something needs to be done. "When you see numbers such as these," he says, "we may be feeling the impact of this current slowdown for many years to come."