In a Tough Job Market, Teens Are Suffering Most

By STEPHEN GANDEL Monday, Jan. 18, 2010

Juan Iraheta, 19
Iraheta dropped out of a GED program last year to support his 2-year-old-son Joseph and girlfriend Claudia, 18. He caught on at electronics chain Best
Buy, but his hours were cut recently, and his manager has warned of layoffs. In November, Iraheta began looking for a job with evening hours so he
could return to school, but he hasn't found one yet. "It's not easy," he says. "Companies believe older workers are more reliable."

Juan Iraheta, 19, and Delaney Allen-Mills, 17, have little in common. Iraheta dropped out of school in 10th grade. He lives on the outskirts of Washington with his girlfriend and their 2-year-old son. Allen-Mills lives with her parents in McLean, Va., an upper-middle-class suburb of the nation's capital. She's a senior in high school, takes photographs for the school newspaper and is applying to college. What the two teens share is a lack of employment opportunities — both Iraheta and Allen-Mills have struggled to find work.

Last year, Iraheta was working for electronics retailer Best Buy but had his hours cut. For the past few months he has been looking for a full-time job or one with evening hours so he can go back to school, but he hasn't been able to find either. Allen-Mills used to supplement her allowance by photographing children's birthday parties, but she hasn't been booked for a party in close to a year. She's been trying to land a job at the mall, but even at Tysons Corner Center, which is the fifth largest shopping center in America and just a few miles from her house, teen hiring is sparse. In mid-November, right before the holiday season, just 21 of the more than 300 shops there were advertising openings. Of those, almost all were looking for workers 18 or older. "A few years ago, I went to the mall with an older friend, and she got a job right away," says Allen-Mills. "Now the stores aren't even giving out applications." After four months of trying, she finally landed a gig in a beauty salon 25 minutes away from her home.

The job market is tough for everyone. But this recession has become a jobs disaster for 16-to-19-year-olds. "The numbers are incredible," says Andrew Sum, head of the Center for Labor Market Studies at Northeastern University and a nationally recognized expert on teen employment. "Proportionally, more kids have lost jobs in the past few years than the entire country lost in the Great Depression."

The retail and construction sectors, which are usually key employers of young workers, have been among the hardest hit. Manufacturing, another typical job source for those lacking a higher education or even a high school degree, is not the force in the economy it once was. The result: the teen unemployment rate neared 28% in October before falling slightly the next month. That's the highest ever recorded since the Federal Government began tracking it, and it's almost triple the 10% rate for all workers. Teens make up a relatively small portion of the 139 million people employed in the U.S., and by most accounts they would be better off staying in school than entering the workforce. But the small turf that teens have always held in the job market has been shrinking. For much of the past 60 years, the proportion of 16-to-19-year-olds who held jobs — either part or full time — was around 40%. In fact, in 2000 it was a relatively high 45%. In all, nearly 7.3 million teens were getting a regular paycheck.

Then something changed. Suddenly teens were being expelled from the workforce. It started during the pullback that followed the bursting of the tech bubble, but it never really stopped, not even during the housing- and finance-fueled expansion of the mid-2000s. From 2000 to early 2008, overall employment rose by about 10 million jobs. Teen employment headed in the other direction. By early 2008, teen employment had dropped by more than 1.5 million.

Generation Gap
The problem is that older workers are crowding out kids. An economic expansion that at its height produced 11 million jobs, as was the case in the 2000s, isn't bad. But it is nowhere near as robust as the economic growth of the 1990s — which upped employment by 17 million jobs — or the increase of 20 million jobs in the expansion of the 1980s. What's more, 12 million people joined the workforce in the 2000s — a million more new workers than the number of jobs created in that period. With fewer jobs to go around, older workers are settling for jobs that used to go to teens. Baby boomers, hurt by recent stock-market downturns, are hanging around longer. From 2000 to 2007, for instance, the number of 55-to-64-year-olds working in the retail industry rose by 553,000. At the same time, the number of teens who were able to snag jobs at stores fell 419,000, from nearly 2 million.

Teens now make up just 3.2% of the nation's working population, down from a high of nearly 9% in the mid-1970s. In all, 4.5 million teens have some form of employment, about half the 8.2 million who were employed three decades ago. Carlton Tucker, a store manager at Best Buy in the Columbia Heights neighborhood of Washington, recently told a group of teens at a nearby job-training program that it was unlikely they would land positions at his store — because they are up against much more experienced workers. "We have a lot of people filling out applications who used to make $20 an hour and work in an office," says Tucker. "I try to have a mix, but it is a much harder choice to make these days to hire that teen."

Curiously, no one is sure what to do about the problem — or even whether having large numbers of wannabe-working teens is a problem, given the other labor and productivity issues besetting the economy. Some estimates there are 4.2 million teens who can't find a job, have stopped trying or would like to be working more than they are. That's up 84% from 2007. A job used to be a rite of passage for a teen and, anecdotally at least, a first step to a successful career. Ross Perot, Warren Buffett and Walt Disney had newspaper routes. As recently as 15 years ago, nearly 60% of all newspaper carriers in the U.S. were teens. These days, that figure is less than 20%. Across the country, only 17 out of every 100 high school students have jobs. For African-American high schoolers, it is a mere 9 out of 100. For students who are both African American and from a low-income family, the number drops to 4 out of 100.

Policymakers and economists have begun to seriously worry about the long-term effect of the lack of teen jobs on the economy. Federal Reserve Chairman Ben Bernanke recently said, "From the perspective of America's economic future, the effect of the recession on young workers is particularly worrisome."

One reason to worry is that the timing of your first job often influences your future earning power. This summer, Yale economist Lisa Kahn completed a study that found that even 15 years after they entered the workforce, college graduates who first went to work in a weak economy (in her study, the early 1980s) tended to have lower incomes than those who entered the workforce when the economy was expanding. That could be explained by the normal salary arc of a professional life: one paycheck builds on another.

But the persistent lower pay suggests that workers who stumble getting their first job remain somewhat lower-skilled even decades later. Growing teen unemployment — a problem that started before the recession and has been exacerbated by it — could lead to an American workforce that lacks the skills to compete with the rest of the world. "If we lose a generation of workers, there is no way this economy is going to stay competitive," says Joseph Walsh, director of the District of Columbia's Department of Employment Services (DOES), which recently launched a new year-round youth-employment program. "This is an immediate crisis."

Sum believes that the problems of teen unemployment reach beyond the labor market. Teen unemployment is one of the leading causes of single-parent households, he says. Studies show that women are less likely to marry men who don't appear to have the ability to adequately support a family. Conversely, teenagers who work tend not to become teen parents. "The lack of good, solid jobs for young people is creating a lot of serious social problems for the country," says Sum.

Economists used to think the devil in the teen-unemployment story was the minimum wage. And for some, that's still the case. But in the past decade, studies have shown that the minimum wage seems to have little or no impact on overall employment. The national training wage — which allows employers to pay younger workers a subminimum wage for 90 days — has done little to help. In fact, some economists believe that minimum-wage laws, by raising salaries, actually give a boost to the economy, creating jobs.

The Limits of Training
More recently, academics and policymakers have focused on job-training programs as the solution to teen unemployment. Sum is calling for a permanent, national youth job-training program. Last year's economic-stimulus bill included $1.2 billion to fund a nationwide summer youth-employment program. In December a bill was introduced in the Senate to fund a year-round initiative.

It's not clear, though, whether job-training programs are effective at arresting teen unemployment. There's scant evidence that programs meant to boost teen job skills have had success in increasing employment or teens' wages. Nowhere is the difficulty of rolling back teen unemployment more evident than in Washington. In the late 1970s, the District of Columbia became one of the first metro areas in the U.S. to formalize a summer youth job-training program. Two years ago, Washington Mayor Adrian Fenty dramatically increased the size of the city's long-standing summer program, expanding it to 10 weeks from six, and employing more than 21,000 teens, up from 12,000 the year before. The result was a mess. After encountering payroll problems, the city decided to pay teens for their scheduled hours whether they worked them all or not. The kids quickly caught on. Today it spends more per teen on employment training — $40 million on the summer program alone — than any other city in the country.

Yet Washington has one of the nation's highest rates of teen unemployment. At 53%, it is nearly double the national average. "We throw money at these programs, but we are not getting anything out of them," says Rick Berman, executive director of the Employment Policies Institute. "I'm a fan of job training, but I think the best job training is a job."

That's exactly the problem. Terry Flood — who co-founded Jubilee Jobs, a Washington job-placement program, in 1981 — says more teens than ever are coming to her program for help. In 2009, 42 teens enrolled in Jubilee's job-search program, which sets job seekers up with counselors and classes on such things as interviewing and résumé writing. Nonetheless, just 11 of Jubilee's teens found jobs last year. Thomas Moore, 19, began working with Jubilee at the beginning of 2009. He recently landed a job at UPS, but it took him nearly a year of searching.

Alison Lee, a job counselor at Washington's YouthBuild Charter School, which helps teens get GEDs and job training, says even employers who have hired YouthBuild students are saying they have no openings. "Employers are less willing to work with student schedules," says Lee. "There are people out of work with a lot of experience. It all trickles down to teenagers."

Walsh, who became director of the DOES in late 2008, says the job-training program was much better run this past summer. Princess Galloway, who recently turned 20, agrees. She was placed at a Wachovia-bank branch for the summer. Before that, Galloway — who left high school in 11th grade and has two young children — had been in and out of the workforce. Her last steady job was at the pharmacy chain CVS in 2008. She says when she first got word that she would be working at Wachovia, she was reluctant to go. "They told me what I had to wear, but I didn't have any professional clothes," says Galloway. "But after a few days, they bought me clothes and made me feel at home." After the summer, Galloway was hired full time at the bank.

Washington isn't alone in trying to boost teen employment by spending money on job-training programs. Also included in last year's economic-stimulus bill was federal money for states to help 16-to-24-year-olds find jobs. And states spent the money on getting kids different kinds of work experience. In Norwich, Conn., kids made a documentary film about upcoming elections. In Brooklyn, N.Y., teens worked on an urban farm, growing vegetables. In Portland, Ore., they went to work restoring the Sandy River to promote the waterway's native salmon population. In all, nearly 250,000 teens and young adults got jobs over the summer. But, as in Washington, the program seems to have done little to arrest teen unemployment.

Back to School
Mathematica Policy Research, a nonpartisan group based in Princeton, N.J., has found in general that youth-training programs have limited success in boosting long-term employment or wages. In a 2006 study of a youth-training program meant to help teens complete high school and enter postsecondary education, Mathematica found that teens enrolled in the program did not have a comparatively better chance of finding a job or receiving higher earnings. Another study found that a teen-employment program tended to boost wages and employment, but the gains were mostly short term. Three years later, there seemed to be no difference between teens who had gotten job training and those who hadn't. Experience had closed the gap.

As a result, economist Heidi Schierholz of the Economic Policy Institute says the best thing we can do for teen unemployment is nothing, at least not directly. "If we focus on turning around the economy, teens will be a big beneficiary of that," says Schierholz.

Northeastern's Sum disagrees. Along with year-round training programs, Sum likes the idea of offering employers a subsidy or tax credit for hiring teen workers. Others have proposed converting the current 90-day teen training wage to a permanent teen subminimum wage. While Sum agrees the minimum wage hurts lower-skilled teen workers, he says, in practice, subminimum wages are rarely used. Employers say paying some significantly less to do the same job hurts morale and seems unfair.

Economist Dean Baker of the Center for Economic and Policy Research says he doesn't believe talk that the economy is going to grind to a halt just because teens aren't finding the on-ramp to the workforce. When workers hit dead ends, they often create new opportunities. Baker believes teens could be among the main beneficiaries of the falling dollar. He says that will lead to a resurgence of the nation's manufacturing sector, which has traditionally been a major employer of teens.

And then there is the silver lining of low teen employment: with fewer work opportunities, more teens are staying in school and striving for higher levels of academic achievement. The school enrollment rate for 16-to-19-year-olds has risen to 83%, up from 78% in the mid-1990s. And 1.7 million high school students now take advanced-placement courses, three times the number who participated in them a decade and a half ago. With more and more high school grads out of work, teens are seeing a greater value in a college education. That, in turn, may eventually lead to a more skilled workforce, and not the other way around. "This is not going to be as devastating to the nation as people think," says Baker. Maybe, but just don't try selling that to teens like Iraheta and Allen-Mills, who want to work today, while they're still young.

Matt Eich / Luceo for TIME

Devine Ford, 19

Ford always dreamed of helping build a skyscraper. But after dropping out of high school in 2006 as a ninth-grader, he found that most construction companies required experience or a GED. Instead, he got a job at Popeye's. But then he had a run-in with the law in 2007 — he was arrested for driving without a license — and has filled out 100 applications in the past 18 months and hasn't gotten a single callback. "Hopefully something will change," he says. "You want to work and do right, but not having a job is stressful. That's what a lot of people end up doing negative things."

Torin Liberthson-Brown, 17, was laid off from the day-care job she held for two years

Rubina Sarkisian, 17

Sarkisian, above left, a senior at McLean High School, started looking for a job in late August. With Tysons Corner Center — the fifth largest mall in America — nearby, Sarkisian figured she would find employment quickly. Instead, during her three-month search, she filled out nearly 25 applications. Many stores won't hire people under 18. In late November, through a friend, Sarkisian landed a job at chocolate shop Godiva that pays $8.25 an hour.

Read more