Like, Where are all the Teen Workers?

Going back a decade and a half, teens have been slowly and steadily leaving the labor force, given the recession, teen labor participation could well drop below already historic lows. Teenagers today have probably not faced such a desperate job market since at least the early 1980s, when unemployment approached 10 percent. Indeed, the job market for teens today might be worse because youth are jockeying with a much older, more experienced crowd of job seekers.

But when the economy recovers, teens will stand at the proverbial fork in the road. While teen labor participation rates will likely recover somewhat from recession levels, what's not clear is whether the long-term trend will continue its downward course or swing back upward. Some evidence suggests that although teen job seekers are suffering from the recession, the economic downturn has reintroduced the value of work, even for those who can't land a job.

According to a June report by the Minnesota Department of Employment and Economic Development (DEED), teen employment fell in each of the past four recessions. When the overall job market tightens, teens are forced to compete for available jobs with more workers who are both older and more experienced-two factors that employers tend to prefer, all else equal.

But it would be wrong to conclude that the downward trend in teen labor participation is a result of the recession. It's more accurate to say the recession has compounded a long-running trend.

Teen labor force participation, which counts both workers and those actively seeking a job, has fallen across the United States for about 15 years. But the rate has dropped much more steeply since 2000. In fact, during the strong economy of the late 1990s, the rate of employed teens actually rose and teen unemployment dropped significantly. But overall labor force participation-the percentage of those seeking or holding a job-still fell slightly during this time because many teens simply weren't interested in or searching for a job. With the onset of the 2001 recession, teen labor force participation rates plummeted, joined by a related drop in teen employment, while the teen jobless rate almost doubled.

The teen labor rate differs considerably from state to state in the Ninth Federal Reserve District. Labor force participation in North Dakota is near 60 percent; in Montana, it's about 45 percent. But each state in the district (including all of Wisconsin) has experienced a general decline in its teen labor participation, though to varying degrees. Minnesota, Montana, South Dakota and Wisconsin all saw drops of at least 10 percentage points from 1994 to 2009, with Minnesota seeing the largest drop, from 71 percent to less than 55 percent.

Some might not fret at the lack of teenagers in the workforce. After all, they have their whole lives to work, right? But there are a lot of reasons to care, or at least pay the matter some attention, according to the Center for Labor Market Studies at Northeastern University in Boston. For starters, work at an early age brings insight to interests and potential career paths. Equally important, it familiarizes a person with the nuances of work, establishes work ethic and promotes attachment to work-what researchers call "path dependency." For teen employment, and employment later in life, work this year begets work next year.

(FutureWork Note: For additional data and discussion of the issue, please go to the Center for Labor Market Studies website, http://www.clms.neu.edu/publication. Look at Andrew Sum's presentation to the National Association of Workforce Boards Conference in Minneapolis this past May.)

The outlook for teen employment is a bit divided. Though unemployment is expected to keep rising in the near term, the general forecast is for economic growth around the corner, and many believe job growth will return in 2010. But job growth coming out of the past two recessions has been slow, and teens will be the last to sip from the job hose.

From a labor supply standpoint, the good news is that teens will have to battle fewer of their peers for available jobs; the number of teens is slowly declining as the millennium generation passes to adulthood.

According to the Minnesota State Demographer's Office, the number of high-school-aged youth is projected to fall from 294,000 in 2008 to below 280,000 by 2012.

Then again, the huge baby boom generation is moving toward retirement, and the trend of higher work participation among workers over age 55 appears likely to continue given the carnage many suffered in the stock market over the past 18 months.

Source: Federal Gazette, Ronald A. Wirtz, 9/2009