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Recession's Lingering Effects on Oregon's Youth Employment
by Guy Tauer
Published Jan-6-2012

 
During the Great Recent recession and the weak recovery one group that has been especially hard-hit is young workers. In January 2010, a sobering statistic was published by the Bureau of Labor Statistics: The employment-to-population ratio for those ages 16 to 24 reached 42.6 - the lowest on record going back to 1948 and down 7.5 percentage points in two years. This statistic has rebounded to 45.5 percent by November 2011, but still remains near historic lows.

A similar trend is evident in the labor force participation rate. Graph 1 shows a downward trend since 2000, but the peak was a decade earlier. Data through November was used to estimate 2011 annual figures. There are a number of factors responsible for the decline. More youth are enrolling in post-secondary education, and therefore not in the workforce. School enrollment for 16 to 19 year olds has risen to 83 percent, up from 78 percent in the mid-1990s. The more disturbing factor is the economy. With youth unemployment rates at near record levels, there are many who dropped out of the labor market, and are waiting for more evidence of hiring demand before knocking on employers' doors again.

Graph 1
U.S. labor force participation rate 1980-2011 youth ages 16-24 years
Why Worry?
 
While career and vocational counselors preach the merits of establishing solid work histories and gaining work ethic and other soft skills that can be acquired by having a job, many youth are unable to compete with older workers. Older workers may have more skills and experience and be willing to take jobs that were typically held by younger workers when economic conditions were better.

My own first job probably violated child labor and unemployment insurance laws, working late into the evening "under the table" at my mom's concession stand at a baseball field. I've been employed (legally) for all but a few weeks in the subsequent 35 years. Looking back, I realize how lucky I was to have a job, and keep one during ups and downs in the economy over that time. Many today have not had such good fortune. In a Time article, Federal Reserve Chairman Ben Bernanke speaks to the long-term effect of the lack of youth jobs, "From the perspective of America's economic future, the effect of the recession on young workers is particularly worrisome." In that article, Joseph Walsh, Director of Washington, DC's Department of Employment laments, "If we lose a generation of workers, there is no way this economy is going to stay competitive."

Trends in Youth Unemployment Rates
 
Over the course of the painful and deep economic downturn, you may have heard the term "he-cession" or "man-cession" used to describe the somewhat disparate employment trends for men and women. Typically, male-dominated industries such as manufacturing and construction were among the hardest hit, and experienced the deepest job losses and layoffs. The trends for youth - defined in this article as ages 16 to 24 - are similar when looking at unemployment rates from 1948 through 2011 (Graph 2).

Since 1948, unemployment rates for male youth were an average of 1.8 percentage points above rates for female youth. There were some exceptions: during some years in the 1960s and the early 1970s, female rates were slightly higher than male unemployment rates. Since then, male unemployment rates exceeded female rates. In 2000, the male youth unemployment rate was only 0.8 percentage point higher than for female youth. By 2006, youth male unemployment was 1.5 percentage points higher than female rates. In 2009, that gap increased to 5.2 percentage points, showing that the "he-cession's" impact has also been more pronounced for male youth than for female youth. In 2011, the gap shrunk to 2.9 percentage points, as youth female unemployment inched up from 15.8 to 15.9 percent, while youth male unemployment declined from 20.8 to 18.8 percent, based on 11 months of data in 2011.

Graph 2
U.S. unemployment rate men and women ages 16-24 years
Recent Unemployment Rate Changes by Age
 
Statistics for youth unemployment are published monthly at the national level. Graph 3 shows national data for the percentage point increase in unemployment rates by age group between October 2007 - before the start of the recession - and October 2011. It is worth noting that this large jump in rates for youth is the change in percentage

points, rather than percent change. Because youth unemployment rates were higher than other groups back in 2007, the greatest percentage change in unemployment rates occurred for those ages 60 and older, up 130 percent over that time. Youths age 16 to 19 and those ages 20 to 24 had more modest percentage increases, 63 percent and 60 percent, respectively, over that time.

In 2010, Oregon's teens had the third-highest unemployment rate in the nation, behind only California and Nevada. For the last several years (2006-2008) Oregonians ages 16 to 19 years had an unemployment rate above 16 percent, and the rate for those ages 20 to 24 was near 10 percent. The 2009 spike took the teen unemployment rate above 30 percent and the rate for those ages 20 to 24 surged to 17 percent. In 2010, rates for those age groups fell slightly, to 28.8 and 14.4 percent, respectively.

Graph 3
Unemployment rate change by age group U.S. January 2008 to January 2011
Oregon Youth Employment Trends
 
Digging deeper into youth employment trends, the Census Bureau's Local Employment Dynamics (LED) data provides a detailed source of information regarding Oregon employment by age group. The LED data is a rich source of information, compiling data from both individual workers, and business payroll tax records to give a wide range of workforce data by age, sex and industry. While the data is not as current as U.S. unemployment rates by age group, it does allow us to peer into employment trends through the recession, up through the first quarter of 2011. Employment for youths ages 14 to 21continued to decline from the first quarter 2010 to the first quarter 2011, while employment for those ages 22 to 24 was unchanged.

LED data enable us to see which age groups lost the most private-sector payroll jobs and which industries employ the largest numbers of youth workers. Graph 4 displays the change in total private sector payroll jobs in Oregon by age group from the first quarter of 2008 - about the peak employment in Oregon - to the first quarter of 2011.

The recession's impact on youth is clear, and it is not pretty. During those three years, overall private-sector payroll jobs for all ages declined by 9.6 percent. Hardest hit, and by a large margin, were teen workers who saw their job numbers fall by 46 percent. Those in the next oldest age group, 19 to 21 years experienced the second largest decline, down 20.4 percent. On the other end of the age spectrum, the 55 and older group saw slight gains in total employment. In a statement from the Time article, In a Tough Job Market, Teens are Suffering the Most, "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." The article goes on to note, "From 2000 to 2007, the number of 55 to 64 years 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." In an article published in The World (Coos Bay), A Tough Market for Teens, Marshfield High School Senior, Stephanie Schwenk, applied for a number of jobs, to no avail. She surmises, "In a down economy, they're going to hire older people with more experience." Graph 5 shows third quarter hiring, a quarter when leisure and hospitality is ramping up. Leisure is also an industry with a high percentage of younger workers. There is little evidence from this chart of any "recovery" in summer teen hiring, at least through 2010.

Graph 4
Oregon employment change by age group 1Q 2008-1Q 2011
Oregon's Youth Industry Employment
 
Not only are Oregon's young job seekers being crowded out by older workers during this recession, but many industries that typically employ large numbers of younger workers have been hurt by the broad-based nature of the deep downturn in the economy. Overall, youth comprised about 15 percent of all private-sector employment in the fourth quarter of 2010 (Graph 6). Looking at broad industry sector categories, youth had the highest percentage of employment in accommodation and food services, retail trade, and arts, entertainment and recreation. While not as impacted as some industries such as construction and wood product manufacturing, these industries that have a higher percentage of younger workers were not immune from the broad-based downturn and associated job declines. There have been some recent job market improvements, but there has not been much evidence that the youngest workers have benefited from the slowly growing economy in Oregon.

These data and statistics are not just numbers; they represent individuals who are impacted in many ways by the Great Recession and subsequent slow-growth recovery.

Graph 5
Oregon industries with highest percent of youth employment 14-24 years 1Q 2009
Graph 6
Top Oregon industries for workers age 14-24 years