Endangered: Youth in the Labor Force

by Nick Beleiciks

May 31, 2016

Oregon added tens of thousands of new jobs while recovering from the Great Recession. Younger workers, especially teens, are struggling to take advantage of Oregon's strong job growth. There were fewer workers in Oregon ages 14 to 24 in 2015 than in 2007, before the recession began. This is partly due to lower labor force participation of today's youth, but also due to high unemployment among teens.

Young people are spending more time on education and face increased competition from older workers for jobs traditionally held by younger workers. Although higher levels of education improve a worker's job prospects and lifetime earnings, many of the essential "soft" skills that employers value are gained through early work experiences. 
Our report Endangered: Youth in the Labor Force is an overview of the labor market situation faced by teens and young adults. This article is an update of the report's findings. The full report is available online at www.QualityInfo.org.

Youth Face High Unemployment Rates

Unemployment rates for youth increased drastically during the recession and have not returned to previous levels. The unemployment rate of Oregon teens ages 16 to 19 years was 22.2 percent in 2015, while the rate was 8.8 percent among young adults ages 20 to 24. Young people are having a much tougher time finding jobs than the population age 25 and over. Their unemployment rate was just 4.7 percent last year.

Unemployment among young workers has historically been higher than among the older population. Regulations restricting hours and limiting the nature of permissible work, and the need to schedule work around school and extracurricular activities can make it more difficult for a teen to find a job (although these considerations predate the decline of the teen labor force since 2000). But young workers account for a disproportionate share of overall unemployment. Young people ages 16 to 24 made up 12 percent of the labor force, but accounted for 27 percent of Oregon unemployment in 2015.

Not Working Now the Norm for Teens

Having a part-time or summer job used to be the normal situation for many teenagers. The labor force participation of teens averaged around 59 percent from 1978 to 2000. The rate started falling dramatically in 2001 – both in Oregon and the nation – but never rebounded as it had after past recessions.
The decline in youth labor force participation accounts for a quarter of the overall decline in labor force participation since 2000. In other words, the declining rate is partly structural and reflects a decade-long trend. It was already low when Oregon entered the Great Recession.

Oregon's strong job growth since 2013 was able to attract more young adults into the labor force, and the participation rate of those ages 20 to 24 years rose slightly to 72 percent in 2015. The labor force participation rate of teens continued its downward trend, falling to 34 percent despite the strong job growth.

Teens Use Fewer Job Search Methods

Youth use fewer job search methods than adults, and they are less likely to use personal networks and public employment agencies in their job search. National data show that the most common job search method used by teens is sending out resumes or filling out applications. Using more job search methods could help them find more employment opportunities. Older workers are more likely to contact friends or relatives for job leads, place or answer job advertisements, and use a public or private employment agency.

The Previous Work Experience Problem

The time young people spend unemployed has lengthened significantly. That is time not spent gaining on-the-job experience. Consequently, the share of unemployed young people with no previous work experience nearly doubled, making it harder for them to compete with experienced applicants.

Employers have reported that finding workers with previous work experience is a priority and that finding workers with the experience they need is a major reason for difficulty filling open positions. If the majority of young people looking for work lack experience, it could be driving up the average number of weeks it takes these workers to find a good job match.

Efforts to break what appears to be a vicious cycle for young workers could have a beneficial impact on labor market outcomes and lifetime earnings. Youth need opportunities to gain initial on-the-job experience and be successful in the workplace so they can illustrate those essential skills to later employers.

Today's Youth Are Not More Likely to Be Idle

Counter to popular belief, the Great Recession did not increase the share of "idle" youth – those neither in the labor force nor enrolled in school. In Oregon, roughly 5 percent of teens and 11 percent of young adults were considered idle in 2014. National data going back to 1985 show that youth are no more likely to be idle today than they were in the 1980s and early 1990s, although the share of idle youth nationally did rise in 2013, it was back to the historical average in 2015. This could be because college enrollments have tapered off after rapid growth during and following the recession.
The use of the word "idle" here is not intended to be judgmental. Some young people face life situations more complex than simply choosing between work, education, or "nothing." Stay at home parents and others with family care responsibilities, and young people with disabilities come to mind. They may not be in the labor force or enrolled in school, but they are not necessarily purposely avoiding either.

Youth Substitute Education for Labor Force Experience

Youth today face increased requirements related to high-school graduation and college preparations, and those enrolled in school are less likely to be in the labor force than in the past. Many are forgoing early work experience to gain formal education, which could pay off long-term given the college wage premium.

The importance of educational attainment has increased over time. Competition to get into colleges may encourage young people to pursue extracurricular activities that don't pay, but that will help them get into college. One example is the increasing number of advance placement exams. Passing such exams can help college bound students and their families save on tuition costs before they even show up to their chosen college campus. In 2015, Oregon high school students took a record 30,000 advanced placement exams – a staggering increase compared with the 12,500 such exams a decade earlier.

Next Steps

Fortunately, there are ways to help the youth labor force. Oregon's Local Workforce Investment Boards work to address youth workforce development issues. Examples are listed in the full report. They also identified potential next steps for actionable items that workforce development stakeholders can undertake to address youth unemployment.

  • Invest funding in summer jobs programs for youth. The Oregon Youth Employment Program – created to enable youth the opportunity to experience the value of work, develop work readiness skills, improve their financial literacy skills, and learn about career opportunities – remains unfunded.
  • Support career readiness and career exploration, targeted to the youth population, throughout the education and workforce system. Providing opportunities for youth to acquire work experience and skills through job shadowing, mock interviews, and career exploration is the key to building the workforce pipeline.
  • Provide flexible, evening, and weekend classes within postsecondary institutions to accommodate youth acquiring work-related skills while still focusing on education. Establishing connections with employers throughout the educational process, including piloting new programs, will help meet the unmet demand for career-related learning skills in school.
An investment in youth employment now means long-term benefits and a successful future for the state of Oregon.

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