In reporting StateImpact’s recent story on Idaho’s high teen unemployment rate, one of the people I consulted was Andrew Sum, of Northeastern University in Boston. He’s an economist, and an expert on the youth labor market. Here, he explains the magnitude of the shifts Idaho has seen in terms of teen employment.
Q: First, you say we should look at the teen employment rate rather than the unemployment rate. Why is that?
A: When we’re trying to judge how well any group is doing in the labor market, the employment rate measure is a better measure of understanding how many individuals are able to get work. This is particularly true among teenagers, where replies to their labor force status are frequently given not by the youth themselves, but often by their mother or another adult in the household. There is a tendency for the parent to not report them as looking for work.
This is particularly true in lower income households. When we speak to the young people themselves, they do admit that they are looking for work, but they will not be reported as unemployed. We underestimate the true desire for work by many young people when we only rely on the unemployment rate.
Q: When we look at Idaho’s teen labor market and the employment rate over time, what do we see?
A: In Idaho, if you went back to the late 1990s when we had very strong labor market growth, you would have found that pretty close to 52 out of every 100 teenagers had a job in a given month. Idaho ranked about 15th highest in the nation at that time.
Then, as we work our way through the decade, the employment rates of young people in Idaho gradually begin to decay. Every year, there were somewhat fewer kids that were working.
By the time you get to 2007, then we find that that employment rate is down to around 46. And then the Great Recession hits and sticks with us. You find that by the time we get to 2011, the rate in Idaho has gone all the way down to 28. So we went from just about 52 down to 28 in a little bit more than a decade. The magnitude of that decline is stunning. The country also had a big dip, but it was much bigger in Idaho.
Q: Why have younger workers been hit so hard?
A: You always find that when the economy turns down, teenagers are the most adversely affected. It’s not that they get fired. It’s that they don’t get considered for hiring when the economy is weak.
What has been different this time is that for the whole decade, kids across the country took some really bad hits. When the economy picked up between 2003 and 2007, teenagers basically got none of the jobs. That’s the first time since the end of WWII where we’ve ever found such a thing taking place. And then, when the recession hit, the younger you were, the more likely you were to get thrown out of the labor market.
Q: What factors, in addition to competition from older and more experienced workers, led to that?
A: It was a very weak recovery. You also had a surge of older adults coming back to the labor market or staying in the labor market. Also, young workers were facing competition from young college grads and younger adults who had a very difficult time finding jobs in the regular college labor market. Finally, in 2006 and 2007 we raised the federal minimum wage. For the average state in the country, the evidence shows that teens got pushed out of the labor market by that rising federal minimum wage.
Q: We’ve also seen the automation of many jobs that teens used to do. Filing jobs, for example, come to mind.
A: It is true. Administrative support jobs got beat up in the last decade.
Q: Have some teens been affected more than others?
A: Yes. If you take a look at who works and who doesn’t, you see there’s a very clear story. If you come from a low-income family, across the country — the groups who most need work get it the least. They are the least likely of all to work.
The reason I think we should care about this is that the amount of work you and I do when we’re teenagers influences how well you and I do when we reach ages 20 to 24 and 25 to 29. The more work you had as a teen, the more likely you are to work when you’re 20-24. The more well-paid you’re going to be. You’re more likely to be trained by your employer. You’re more likely to get a more substantive benefit package. And it’s particularly important for young people without college degrees. It’s a cumulative thing.
If you go back to 2010, what you find is that if you were a teenager living in a low-income household, you were the least likely to work. We estimated that one in five Idaho teenagers in a family like that had a job. Yet, if you and I lived in a family with an income between $60,000 and $100,000, then close to about 35 percent worked.
Q: Based on all of this, what is the picture for Idaho teens?
A: Well, younger people will spend a lot more time floating through the labor market. It’s harder to get a stable job and get the wages you would hope to get when you don’t have a strong work record.
If we had five or six years of very strong labor market growth it could help overcome a large part of that, but right now there’s still a lot of stagnation in labor markets across the country. We’ve got a long way to go before we’ll be able to solve this problem.
It’s in our long-term interest to have far more of these kids work, and the lack of work is going to haunt us for a long time.