The Plummeting Labor Market Fortunes of Teens and Young Adults

Washington, DC / March 13, 2014

By Andrew Sum, Ishwar Khatiwada, Mykhaylo Trubskyy, and Martha Ross with Walter McHugh and Sheila Palma

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Introduction • The first decade of the 21st century, including the Great

Recession and its aftermath, was disastrous for many American workers.

• Teens and young adults have been among those hurt most by shrinking job opportunities.

• Finding a job is a key step in the transition to adulthood and self-sufficiency.

• This analysis examines labor market outcomes of those aged 16 to 24 in the nation’s 100 largest metropolitan areas.

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The "Great Age Twist": Employment Increased for Older Workers and Decreased for Younger Workers

Individuals under age 54 were less likely to be working in 2011 than in 2000, with the sharpest declines among teens and young adults.

Employment rate = Share of the population that is employed.

Employment Rates by Age, United States, 2000 and 2011

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Teens Aged 16-19 Finishing high school is the priority for teens, but employment is a valuable complementary activity. Most agree that working 15-20 hours a week is unlikely to hurt academic performance. This research, and other studies, actually suggest teen work experience is positively associated with future employment and earnings. Since teens and young adults aged 20-24 have differing employment and educational patterns and expectations, this study examines each group separately.

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Teen employment declined 45% between 2000 and 2011, from 44% to 24%.

Employment rates were highest among high school graduates not enrolled in post-secondary education in both 2000 (72%) and 2011 (53%)

Employment Rates of Teens Aged 16-19 in the Nation’s 100 Largest Metropolitan Areas by Educational Attainment/School Enrollment, 2000 and 2011

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Teen employment is lowest in households with lower incomes

Only 19% of teens in households with annual incomes below $20,000 worked in a given month in 2011, compared to 28% of teens in households with incomes above $60,000.

Employment Rates of Teens Aged 16-19 in the Nation’s 100 Largest Metropolitan Areas by Household Income, 2000 and 2011

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“Labor force underutilization” among teens reveals a bigger problem than the unemployment rate

Unemployment and Labor Force Underutilization Rates among Teens Aged 16-19 in the Nation’s 100 Largest Metropolitan Areas, 2000 and 2011

Underutilized Labor Force =

Officially Unemployed +

Hidden Unemployed (those who want a job but are

not actively looking) +

Under-Employed (those involuntarily working part-time and available for

full-time work)

The teen unemployment rate in the nation’s 100 largest metropolitan areas nearly doubled, from 13 to 25%, while the underutilization rate rose from 25 to 43%.

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The underemployed and hidden unemployed made up more than half of the teen underutilized labor force in 2011.

48%

Composition of the Underutilized Labor Force among Teens in the Nation’s 100 Largest Metropolitan Areas, 2011

36%

16%

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Teen labor force underutilization rates remained highest among high school dropouts and lowest among college students

Underutilization rates reached 57% in 2011 among those who dropped out of high school, considerably higher than the (already high) overall teen underutilization rate of 43%.

Labor Force Underutilization by Teens Aged 16-19, Largest 100 Metropolitan Areas, by Race/Ethnicity, 2000 and 2011

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The share of teens with any paid employment dropped from 55% in 2000 to 28% in 2011. In other words, year-round teen joblessness increased from 45 to 72%.

In 2011, about 20% of Asians, blacks, and Hispanics worked at some point during the previous year, compared to 35% of whites. That is, white teens were 75% more likely than Asian, black, and Hispanic teens to find paid employment.

Share of Teens Aged 16-19 in the Nation’s 100 Largest Metropolitan Areas with Paid Employment Experience During the Year, by Race/Ethnicity, 2000 and 2011

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Teens with higher levels of education continued to have higher rates of paid employment

In 2011, high school students had the lowest rate of paid employment, at 19%. Among those not enrolled in school, the likelihood of paid employment rose steadily with the level of education.

Share of Teens Aged 16-19 in the Nation’s 100 Largest Metropolitan Areas with Paid Employment Experience during the Year, by Education, 2000 and 2011

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As with teens, young adult employment should be considered in the context of school enrollment. Declining employment can result from a voluntary withdrawal from the labor force in favor of post-secondary education rather than simply from reduced employer demand for labor in a weak economy. Indeed, school enrollment among young people rose modestly from 2000 to 2011. However, the magnitude of the disruption in young people’s employment shown in this analysis is such that additional schooling is unlikely an adequate explanation, especially given the high rates of unemployment and underutilization, both of which signal an interest in working.

Young Adults Aged 20-24

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The employment rate among young adults fell 17% between 2000 and 2011, from 72 to 60%.

Those with associate or bachelor’s degrees had higher employment rates in both 2000 and 2011 and a much smaller decline than those with less education.

Employment Rates of Young Adults Aged 20-24 in the Nation’s 100 Largest Metropolitan Areas by Educational Attainment / School Enrollment, 2000 and 2011

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As with teens, labor force underutilization rates for young adults are much higher than the official unemployment rate

Unemployment and Labor Force Underutilization Rates among Young Adults Aged 20-24 in the Nation’s 100 Largest Metropolitan Areas, 2000 and 2011

Both the unemployment and labor force underutilization rates among young adults doubled between 2000 and 2011. Unemployment rose from 7 to 15%, while the underutilization rate rose from 14 to 29%.

Underutilized Labor Force =

Officially Unemployed +

Hidden Unemployed (those who want a job but are

not actively looking) +

Under-Employed (those involuntarily working part-time and available for

full-time work)

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The underemployed and hidden unemployed made up more than half of the young adult underutilized labor force in 2011.

Composition of the Underutilized Labor Force among Young Adults Aged 20-24 in the Nation’s 100 Largest Metropolitan Areas, 2011

Officially Unemployed = 49% | Hidden Unemployed = 18% | Underemployed = 33%

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Young adults with two- or four-year degrees continued to have the lowest underutilization rates.

Labor Force Underutilization by Young Adults Aged 20-24, Largest 100 Metropolitan Areas, by Educational Attainment/School Enrollment status, 2000 and 2011

In 2011, labor force underutilization was twice as high among high school graduates not enrolled in post-secondary education (37%) than among Bachelor’s degrees holders (18%).

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The share of young adults with any paid employment in a given year dropped 16% between 2000 and 2011, from 82% to 69%.

Share of Young Adults Aged 20-24 in the Nation’s 100 Largest Metropolitan Areas with Paid Employment Experience during the Year, by Race and Ethnicity, 2000 and 2011

Whites had the smallest declines and highest rates of previous-year employment in both 2000 and 2011. In 2011, 40% of black young adults experienced year-round joblessness, as did 33% of Hispanics and 24% of whites.

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Young adults with an associate or bachelor’s degrees continued to have the highest rates of paid employment in a given year.”

Share of Young Adults Aged 20-24 in the Nation’s 100 Largest Metropolitan Areas with Paid Employment Experience during the Year, by Educational Status, 2000 and 2011

In 2011, only 14% of two or four year degree holders experienced year-round joblessness, compared to 44% of high school dropouts.

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While labor market problems affected all young people in the first decade of the 21st century, non-Hispanic whites, those from higher income households, those with work experience, and those with higher levels of education were more successful by the key measures of employment rates, unemployment rates, labor force underutilization, and year-round joblessness. In particular, education and previous work experience were most strongly associated with employment.

These findings point to a clear need for action. While job growth and increased demand for labor are critical, we can better prepare young people for the work world by more tightly coupling employer demand with education and training, integrating work-based learning like internships, co-ops and apprenticeships into education, and creating stronger pathways from high school to post-secondary credentials.

Conclusion

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Recommendations 1. Integrate work-based learning opportunities into high school and college and

expand apprenticeships.

2. Link high school to post-secondary educational credentials.

3. Provide more directed assistance to help young people find employment — especially non-college bound high school graduates — through strengthened career and technical education, career counseling, and job development/placement.

4. Expand opportunities for high school dropouts to earn a diploma or GED, coupled with access to post-secondary credentials/occupational skills training.

5. Orient career-focused education and training to the regional labor market.

6. To address weak demand for labor, create transitional subsidized jobs programs for young people to help them support themselves, develop work experience, and gain a foothold in the labor market.

7. Increase financial incentives for employment through an expanded Earned Income Tax Credit, specifically targeting younger workers without children.

http://www.brookings.edu/metro