Still Young Restless and Jobless Report

8/2/2019 Still Young Restless and Jobless Report

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Still Young, Restless, and Jobless:

The Growing Employment Malaise Among

U.S. Teens and Young Adults

Prepared by:

Andrew SumIshwar Khatiwada

With

Sheila Palma

Susan Perron

Center for Labor Market Studies

Northeastern University

Boston, Massachusetts

Prepared for:Jobs for Americas Graduates

Alexandria, Virginia

January 2004


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Table of Contents

Introduction..................................................................................................................................... 2

The Deteriorating Employment Situation Among theNations Teens and 20-24 Year Olds

Between 2000 and 2003 ............................................................................................................. 4Trends in the E/P Ratios of Key Demographic Subgroups of Teens.............................................. 7

Trends in the Employment Rates of Out-of-School, 16-24 Year Old Youth.................................. 9

Changes in the Part-time and Full-time Employment Status of Out-of-School Young Adults .... 10

The Deteriorating Employment Situation of the Nations Youngest High School Graduates...... 12

Comparisons of the Recent Employment Experiences of Teens

With Those During the 1990-91 Recession and Economic Recovery ..................................... 15

Job Deficits Among Teens and Young Adults 20-24 Years Old.................................................. 17

Changes in the Out-of-School and Out-of-Work Young Adult Population.................................. 18Why We Should Care About Higher Levels of Youth Joblessness.............................................. 19

What Can Be Done?...................................................................................................................... 21


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Introduction

In early 2001, the economic boom of the 1990s which was accompanied by ten

consecutive years of economic growth and high levels of job creation came to an immediate halt,

and the recession of 2001 set in. While the National Bureau of Economic Research has recently

announced that the recession ended in November 2001, labor markets have failed to generate the

same level of strength as exhibited by the growth of the nations real output over the past year.

Unemployment continued to rise through 2002, and payroll jobs failed to increase. The onset of

the recession of 2001 and the so-called jobless recovery of 2002 took a severe toll on job

opportunities for the nations teens and young adults (20-24), especially those lacking a four year

college degree.1 Rising unemployment among teens and young adults was accompanied by

declines in their labor force participation, growing underemployment, and rising mal-

employment among college graduates. Underemployment problems are measured by workers

who can only obtain part-time jobs even though they wish to be employed full-time, and mal-

employment occurs when workers cannot obtain jobs in occupations that will fully utilize their

education and skills; e.g., college graduates working as waiters/waitresses, sales clerks, call

center operators, construction laborers.

During the second and third quarters of 2003, economic growth in the U.S. accelerated,

with real Gross Domestic Product rising by more than 8% in the third quarter. Payroll

employment began to rise steadily from August through November, and the estimated number of

employed persons 16 and older in the CPS household survey rose even more strongly. The

overall unemployment rate began to drift downward, falling below 6% in the fall of 2003 and to

5.7% in December.2 How have these recent output and employment developments influenced

1 For an earlier review of the impacts of the 2001 recession and the jobless recovery of 2002 on the employment

opportunities for teen and young adult population,See: (i) Andrew Sum, Nathan Pond, and Sheila Palma, The Impacts of the 2001 National Recession and the Ensuing

Jobless Recovery on the Employment of the Nations Teens and Young Adults, Prepared for the National League of

Cities, Washington, D.C., August 2002; (ii) Andrew Sum,Leaving Young Workers Behind, National League of

Cities, Institute for Youth, Education, and Families, Washington, D.C., 2003.

For other articles on the declining economic fortunes of the nations young adults,

See: (i) Peter Cox, Michelle Conlin, and Emily Thornton, A Lost Generation?,Business Week, November 4,

2002, pp. 44-46; (ii) Noshua Watson, Generation X: Generation Wrecked,Fortune, October 14, 2002, web site.2 The decline in the unemployment rate to 5.7% in December 2003 was due entirely to a drop in the number of

persons in the labor force rather than to a rise in employment.


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job opportunities for the nations teens and young adults? This research report will provide a

detailed answer to this key labor market question. Unfortunately, the findings are

overwhelmingly disappointing. The employment rates of the nations teens 16-19 years old and

20-24 year old adults continued to plummet during calendar year 2003, with several of these

employment rates falling to new historical lows.3

The empirical findings will begin with an overview of employment and population

developments among the nations 16-24 year olds over the 2000-2003 period, with separate

breakouts of the data for teens and 20-24 year olds. Changes in the annual

employment/population ratios of teens and young adults over the 2000-2003 period will be

presented and compared to those of the nations adults in older age groups. The employment

experiences of teens in an array of gender and race-ethnic groups will be examined as will those

of out-of-school 16-24 year olds in various educational attainment subgroups. The changes in

the employment rates of teens during the recession of 2001 and the first two years of recovery

from the recession will be compared to those that took place in the 1990-91 recession and the

early years of recovery from that recession.

The employment analyses will be followed by an examination of changes in the numbers

and demographic characteristics of 16-24 year olds who were both out-of-school and out-of-work

in 2000 and 2003, a group sometimes referred to as disconnected youth.4 The final section will

be devoted to a discussion of why the nation ought to care about these growing youth labor

market problems and provide a brief description of national economic policy actions that the U.S.

Congress and the Bush administration should consider undertaking in cooperation with the states

and local governments to address the growing problems of youth idleness and joblessness.

See: U.S. Bureau of Labor Statistics, The Employment Situation: December 2003, Washington, D.C., January

2004.3 The term employment rate in this study is used to refer to the employment/population ratio, i.e., the ratio of the

number of employed youth in a given age group to the civilian non-institutional population of youth in that same age

group.4 See: (i) Douglas J. Besharov,Americans Disconnected Youth: Toward A Preventive Strategy, CWAL Press and

American Enterprise Institute for Public Policy Research, Washington, D.C., 2000; (ii) Andrew Sum, Ishwar

Khatiwada, et.al.,Left Behind in the Labor Market: Labor Market Problems of the Nations Out-of-School, Young

Adult Population, Alternative Schools Network, Chicago, January 2003.


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The Deteriorating Employment Situation Among the

Nations Teens and 20-24 Year Olds Between 2000 and 2003

The onset of the national economic recession of 2001 and the lack of any job growth in

2002 substantially reduced employment opportunities for the nations teens and young adults

(20-24). These young workers bore the brunt of the employment losses experienced across the

country between 2000 and 2002.5 Recently-released national CPS employment data for 2003

reveal that the employment rates of teens and young adults continued to decline in 2003, pushing

the teen employment rate (E/P ratio) down to a new post-WW II low during the past year. In the

following three tables, we summarize three sets of inter-related developments for the 16-19 and

20-24 year old population over the 2000-2003 period: changes in their annual average aggregate

employment levels, their population size, and their employment/population ratios (E/P).

The key findings of this analysis can be summarized as follows. Over the past three

years, the annual average number of employed 16-24 year olds declined by nearly 1.1 million or

5.2%, far exceeding the rate of employment declines for all other age groups. The teen

population was responsible for all of the net decline in employment among the 16-24 age group

with their numbers dropping by 1.272 million or 18%. There was a modest gain in the number of

20-24 year olds over this time period.

Table 1:

Comparisons of Employment Levels of 16-19 and

20-24 Year Olds in the U.S., 2000 and 2003

(in millions)

Age Group

(A)

Employed 2000

(B)

Employed 2003

(C )

Change

2000-2003

(D)

% Change

2000-2003

16-19 7.194 5.922 -1.272 -17.7%

20-24 13.228 13.434 0.206 +1.5%

16-24 20.422 19.356 -1.066 -5.2%

Over the same three year period, the 16-24 year old population increased by nearly 5%

with the number of 20-24 year olds rising by 8% due in large part to a substantial influx of new


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immigrant workers, who often displaced native born workers in the same age group from jobs

that they would likely have obtained.

Table 2:

Changes in the Population of 16-19 and 20-24 Year Olds in the U.S., 2000 to 2003

(in millions)

Age Group

(A)

Population 2000

(B)

Population 2003

(C)

Change

2000-2003

(D)

% Change

2000-2003

16-19 15.912 16.096 +0.184 +1.1%

20-24 18.311 19.801 +1.490 +8.1%

16-24 34.223 35.897 +1.674 +4.9%

As a consequence of declining employment and a rising population, the employment/

population ratios of teens and 20-24 year olds declined sharply over the 2000-2003 period. The

teen E/P rate fell by 8.4 percentage points to 36.8% in 2003, the lowest E/P ratio for the nations

teens since the end of World War II.6 (Chart 1). The E/P ratio of 20-24 year olds fell by 4.4

percentage points over the same three year period. The E/P ratios of most other age groups of

adults fell by much smaller amounts over this period, and persons 55 and older actually

experienced increases in their employment rates over this three year period. (Chart 2). The

younger the age group, the greater the decline in their E/P ratio. Idleness problems have

accelerated among the nations teens and young adults over the past three years, with no sign of

recovery during calendar year 2003.

5 See: Andrew Sum, Nathan Pond, with Sheila Palma, The Impacts of the 2001 National Recession and the Ensuing

Jobless Recovery6 As will be noted below, annual average data on teen employment rates are available from the CPS survey from

1948 onward.


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Table 3:

Comparisons of the Employment/Population Ratios of 16-19 and

20-24 Year Olds in the U.S., 2000 and 2003 (in %)

Age Group

(A)

2000

(B)

2003

(C)

Change

2000-2003

16-19 45.2 36.8 -8.4

20-24 72.2 67.8 -4.4

Chart 1:

Trends in the Employment-Population Ratios of Teens and 20-24

Year Olds in the U.S., 2000 to 2003

(Annual Averages in Percent)

45.242.3

39.636.8

72.270.7

69.0 67.8

0

10

20

30

40

50

60

70

80

2000 2001 2002 2003 2000 2001 2002 2003

Teens 20-24 Year Olds

Percent


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Chart 2:

Changes in Employment to Population Ratios in the U.S. by Age Group, 2000 and 2003

-2.1

-8.4

-4.4-4.0

-3.3

-2.5

-1.7

2.1

1.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

All 16+ 16 -19

Years

20 - 24

Years

25 - 29

Years

30 - 34

Years

35 - 44

Years

45 - 54

Years

55 - 64

Years

65 +

Change(%)

Trends in the E/P Ratios of Key Demographic Subgroups of Teens

The nations teenagers clearly experienced the most substantial declines in their

employment rates over the past three years. How widespread were the job losses among the

nations teens across demographic subgroups over the 2000-2003 period? To answer this

question, we analyzed changes in the E/P ratios of gender and race-ethnic subgroups of the

teenaged population of the nation between 2000 and 2003. Findings reveal that these E/P ratios

declined considerably across both gender groups and all four race-ethnic subgroups (Table 4 and

Chart 3). Male teens, however, were more adversely affected than women. The E/P ratio of

male teens fell by nearly 10 percentage points while that for women declined by seven percentage

points. Male teens have been affected more considerably than women by the surge in new

immigrant workers in recent years, two-thirds of whom are males and half of whom are under the

age of 30.7 The E/P ratios of Black, Hispanic, and White teens fell by 8 to 9 percentage points

over the past three years. (See Table 4 and Chart 3).

7 See: Andrew Sum, Ishwar Khatiwada, Paul Harrington, with Sheila Palma,New Immigrants in the Labor Force

and the Number of Employed New Immigrants in the U.S. from 2000 through 2003 , Center for Labor Market

Studies, Northeastern University, Boston, December 2003.


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Table 4:

Trends in the Employment/Population Ratios of Teenagers in the

U.S., by Gender and Race-Ethnic Group, 2000 to 2003

(Annual Averages in %)

Group

(A)

2000

(B)

2003

(C)

Percentage Point

Change

2000-2003

All 45.2 36.8 -8.4

Men 45.4 35.7 -9.7

Women 45.0 37.9 -7.1

Asian 30.8 24.4 -6.4

Black 29.8 21.7 -8.1

Hispanic 38.6 30.2 -8.4White 49.1 40.4 -8.7

Chart 3:

Percentage Point Change in the Employment/Population Ratios of

Teenagers between 2000 and 2003, by Gender and Race-Ethnic Group

-8.4

-9.7

-7.1

-6.4

-8.1-8.4

-8.7

-12

-10

-8

-6

-4

-2

0

All Men Women Asian Black Hispanic White

To place these declining E/P ratios of teens into historical perspective, we analyzed the

historical CPS data on employment rates of teens back to 1948, the beginning year of the data

series. For Black teens, employment data are only available back to 1973 and for Hispanics only

back to 1994. The estimated 36.8% employment rate for the nations teens was the lowest ever

recorded since 1948. The same holds true for the 35.7% employment rate among male teens. At


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no time in the past 55 years have so few male teens worked as a percent of their population.

Among women, the 38% employment rate in 2003 was the lowest since 1971. For White teens,

the E/P rate was the lowest since 1964; and for Black youth the 22% employment rate was the

lowest since 1983 and the third lowest over the 30 year period for which such data are available.

Yet, with few exceptions, the national media and political leaders of both parties have been

largely silent on these issues.

Table 5:

Comparisons of the 2003 Employment/Population Ratios of Teens

(16-19) with those over the previous 57 Years

(A) (B)

Group 2003 E/P Ratio

Previous Year that the

E/P Ratio was Lower

All 16-19 36.8 None; Lowest in Post-WWII Period

Males 16-19 35.7 None; Lowest in Post-WWII Period

Females 16-19 37.8 Lowest since 1971

Whites 16-19 40.4 Lowest since 1964

Blacks 16-19 21.7 Lowest since 1983 (3rd lowest in 30

years for which data are available)

Trends in the Employment Rates of Out-of-School, 16-24 Year Old Youth

While in-school youth have faced sharp drops in the demand for their labor in recent

years, some labor market observers would place greater emphasis on the labor market plight of

the nations out-of-school youth. How have out-of-school teens and young adults fared in the

labor market over the past three years? To answer this question, we estimated E/P ratios for all

out-of-school 16-24 year olds by educational attainment during 2000 and 2003. Findings are

displayed in Table 6. During calendar year 2000, the E/P ratio for these out-of-school youth was

73.2%, but it fell to 68.5% in 2003, a decline of nearly five percentage points. Declines in E/P

ratios were in the 4.5 to 6.0 percentage point range for all educational subgroups, except four

year college graduates. The E/P ratio of bachelor degree recipients (and a few with advanced

degrees) fell by only 2.1 percentage points over this three year period. Young college graduates

enjoyed substantial advantages over their less educated counterparts. In 2003, 86 of every 100

young college graduates were employed versus only 70 of every 100 high school graduates and


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50 out of 100 high school dropouts. Idleness rates and underemployment problems were very

high among out-of-school youth with no post-secondary education in 2003.8

Table 6:

Trends in the Employment/Population Ratios of Out-of-School 16-24 Year Olds by

Educational Attainment Between 2000 and 2003, U.S.(in %)

Educational Attainment

(A)

2000

(B)

2003

(C)

Percentage Point

Change, 2000 2003

All 73.2 68.5 -4.7

0-12 years, no diploma or GED 55.7 50.7 -5.0

H.S. diploma/GED 75.9 69.8 -6.1

1-3 years college, no degree 83.9 79.5 -4.5Associates degree 89.2 84.6 -4.6

Bachelors degree 88.3 86.2 -2.1

Changes in the Part-time and Full-time Employment Status of Out-of-School Young Adults

The ability of young adults to secure full-time employment when they do seek work has a

number of important economic advantages for them. Those youth who are employed full-time

work substantially more hours per week than their part-time peers, and they earn more per hour,

yielding very large weekly earnings advantages (more than twice as high as those of part-time

workers).9

Full-time employed youth are more likely to receive informal and formal training

from their employers and to be eligible for tuition assistance for college courses. They are also

more likely to be eligible for vacation pay, health insurance coverage, and pension coverage. The

economic returns from full-time work experience in the form of higher future wages are

considerably higher than those from part-time work.

Given the multiple economic advantages of full-time work, how well did the nations out-

of-school employed young adults fare in obtaining full-time jobs when they did secure

employment in 2000 and 2003? Overall, 19 percent of employed out-of-school young adults

8 A high fraction (nearly 1 of 4) of employed out-of-school youth with no post-secondary education were only

working part-time during calendar year 2003 even though many of them preferred full-time work.9 For a more detailed review of the economic advantages of full-time employment for young adults,

See: Andrew Sum, Neeta Fogg, and Garth Mangum, Confronting the Youth Demographic Challenge.


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were working part-time in 2000; however, by 2003, the share of employed young adults in part-

time positions had risen to nearly 22 percent, an increase of three percentage points (Table 7).

Employed out-of-school youth in each educational subgroup were more likely to be working

part-time in 2003 than they were in 2000. Nevertheless, the ability of these youth to obtain full-

time jobs when they did work was strongly associated with their educational attainment. Only 11

percent of employed four year college graduates worked part-time in 2003 versus 21% of high

school graduates and 31% of high school dropouts.

Table 7:

Per Cent of Employed Out-of-School 16-24 Year Old Youth Working

Part-time in 2000 and 2003 by Educational Attainment, U.S.

Educational Group

(A)

2000

(B)

2003

(C)

Absolute

Change

All 18.9 21.9 +3.0

Lacks high school diploma/GED 29.7 31.2 +1.5

High school graduate, no college 17.4 20.7 +3.3

1-3 years of college 17.7 21.8 +4.1

Bachelors degree 6.9 10.7 +3.8

By combining the findings on the estimated employment rates of out-of-school 16-24

year olds with the shares of youth working full-time, we can generate estimates of full-time

employment/population ratios for each educational subgroup of out-of-school youth. The full-

time employment/population ratio of all out-of-school youth declined considerably between 2000

and 2003, a drop of 6 percentage points or 10%, more than three times as high as that for the

nations adults 25 and older. Young adults in each educational subgroup experienced substantial

declines in their full-time employment rates, with the absolute size of these reductions, ranging

from 4 to 7.5 percentage points. In 2003, only 35% of young high school dropouts and 55% of

high school graduates were employed on a full-time basis versus 77% of four year college

graduates (Table 8).


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Table 8:

Trends in the Full-time Employment/Population Ratios of 16-24 Year

Old Youth by Educational Attainment, 2000 to 2003, U.S.

(in %)

Educational Group

(A)

2000

(B)

2003

(C)

Absolute

Change

(D)

Per Cent

Change

All 59.4 53.5 -5.9 -10%

Lacks high school diploma/GED 39.1 34.9 -4.2 -11%

High school graduate, no college 62.7 55.3 -7.4 -12%

1-3 years of college 69.0 62.1 -6.9 -10%

Bachelors degree 82.3 77.0 -5.3 -6%

The Deteriorating Employment Situation of the Nations Youngest High School Graduates

Many of the nations young adults who complete their formal schooling after graduating

from high school, especially men, have faced considerable difficulties in obtaining access to

well-paid, full-time jobs over the past few decades. The employment rates of the nations young

high school graduates (under 25) declined by six percentage points over the past three years.

These declines in employment rates were quite steep among both male and female high school

graduates, and graduates in each of the three major race-ethnic groups saw their employment

rates drop by 5.5 to 6.5 percentage points between 2000 and 2003. On a typical month, only 56

of every 100 Black high school graduates had any type of job in 2003.


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Table 9:

Trends in the Employment/Population Ratios of Out-of-School

16-24 Year Old High School Graduates by Gender and Race-Ethnic Origin, 2000-2003

Gender/Race-Ethnic Group

(A)

2000

(B)

2003

(C)

Absolute

Change

(D)

Percent

Change

All 75.9 69.8 -6.1 -8.0%

Men 81.3 74.9 -6.4 -7.8%

Women 69.9 63.8 -6.1 -8.7%

Black 62.7 56.2 -6.5 -10.3%

Hispanic 75.2 69.7 -5.5 -7.3%

White 79.1 73.5 -5.6 -7.0%

The nations youngest high school graduates (those under 20) have fared even more

poorly in the labor market over the past three years. In calendar year 2000, at the peak of the

labor market boom, 71% of all non-enrolled high school graduates under age 20 were employed.

By 2003, the employment rate of these young high school graduates had declined to slightly

under 62% (Table 10). Each gender and race-ethnic group of young high school graduates

experienced very steep declines in their employment rates over this three year period. In 2003,

only 43% of young Black high school graduates were able to obtain some type of employment

versus 66% of White graduates.


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Table 10:

Trends in the E/P Ratios of Non-Enrolled 16-19 Year Old,

High School Graduates, by Gender and Race-Ethnic Origin, 2000-2003


(A)

2000

(B)

2003

(C)

Absolute

Change

(D)

Percent

Change

All 71.4 61.8 -9.6 -13.5%

Men 74.9 63.9 -11.0 -14.6%

Women 67.7 59.5 -8.2 -12.1%

White 75.5 66.5 -9.0 -12.0%

Black 53.2 43.3 -9.9 -18.7%

Hispanic 69.3 57.5 -11.8 17.0%

These young high school graduates had an even more difficult time in finding full-time

jobs in the first year or two following high school graduation. In 2000, only 50% of these

teenaged high school graduates were able to secure a full-time job (Table 11). Three years later,

the share of these young graduates with full-time jobs had fallen to 39%, a relative decline of

23%, with very sharp reductions taking place among each gender and race-ethnic group. Only

one of four young Black high school graduates were working full-time. Clearly, the nations

newest high school graduates have been facing several obstacles in transitioning to the labor

market and in securing full-time employment in the nations career labor markets. This situation

represents a substantial waste in available human resources, and the continued underutilization of

these young adults by reducing their cumulative work experience will lower their future earnings

as well.


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Table 11:

Full-Time E/P Ratios for the 16-19 Year Old High School Graduates

Not Enrolled in College, 2000-2003


(A)

2000

(B)

2003

(C)

Absolute

Change

(D)

Percent

Change

All 50.6 38.9 -11.7 -23.1%

Men 57.9 45.2 -12.7 -22.0%

Women 42.9 32.2 -10.6 -24.8%

White 53.8 42.6 -11.2 -20.9%

Black 35.7 24.5 -11.2 -31.4%

Hispanic 51.8 38.6 -13.2 -25.5%

Comparisons of the Recent Employment Experiences of Teens

With Those During the 1990-91 Recession and Economic Recovery

The steep decline in the employment/population ratio of the nations teens from 2000 to

2003 differs in a number of important respects from its behavior during the recession of 1990-91

and the first two years of recovery from that recession. The employment rate of the nations

teens is quite cyclically sensitive, declining at above average rates during recessionary periods

and rising at above average rates during periods of strong job growth and declining

unemployment. For example, the teen employment rate rose strongly during the economic boom

years of the mid to late 1980s increasing from 41.5% in 1983 to 47.5% in 1989, the peak

economic year before the recession of 1990-91 set in. From 1989 to 1991, the E/P rate of teens

fell by 5.5 percentage points and would decline by another full percentage point in 1992. In

1993, however, the E/P rate of teens began to rise. Two years after the 1990-91 recession ended,

the E/P rate of teens was back to where it was at the end of the recession.

From 1992 to 2000, the E/P ratio of the nations teens rose from 41.7% to 45.2%, but

never achieved its 1989 cyclical peak value of 47.5%. The recession of 2001 lasted from March

to November, an eight month duration identical to that of the 1990-91 recession. The nations

unemployment rate at the trough of the recession in March 1991, however, was 6.8% versus an

unemployment rate of only 5.6% in November 2001, the trough of the 2001 recession. The E/P


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rate of teens fell by 5.8 percentage points between 2000 and 2002, but rather than rising as

expected in 2003 it continued to decline by nearly another three percentage points. While payroll

job growth in the U.S. has been quite weak in the past two years, the number of persons reporting

themselves as employed in the CPS household survey was 2.3 million higher in November 2003

than in November 2001, a stronger level of employment growth than took place during the

recovery from the 1991 recession.10 There are clearly important structural forces at work in U.S.

labor markets that are holding down the employment levels of teens, including low rates of

growth in formal payroll employment, especially in retail trade, a key sector for youth

employment, and high levels of competition from new foreign immigrants, whose employment

ranks increased by 2.5 million from 2000 to 2003. There is clear evidence of displacement of

native born, young adults by these new immigrants, a majority of whom are young, male, and

poorly educated.

Chart 4:

Trends in the Employment/Population Ratios of the

Nations Teens, Selected Years, 1989 to 2003

(in %)

47.5

42.0

41.041.7

45.2

42.3

39.6

36.8

35

40

45

50

55

1989 1991 1992 1993 2000 2001 2002 2003

Percent

10 See: Andrew Sum, Paul Harrington, and Ishwar Khatiwada, Employment Developments in the U.S. Since the End

of the Recession of 2001: Conflicting Tales from Two National Surveys, Center for Labor Market Studies,

Northeastern University, November 2003.


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Job Deficits Among Teens and Young Adults 20-24 Years Old

The extraordinarily steep declines in the employment/population ratios of the nations

teens and young adults over the past three years have left a large number of youth jobless in the

past year. To estimate the size of the job deficits faced by youth in these two age groups in 2003,we calculated the number of additional jobs that would have been needed by teens and 20-24

year olds in the past year to maintain their employment rates at their 2000 levels. The number of

additional jobs needed by the nations teenagers in 2003 would have been 1.352 million while

20-24 year old youth would have required another .872 million jobs to achieve this employment

target (Table 12 and Chart 5). The combined number of additional jobs needed by teens and

young adults to eliminate their job deficits would have been 2.224 million, an increase of

between 11 and 12 percent over their actual 2003 employment levels. Elimination of these job

deficits will require extraordinary job creation efforts. It took six years of steady and strong

national job growth from 1992 to 1998 to boost teen employment by 1.37 million jobs. In the

absence of a new, comprehensive youth employment initiative, including incentives for firms to

hire young workers and public job creation programs, teen idleness will remain at very high

levels over the next few years, especially among high school dropouts, high school graduates

with no college, low income youth, and Black teens.

Table 12:

Comparisons of the Actual 2003 Employment Levels of 16-19 and 20-24Year Olds with those that Would Have Prevailed if their E/P Ratios in 2000

Had Been in Place in 2003

(in Millions)

Age Group

(A)

Actual 2003

Employment

(B)

Hypothetical

2003 Employment

(C)

Hypothetical

Minus Actual

16 19 5.922 7.274 1.352

20 24 13.434 14.306 0.87216 24 19.356 21.580 2.224


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Chart 5:

Additional Number of Employed Youth if

Year 2000 E/P Ratios had Prevailed

(in Millions)

1.352

0.872

2.224

0.0

0.5

1.0

1.5

2.0

2.5

16 - 19 20 - 24 16 - 24

Employment(inmillions)

Changes in the Out-of-School and Out-of-Work Young Adult Population

Joblessness among the nations youth is often viewed as a much more serious economic

and social problem when it is combined with the absence of any schooling/training activity. The

national CPS data for 2000 and 2003 have been used by BLS to produce estimates of the labor

force status of 16-24 year old youth by their school enrollment status at the time of the surveys.

We have analyzed these data to produce estimates of the number of 16-24 year old youth who

were both out-of-school and out-of-work in 2000 and 2003 (Table 13). Over this three year

period, the annual average number of out-of-school, out-of-work youth increased from 4.881

million to 5.668 million, an increase of 787,000 or 16%. Young males accounted for the bulk of

this increase, with their numbers rising by 525,000 or 26 percent, due to their steeper job losses

over this three year period and their lower school enrollment rates. The pool of women who

were out-of-school and out-of-work rose by only 8%, but many women enrolled in school were


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left jobless. Both Whites and Hispanics experienced double digit growth in the number of teens

and young adults in their out-of-school, out-of-work ranks.

Table 13:

Trends in the Number of Out-of-School, Out-of-Work 16-24 Year Olds in

the U.S., by Gender and Race-Ethnic Origin, 2000 to 2003

Group

(A)

2000

(B)

2003

(C)

Absolute

Change

(D)

Percent

Change

All 16-24 4,881 5,668 787 16%

Men 1,992 2,517 525 26% Women 2,890 3,151 261 9% Black 1,113 1,206 93 8% Hispanic 1,008 1,233 225 22% White 3,509 4,014 505 14%

Source: U.S. Bureau of Labor Statistics, Unpublished tabulations from the CPS surveys, 2000

and 2003.

Why We Should Care About Higher Levels of Youth Joblessness

The high and rising levels of youth joblessness across the country and the growing

numbers of disconnected youth have received some media attention over the past few years, but

economic policymakers at the national and state level have provided few, and in most cases no,

effective responses to the problem.11 There even has been a tendency among some analysts and

reporters to casually dismiss the problem of declining labor force participation and rising

joblessness among teens, claiming that they can go apply themselves to their academic studies or

work on their tans during the summer months.12

These shortsighted and largely ignorant views

of the problem need to be challenged by youth advocates, labor market analysts, and youth

themselves, and the nations and states economic policymakers need to provide considerably

more political leadership and support for youth employment, education, and training programs to

substantially boost employment among the nations teens and young adults in the near future.

11 See: (i) Marla Dickerson, Latino Job Seekers Find Born in USA Not Enough,Los Angeles Times, April 2,

2002, (ii) Bob Herbert, Young, Jobless, Hopeless,New York Times, February 6, 2003, pp. A-35.12 (i) State of the Union: Americas Fortune, The Atlantic Monthly, January/February 2004, pp. ; (ii) Stephanie

Armour, Record Number of Teens Just Say No to Summer Jobs, USA Today, 6-24-2002, www.USATODAY.com.


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There are a wide array of private and social economic and educational benefits that can be

generated by a substantive expansion of employment opportunities for the nations teens and

young adults.13

First, the high rates of labor underutilization among 16-24 year olds, including

unemployment, underemployment, and discouragement, reduces the volume of labor inputs into

the production process and the level of real output of the U.S. economy. These output losses

from failing to utilize the available youth labor supply today are lost forever. Second, work

experience is a valuable form of human capital that can increase the future employability and real

wages of youth. Rising joblessness reduces the amount of work experience that youth will

acquire today and their future earnings tomorrow. Third, the earnings obtained by young workers

from their employment would be used to generate additional consumption expenditures on goods

and services, thereby raising aggregate demand throughout the economy and the level of

employment of other adult workers.

Fourth, a number of studies of the in high school work experiences of teens have found

that youth with some in-school employment experience, especially Black, Hispanic, and

economically disadvantaged youths, are less likely to dropout of high school than their peers who

do not work during their high school years. Employment expansion can help boost efforts to

keep these youth in-school through graduation. Rising employment by itself can encourage some

other teens to drop out of school, but strong efforts to tie jobs for youth to their continuedenrollment in high school can achieve the desired results. Fifth, work-based learning

opportunities can increase the perceived relevance of school-based learning among high school

and college students and strengthen their incentives to acquire some post-secondary education.

Followup studies of Boston high school graduates has revealed that participation in school-to-

career programs in high school with related work experience has been associated with a

significantly higher likelihood of college enrollment upon graduation from high school.

Sixth, students who work steadily in high school, especially those who do not go on to

enroll in four year colleges and universities, obtain a smoother transition into the labor market in

13 For a review of the educational and economic advantages of in-school work experience,

See: Andrew Sum, Neeta Fogg, and Garth Mangum, Confronting the Youth Demographic Challenge: The Labor

Market Prospects of Out-of-School Youth, Sar Levitan Center for Social Policy Studies, Johns Hopkins University,

Baltimore, 2000.


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the first few years after graduation from high school, avoiding problems of long-term idleness.

Seventh, those states and metropolitan areas with higher rates of employment for teens are

characterized by significantly higher rates of employment for its 20-24 year old residents five

years later. Eighth, youth who work more during the high school years, especially those who

learn new skills on their jobs, obtain significantly higher hourly earnings on their jobs in the first

few years following graduation. Findings of longitudinal research also indicate that they will

secure significantly higher annual earnings eight to ten years after graduation than their peers

who did not work during high school.

Ninth, a rise in the teen employment/population ratio tends to be associated with

significantly lower rates of teen pregnancies.14

Tenth, teenaged mothers who work more during

the first five to ten years following the birth of their first child obtain higher wages and real

annual earnings in their young adult years and are significantly less likely to be poor.15

Eleventh,

national research on the criminal behavior of young men suggests that reduced real earnings of

young men tend to be associated with higher rates of criminal activity, including those involved

with the illegal drug trade.16 High rates of idleness among young men reduces their work

experience and their future earnings potential, thus making criminal activity more attractive.

What Can Be Done?

There is no simple silver bullet solution to the problems of the high levels of joblessness

and underemployment among the nations teens and young adults. The causes of these problems

are multiple in nature and new important structural forces seem to be at work.17

There are,

14 For evidence on the risky behavior of youth and its consequences,

See: Jonathan Gruber, Risky Behavior Among Youth, MIT and NBER, Cambridge, May 2000.15 For evidence on this set of issues and on the other determinants of the future earnings and poverty status of teen

mothers,

See: Neeta Fogg,An Economic Analysis of the Determinants and the Long-Term Labor Market Consequences ofTeenage Childbearing in the United States, 1979-91, Ph.D. dissertation, Department of Economics, Northeastern

University, Boston, 1997.16 See: Richard B. Freeman, Why Do So Many Young American Men Commit Crimes and What Can We Do

About It?, Journal of Economic Perspectives, Winter 1996, No. 1, pp. 25-42; (ii) Jeff Grogger, Criminal

Opportunities, Criminal Activities and Young Mens Labor Supply, Department of Economics, University of

California, Santa Barbara, 1997.17 A recent article on the joblessness problems of young Black men cites other structural factors at work, including

employability problems associated with criminal convictions and fathering children out-of-wedlock with

accompanying child support burdens.


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however, a variety of macroeconomic policies, school-to-work transition strategies, and targetted

job creation policies that can play an important role in generating additional employment

opportunities for these young workers over the next few years. First, continued high rates of real

output growth will be needed to boost the overall demand for labor, particularly in formal payroll

employment, and increase employers willingness to hire additional numbers of young workers.

The 1980s and 1990s experience bears out the importance of strong output and employment

growth to boost teen employment opportunities. Between 1992 and 1998, employment levels

among the nations teens increased by nearly 1.4 million, and they captured 14.5% of all of the

gains in employment among the nations civilian working-age population over this six year

period. Second, Targeted New Jobs Tax Credits for employers hiring additional numbers of

teens and young adults could prove effective in boosting the demand for such workers in the

short run. Past experience with the New Jobs Tax Credit of 1977 showed it was quite effective

in boosting employment in teen-intensive industries.18 Employers need to be given incentives to

hire additional numbers of youth.

Third, there is a clear need to provide in-school youth with career counseling, job

development and job placement services during the high school years to connect them to jobs and

employers and to facilitate their transition to the labor market upon graduation. These labor

market connecting activities also need to be supplemented with intensive followup supportactivities to strengthen the ability of youth to obtain and retain employment during the first year

or two following high school graduation and to enable them to move seamlessly from one job to

another. Both the U.S. Congress and state legislatures should be supportive of such efforts, with

additional monies provided by state and local Workforce Investment Boards and county/city

governments.

Fourth, the U.S. Congress should provide monies to state and local Workforce Investment

Boards under the current Workforce Investment Act to create jobs for unemployed 16-24 year

See: Harry Holzer and Paul Offner, The Puzzle of Black Male Unemployment, The Public Interest, Winter 2004,

pp. 74-84.18Our proposal is based on a combination of the New Jobs Tax Credit and the Targeted Jobs Tax Credit Programs.

For evidence on their effectiveness,

See: Lawrence F. Katz, Wage Subsidies for the Disadvantaged, in Generating Jobs: How to Increase Demand

for Less-Skilled Workers, Russell Sage Foundation, New York, 1998, pp. 21-53


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olds in nonprofit organizations and state and local governments. Past job creation programs for

teens and young adults have been able to boost employment for disadvantaged and other low

income neighborhood youth in a cost effective manner. Such monies should also be allowed to

be used to subsidize jobs for teens and young adults in private for profit firms as was done under

the Youth Incentive Entitlement Pilot7 Program in the late 1970s. Fourth, the Bush

administration and the U.S. Congress should immediately restore funding for a separate summer

jobs program for low income and other jobless youth, with the goal of putting no less than

500,000 youth to work in such jobs during the forthcoming summer. The last two summers have

seen steep declines in the employment rates of teens, with the summer of 2003 being

characterized by the lowest teen summer employment rate since the end of World War II. A

combination of strong aggregate job growth, tax incentives for employers to hire teens and young

adults, a comprehensive set of connecting activities to move youth into regular employment, and

subsidized job creation programs for teens and young adults will be needed to substantively boost

youth employment over the next few years. It is now time for national political leaders in both

parties, including all Presidential candidates, to place youth joblessness higher on their political

agendas.

Still Young Restless and Jobless Report

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