Wednesday, June 29, 2011

Summertime Blues for Teenagers

Copyright, The New York Times Company

Many teenagers cannot find work this summer, victims of a weak economy and a situation made worse by minimum-wage laws. Budget cuts for government youth-employment programs are a much less important factor.

Employment rates among teenagers are much lower now than they were before the recession began. While some people blame cuts to summer youth-hiring programs by state, local and federal governments, even in the best of times these provide only a small fraction of summer jobs for teenagers.

I used the Census Bureau’s monthly household surveys from January 2000 to December 2009 to calculate the amount that each industry’s employment of teenagers (measured as the sum of hours worked by all persons 16 to 19) during June, July, and August exceeded its average value in the months of April, May, September and October. For the economy as a whole, the average teenager worked 11 hours a week during the summer, compared with an average of eight hours a week during the academic year.

Not surprisingly, the arts, entertainment and recreation industries provided more of those extra work hours – about 16 percent of them — than any other industry group. Accommodation and food services — that is, hotels and restaurants — provided 15 percent.

Retail trade and construction were next among the job providers, with 11 and 9 percent, respectively. Local government was fifth, providing less than 9 percent of the extra summer work for teenagers. Even the combination of local, state and federal government hiring explained less than one-eighth of the extra summer work for teenagers (for the contributions of more industries, see Table 4 of this paper).

The vast majority of summer youth hiring is done by the private sector, and even if government eliminated its summer youth hiring, that would hardly dent the total.

(Employment rates for adults are also much lower than they were before the recession, although in lesser percentages than for youth. As with youth, private-sector employment reductions were much larger than the public sector reductions.)

Employment during recessions tends to drop disproportionately among low-skilled people like teenagers, so the latest recession has to be the biggest factor in explaining why teenage employment rates are so low today.

But minimum-wage laws also disproportionately affect teenagers — reducing their employment rates — and the federal minimum wage was increased three times in and around this recession. (Next week I will present more evidence on the number of jobs lost because of the most recent federal minimum wage hike.)

If the government wants to help raise teenage employment rates significantly, a good way to start would be by reducing labor market regulation rather than spending tax dollars on youth employment programs.

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