Last week, this column looked at the problem of high teen unemployment, which has risen to its highest levels in some 50 years. Though the nation's overall unemployment rate stood at 9.5% in June, it's triple that for those aged 16 to 19, the Labor Department reported earlier this month.
That daunting statistic alone is reason enough to take another look at teen joblessness. But adding insult to injury is news that working seniors now outnumber teens in the workforce.
Data compiled by Bloomberg News show that 6.6 million people aged 66 and older worked or looked for work in the first six months of the year, compared to 5.9 million 16- to 19-year-olds. The analysis is based on federal records that started in 1948, when there were 4.4 million teens in the labor force, compared with 2.9 million people over age 65, the San Francisco Chronicle reported.
Shrinking Nest Eggs, Delayed Retirement
It's not surprising that seniors are working longer. The phenomenon has been ongoing ever since companies shifted in the mid-1990s to defined-contribution retirement plans, such as 401(k)s, away from defined-benefit plans, says Christy Huebner Caridi, director of the Marist College Bureau of Economic Research in Poughkeepsie, N.Y.
Stunned by setbacks to retirement savings caused by the bursting of the tech and housing bubbles, many older workers have found it necessary to stay on the job (or resume work) to replenish nest eggs. Further eroding seniors' savings are higher taxes and increased health-care costs.
"There's no question older workers are staying in the labor force longer," Caridi says, adding that evidence shows in doing so, they're displacing younger workers -- "certainly in the unskilled labor pool."
Teens Miss Out on Learning Basic Skills
Other changes, which began to take hold in the late '80s and early '90s, have affected teens' participation in the labor pool. They include a rise in student enrolment in summer school, Caridi says. In 1989, 19.4% were in summer school, but in 2009, that number climbed to a whopping 53%. While some students both work and go to school, data suggest that for the most part, students who go to summer school don't also carry jobs, she says.
Another trend, Caridi cites, is community service, a component of many states' educational requirements for graduation, which cuts into many teens' ability to take summer employment.
Economists fear that fewer teens in the workforce means many aren't learning basic skills, such as discipline and motivation, needed to compete effectively in the labor market. "Labor economists have shown again and again that work experience is an important factor in lifetime earnings," Michael W. Brandl, finance professor at the University of Texas at Austin, told this column last week.
Dwindling Purchasing Power of Teen Wages
The need for more teen hiring has led some labor experts to call for a reduced "training" wage for teenaged workers. "We need to create a lower minimum wage for teens to lower the cost of hiring and training entry-level employees," Michael Saltsman, a research fellow at the conservative Employment Policies Institute, told the Chronicle. "What we would get for this is more jobs for our teens to learn career skills."
On one point, Marist's Caridi agrees. It's a valid argument that many of today's young workers don't have the skill set to work in a new-economy environment, and any needed additional training can present a burden to employers, she says. But that doesn't mean the current minimum wage is the problem.
"The truth of the matter is that the purchasing power of current minimum wage earners is much lower than it was," Caridi says.
Even at $7.25 an hour, today's youth are earning less than their counterparts did, for example, in 1968, when the minimum wage was set at $1.60 an hour. A worker today would need to earn $10 an hour to match that wage, according to the Bureau of Labor Statistics' inflation calculator.
Caridi notes further that high teen unemployment isn't relegated to certain groups. Though unemployment rates may be higher among minority youth, she says, "the collapse in teen employment is across the board."
Whether Congress and the President have the courage to implement programs to deal with high unemployment remains to be seen. But with the GOP openly opposed to even extending unemployment benefits to the long-term jobless, that seems unlikely -- giving many teens an important lesson on how difficult the real world can be.
Take the first steps to building your portfolio.View Course »