Fewer Youth Are Participating in the Labor Force

A recent report by the Annie E. Casey Foundation on youth and work in the U. S. identifies a growing threat to the prospects of young Americans – that the doors to future financial stability and employment prospects are closing for America’s youth. At the national level, only half of Americans between the ages of 16 and 24 years held jobs in 2011, the lowest employment rate in this age group since World War II.

The report cites various reasons for this disturbing trend: today’s employers require higher levels of training and education (for more on this, see this article) and a modern and globalized market rewards these higher technical skills; the diminishing availability of youth jobs since the 2008 recession; fewer youth are graduating high school on time.

Source: Utah Dept. of Workforce Services
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Another reason often cited for the disconnection between youth and the work force is that older workers are staying in the work force longer, leaving a net decrease in the jobs available to youth. In fact, the national rate of labor force participation among individuals 65 years and older has virtually doubled since the mid-eighties and shows no signs of reversing (Figure 1). With the lowest median age in the country, shrinking employment opportunities among youth should have a particular resonance among Utahns.

The civilian labor force participation rate measures the proportion of individuals who are either employed or unemployed, but actively seeking employment, as a percentage of the entire non-institutional civilian population. It is an important gauge of the connectedness of a group to the labor force. The labor force participation rate of among youth in Utah has fared better than the national average for at least the past decade and probably longer. The participation rate among 16-to-19 year-old Utahns was 12 to 13 percent higher than the national rate among those of the same age group during most of the last decade.

Source: Utah Dept. of Workforce Services
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Nevertheless, just like national aggregate of youth, the employment rate among individuals 16 to 19 years old has been declining in Utah, and the 12-to-13-percent gap between the nation’s and Utah’s labor force participation rate among youth has decreased significantly since the Great Recession to just over 8 percent in 2011 (Figure 2).

A logical explanation of this trend could point to the same reasons stated in the Casey Foundation report. Many of the employment prospects are increasingly more technical, requiring higher levels of experience and/or education. But are older workers in Utah pushing off retirement, leaving less employment opportunities for Utah’s young workers? While the recent recession has seemed to force some of the older age group into retirement (or at least out of the labor force), the general trend over the last decade in Utah has shown that an increasing lot of older workers is hanging around the work force longer. The participation rate among the ages of 65 years and older jumped from 14.7 percent in 2001 to 20.4 percent in 2008 (Figure 3). The subsequent decreases after 2008 can largely be attributed to the recession, which has forced many older workers to leave the work force earlier compared to previous years.

Source: Utah Dept. of Workforce Services
(Click to enlarge) 

Another issue worth mentioning is an idea that is being discussed among labor economists today as the so-called “hollowing out” of the labor force – that middle-skilled / middle-wage jobs are decreasing relative to high-skilled / high-pay and low-skills / low-pay jobs. This implies that more workers who would normally possess say middle-skilled / middle-wage jobs are crowding out young, first-time workers from the low-skills / low-pay jobs, especially since the older workers are increasingly less-reluctant to exit the labor force. See here for more on this.

To what extent the general trend of the oldest workers remaining in the work force longer affects the employability of the youngest workers merits further study. Maybe it is easier for young workers to disconnect from (or push off getting connected to) the work force than it is for older workers who may be bent on securing financial stability during retirement amidst longer life-expectancy rates and ever-rising healthcare costs. Regardless of the causes, one thing is clear – fewer teenagers today are gaining the valuable experience from first-time summer jobs than had been the case for the last half of the 20th Century.