A tough job market for teens, thanks to Grandpa

March 29, 2011: 2:52 PM ET

New research reveals just how tough the job market is on America's youngest workers, and they may have their grandparents to blame.

There's no such thing as retirement anymore.

When the U.S. government releases its monthly jobs report later this week, an important figure to note is not the unemployment rate but rather employment. After all, the percentage of America's workforce without jobs, currently at 8.9%, isn't going to tell us much that we don't already know about the tough job climate.

The employment rate won't promise better news either, but it offers a glimpse of who has jobs. One the most notable trends that's played out during this jobless recovery has been the dramatic shift in the age structure of employment. Before the recession, the nation's youngest workers were more likely to have collected a paycheck than the eldest workers. That's not necessarily the case these days.

Today, grandpa is more likely to earn a paycheck than his grandson, according to research by the Center for Labor Market Studies at Northeastern University in Boston.

The findings highlight two disturbing trends: First, they reveal just how financially strained seniors have become as many in retirement age fill jobs typically sought by teens.

What's more, the findings underscore just how tough the market has become for teens looking to build soft skills and help with family finances. In fact, today's job market is exacerbating a trend that's been worrying for more than a decade: employment among 16 to 19-year-olds has been steadily declining since 2000 while employment among 60 to 64 year-old adults has consistently risen. Baby boomers have either stayed at their jobs longer, or taken lower-skills jobs ordinarily filled by younger workers, for various reasons that include the plunge in stock prices following the financial crisis and the recession.

"A lot of the jobs older people have taken would have gone to teenagers a decade ago," says Andrew Sum, economics professor and director of the labor market studies center. Sum points to jobs in retail stores and fast-food restaurants that are increasingly being filled by older workers. Aside from the fact that the job market has made employers a lot choosier, they're also more inclined to hire older workers with "soft skills," such as showing up on time, taking orders and so forth.

The age reversal emerged for the first time last year. In June 2000, teens were more than twice as likely to have a job as adults age 65 to 69, with teen employment at 51% versus senior employment at 23%. By June 2010, older adults were modestly more likely to be working than teens, with 28.8% of seniors employed versus 28.6% of teens.

It's true that the job market is improving, albeit very slowly, but teens have been losing out on the recovery. Strong hiring in February pushed the overall unemployment rate down to the lowest level in nearly two years as employers added 192,000 jobs to non-farm payrolls. Last week, the Labor Department reported that 27 states and the District of Columbia reported a drop in the unemployment rate, while seven states reported rate increases and 16 had no change. California, among the states with the highest unemployment rate, added 96,500 jobs in February and had the biggest increase in employment.

Even with the gains, Sum says teens will continue to lose as they compete with older workers amid the tight job market. To be sure, this could be viewed as a lesser concern. Teens make up a relatively small part of the estimated 139 million people employed in the U.S. and it's arguable whether the lack of employment is even that big of a deal -- perhaps young people are better off spending time on school than work.

But for many people, that first job on a paper route or at the local ice cream parlor has served as sort of a rite of passage. Even rising corporate executives recall their first jobs fondly, including Marissa Mayer, Google's (GOOG) vice president of search products and user experience, who at 16 years old worked as a checkout clerk at the County Market in Wausau, WI.

"Many of the cashiers had years of experience and were very committed to their jobs, so I saw firsthand the importance of a great work ethic," Mayer told Fortune last year.

Sum says on-the-job learning is especially important in America's inner-cities, where teen employment is at its lowest. In lower-income areas, a job is more than a rite of passage -- it has the potential to reduce crime and violence.

So even if the problem appears to be small, leaving teens out of America's recovery could have bigger consequences in the future.

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About This Author
Nin-Hai Tseng
Nin-Hai Tseng
Writer, Fortune

Nin-Hai Tseng covers economics and finance. Before joining Fortune, Tseng was a reporter at The Orlando Sentinel and a public affairs associate at GE. She holds an MPA from Columbia University and a BS in Journalism from the University of Florida. She lives in New York City.

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