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Thursday, July 04, 2019

Labor Force Participation of Teenagers Over Time

Or more specifically, labor force participation rates of people ages 16-19.

Teens have the most volatile within-year labor force participation, with a substantially higher percentage of teens in the labor force in June, July, and August than the rest of the year.  This is not, of course, surprising, because most--or at least many--teens are in school either full-time and part-time.  And, over time, the general level of teen labor force participation has changed quite significantly, as the following chart shows.


What's most interesting to me right now are the "cohort" effects.  The Bureau of Labor Statistics data begin in 1948, so that initial group consists of those born between 1929 (19 in 1948) and those born in 1932 (16 in 1948).  The chart shows what has happened to succeeding cohorts.  From 1948 to 1960, the labor force participation of 16-19 year-olds, both during the school year (the blue dots) and during the summer (red), dclined a lot--down from around 50% during toe school year to around 40%, and from around 6o% during the summers to around 55%..  (By 1961, that's the group born between 1941 and 1944; it is one of the smaller birth cohorts in US history--for obvious reasons.)

Then the participation begins to rise.  And it seems to have risen both for the early "baby boom" kids and for those born slightly earlier.  By 1980 (those born between 1961 and 1964), labor force participation had risen to about 55% during the school year and around 70% during the summer.  And, it is worth noting, college attendance rates were rising as well.  Whether the rise in summertime labor force participation can be attributed to college students seeking work to help pay for college is a valid hypothesis, but I clearly have not proved that's what drove this.

Since 1980, teen labor force participation has consistently declined, and is now at lower levels than at any time for which we have reliable data--around 35% during the school year (up from even lower levels--around 32% between 2010 and 2015--during the school year) and between 40% and 45% during the summer.  And, the ga between school year and summer participation has narrowed--from around 15% t0 20% in the 1940s and 1950s, to around 10%.  The continuing decline in teen labor force participation has tended to reduce the overall unemployment rate (teen unemployment rates are higher than adult rates) slightly.  

What interests me most about all this is the decline in summer labor force participation.  (I will add here that, although I have not disaggregated by gender, labor force participation for teen women fell less in the 1950s, rose more in the 1960s and 1970s, and has declined less since 1980 that it did for males.)  What was a significant source of funds to support college attendance in the "baby boom" era has quite clearly eroded.  I suspect that part of this might be a consequence of year-round college attendance (although that should, it seems, be at least partially offset by the growth in part-time attendance).  But part of it is probably a result of changes in employment patterns in the overall economy.

In manufacturing, not only are there fewer jobs, those jobs are probably less seasonal, which means fewer opportunities for teens attending college.  The same seems likely to be true in retail, although seasonality in retail employment is likely to have increased, in anything.  And many local governments face significant funding constraints for summer programs, so seasonal employment is likely to have declined there as well.

I would also emphasize a point made above...summer employment is no longer as significant a source of income to support college attendance as it was 20 or 30 4 40 years ago.  Generally, resorting to anecdote is not necessarily a convincing rhetorical strategy, but I will anyway.  I worked every summer beginning a age 16 (1964), through the summer after my college graduation (1969, which was before I entered graduate achool)--six years of summer employment.  That contributed between 10% and 20% of the annual cost of my college attendance.  And almost everyone I knew had the same sort of summer employment.  I would guess that declining summer employment opportunities has caused some increased reliance on student borrowing; I also would giess that we would be better off as a society if we could somehow return to a world of more robust summer earning opportunities for teenagers.

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