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The Teen Workplace Disengagement Epidemic

Probably because it came out on the same day as the monthly Employment Situation Report -- not to mention that it was also published on the Friday before a holiday weekend -- an "Editor's Desk" item at Uncle Sam's Bureau of Labor Statistics entitled "Youth employment and unemployment in July 2010" got very little attention. It deserved plenty.

The report led with this paragraph:

In July, the employment-population ratio for youth — the proportion of the 16- to 24-year-old civilian noninstitutional population that was employed — was 48.9 percent. This was the lowest July rate on record for the series, which began in 1948. (The month of July typically is the summertime peak in youth employment.)

It's the first time this ratio has come in below 50%. In the late 1980s, it was almost 70%. This column will concentrate on the lower portion (ages 16-19) of the 16-24 age bracket.

One would expect the employment-population ratio for those in the age 16-19 cohort to be lower, and it is; but you might be surprised by how much. The July 2010 ratio for this subgroup (not seasonally adjusted) was 31.3%. That is also a low since records have been kept, and represents the fourth consecutive year with a record-breaking low. In July 2006, the analogous percentage was 44.9%. From 1948 until 2002, it was only rarely below 50%. The ratio (rounded) reached 60% for a couple of years in the late 1970s and late 1980s.

What in the world is going on here?

One obvious current factor is that those teens who are looking for work aren't finding it thanks to the economy. Not only have millions of jobs disappeared during the POR (Pelosi-Obama-Reid) economy, but adults (legal citizens and, in many states, illegal immigrants) are also competing for and taking many of the entry-level and even summer jobs that still exist. The July 2010 unemployment rate for teens (again, not seasonally adjusted) was 26.5%, setting a since-1948 July record for the second year in a row, crushing the 24.8% rate in July 2009 (this economy is breaking records all over the place, isn't it?). Before 2009, no July ever had a teen unemployment rate higher than 22.1%.

Perhaps surprisingly, though, it's not as much a matter of unemployment as it is of disengagement, as this graphic comparing July 1989, the last near-peak July for the teen employment-population ratio, to July 2010, shows:

The graphic demonstrates that even if the teen unemployment rate were the same as it was in 1989, the employment-population ratio would get back only 5.2 of the 28.3 points by which it has declined in the past two-plus decades. The obvious comparatives that stick out are the increases of over 5.3 million in the number of teens not in the labor force (9.680 million compared to 4.321 million), and the near doubling of their percentage of the teen population (57.4% versus 30.4%). Fairly close to six out of every ten teens weren't even trying to find work in July.

Perhaps it's a matter of discouragement, as in wanting to work but not actively looking for it because one "knows" there are no jobs out there. To a degree, yes, but not as much as you might think. I looked at July 2006, when the overall unemployment rate in a strong economy was 5%. With roughly the same population as 2010, there were still almost 7.8 million teens not in the labor force. On a population-adjusted basis, that's well over 2.5 million higher than 1989.

This means, good economy or bad, millions of teens have consciously chosen not to try to enter the workforce. Why?