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Youth Unemployment Report Points To A Crisis

Haar, Dan

August 30, 2013

On the same day when fast food workers in Hartford and across the country, many of them young, are protesting for sharply higher wages, an advocacy group has released a report decrying the high unemployment rate among people aged 16 to 24.

The report from Connecticut Voices for Children, titled "The State of Working Connecticut 2013," reminds us that the issue of wages and joblessness among the working poor is anything but simple.

The so-called youth unemployment rate in Connecticut stands at 17.1 percent, lower than the peak of 18.2 percent in 2011 but higher than the national rate of 16.2 percent, and more than double the rate for the state's work force as a whole, which is 8.1 percent.

Although data by age groups within races is not available for states, the unemployment rate among black and Hispanic youths is at crisis levels. Joblessness among all black and Hispanic people in the state is about double the rate of whites, and the effect for youths multiplies.

In largely minority Bridgeport, for example, the unemployment rate among youths 16 to 19 who are actively looking for jobs is an astounding 50 percent, according to the report from the liberal New Haven group, which cites data from the U.S. Bureau of Labor Statistics and the Census.

Even at 17 percent, it's a dire picture -- made complicated by the debate over pay for low-wage workers. If the minimum wage rises, doesn't that mean the total number of jobs will fall, or at least not rise to meet demand for jobs?

That's certainly the view of the conservative Employment Policies Institute, which took out a full-page ad in Washington, D.C.-area editions of the Wall Street Journal on Thursday with the headline, "Why Robots Could Soon Replace Fast Food Workers Demanding a Higher Minimum Wage." At $15 an hour, which the protesters demanded, fast food firms would figure out how to automate their outlets in the time it takes to ask, "Would you like fries with that?"

But there's evidence that modest rises in the minimum wage -- such as Connecticut's increase from $8.25 to $8.70 to $9 over the next two years -- won't quell hiring at all. "If you raise the minimum wage, you put more money in the hands of people who spend every dime they have and you improve the economy," said Wade Gibson, senior policy fellow at Connecticut Voices for Children.

Besides, the goal of a sustainable economy for the working poor is not just jobs, it's jobs at a living wage. Without rising wages, the jobs that are available don't pay enough to keep people off public assistance, so taxpayers end up subsidizing Walmart, McDonald's and Dunkin' Donuts.

Connecticut could be especially rocky these days. The Voices for Children report shows that the median wage in Connecticut, $20.05, is down from $20.71 in 2011, while the national median wage, which is lower, is stabilizing. Connecticut's wage rose far faster than the nation's before the 2007-09 recession and has fallen further since then.

And the wage gap between white and black workers remains large, while Hispanic workers, overall, have lost more ground since 2009, the report shows.

The report also points out that the percent of people age 16 to 24 who are either working or looking for work is low, at 54.5 percent, down from 62 percent in 2007. That means the official unemployment rate is not counting thousands of people who have stopped looking for jobs, perhaps because they are discouraged. A falling "labor participation rate," as it's known, can happen when the economy is good, but that's not the case here.

What does all this mean? Part of the issue is young people's preparation for and willingness to work. That can be a habit that takes time and modeling to learn. It's a matter of personal responsibility, and the state and schools can help people develop the right habits.

But the fact is, even for the most motivated young people there are fewer opportunities for work, especially in inner cities. Thursday's report cited a 2011 paper at the Center for Labor Market Studies at Northeastern University showing that that summer, teens were more likely to have jobs the more income their families had -- in part owing to the demise of a federal teen jobs program.

A Pew Research Center report, cited in the Voices for Children report, showed that in 2012, a record 21.6 million millennials lived with their parents.

It may be time to look more at expanding the idea of a tiered minimum wage, lower for teens. There is a federal minimum of $4.25 for the first 90 days for teens, and Connecticut allows employers to pay 16- and 17-year-olds 85 percent of the minimum for the first 200 hours. Expanding those entry-level pay grades would need to be done with precision, as it raises the likelihood that older workers, even some just starting out at age 19, would have deeper unemployment still.

The Voices for Children report calls for measures such as increased funding for training and education; maintaining social supports such as HUSKY medical care and the earned income tax credit, which was recent pared back in Connecticut; and "expanding access to affordable housing."

"Getting Connecticut's economy back on track will require job growth that includes all workers, including young ones, for whom finding work in this labor market has been particularly difficult. The long-term consequences of youth unemployment are severe; failing to employ young adults today may result in continued high rates of unemployment and slower growth tomorrow."

The takeaway point: Joblessness among young people is a central crisis that won't be solved, but some basic measures would improve the picture.