Maine Teen Unemployment: It’s still a demand problem

THE Portland Press Herald has a new op-ed this morning, looking at the weak labor market facing teenagers, citing a few causes of this as well as some solutions:

The 2013 unemployment rate for Mainers age 16 to 19 was 21.1 percent, up sharply from the pre-recession rate of 14.1 percent.

That’s compared to an overall unemployment rate of 6.8 percent, and lower rates for age groups 35 to 44 (5.7 percent), 45 to 54 (5.3 percent) and 55 to 64 (3.8 percent).

Why? Not as many companies are hiring, and when they are, they are not hiring young people with little experience.

Also, older residents are staying in the workforce longer, taking up some of those jobs that typically would have been available for younger job-seekers.

“Jobs that were part time and minimum-wage were relegated to students,” Tom McNeil, a counselor at Winslow High School, told the Portland Press Herald. “Now you have older folks who are taking those jobs.”

The impact of older workers on younger workers is overstated in the above.  60 year-olds and 16 year-olds are not in direct competition for jobs. A 2013 Slate article sums up nicely the problem with this generational-competition theory:

The astonishing thing is that most experts agree that there is no jobs war between old and young. Studies sponsored by the Pew Research Fund, the MacArthur Foundation, Brookings Institution, Conference Board, and others almost all concur “there is no crowding out between young and old,” says Boston College Center for Retirement economist and study author Alicia Munnell.

. . .

So how do you explain those companies and fields, like academics, where it seems the exact opposite is true? The problem comes in a downturn or jobless recovery, in specific fields with a limited number of openings. For accountants, educators, police officers, doctors, or lawyers, delayed retirements may certainly contribute to the “lousy job market,” to quote the ABA Journal. Healthy long life has its price.

The workforce is aging. For American lawyers, the average age jumped from 39 in 1980 to 49 in 2005. For elementary and high school teachers in the United States, the median age rose from 41 in 1987 to 55 in 2005. In universities across the world, most every professional journal has noted that part of the reason for the crimped job market is due to delayed retirements.

But even in specific fields the delayed retirement trend is neither uniform nor permanent. In New York state, doctors’ retirement rates are actually accelerating, according to the Healthcare Association of New York State. In many aging countries, like Japan, Russia, Italy, and Germany, the problem is a lack of younger workers. And for countries like France and Belgium that bought into the lump of labor theory, lowered retirement ages have not helped younger workers.

So, yes, there is some crowding out, but more likely what is happening is more nuanced.  Nationally, there has been a hollowing out of middle-skilled jobs, with job creation concentrated more in high-skill and low-skill jobs–also known as job or labor market-polarization, though the causes of which are up for dispute.  Those low-skilled jobs have been typically taken by lower-educated and younger workers.  However, those working in middle-skilled occupations who are laid off are faced with a choice; increase their skills to compete for those high-skilled jobs, or accept a low-skilled job. In other words, middle-skilled workers are opting to be under-employed (where their skills exceed the requirements of the job they have).  In turn, this pushes low-skilled workers, such as teenagers, down or out of the labor market.

Describing the problem as being one where 60 year-olds and 16 year-olds compete for one another glosses over the more serious problems in the state’s labor market.  It is not a simple matter of those nearing or at retirement age trying to supplement their income, nor is it a matter of teenagers lacking the requisite for the job.  Rather, it’s the decline in opportunities for the state’s middle-skilled and prime age workers that is pushing everyone else down the job-skills ladder, and some, such as teenagers, off the ladder.  And this makes the solution offered in the op-ed a little confusing:

That’s an easy group to cast aside. But real solutions – more internships and apprenticeships, improved career counseling, early exposure to higher education – are far more valuable.

Increasing “job-readiness”, education, or skills of the entire labor force assumes that there is demand for those specific skills and that jobs sit idle and vacant.  However, if this were true, then we should see pockets of wage spikes in those industries with high demand for certain workers.  We’re not seeing those.  Wage and hour data suggests there is sufficient labor supply but insufficient labor demand.  More importantly, there is a lack of labor demand for middle skill jobs.

 

John Haskell

About John Haskell

John graduated from the University of Southern Maine with a degree in Political Science, and from the University of Maine School of Law. He has worked in both the public and private sectors, and currently, works with a small business services company in the Mid-Coast area.