Summer Youth Employment Outlook 2008

This article was published in the April 2008 South Dakota e-Labor Bulletin.

With the coming of warm weather to South Dakota, it is time to explore summer employment, updating statistics for youths ages 16 to 24 and reviewing U.S. and South Dakota younger worker trends. Preliminary indications for 2008 summer youth employment look good on both the national and state levels. However, 2008 and future employment numbers may be influenced by minimum wage rate increases, which went into effect July 24, 2007, and will increase again in July 2008 and 2009. Finally, we share perspectives on summer youth job opportunities from South Dakota Career Center managers throughout the state.

U.S. Youth Labor Force

The U.S. Bureau of Labor Statistics is responsible for tabulating national labor force information. Each month they compile data on the labor force, employment, unemployment and persons not in the labor force. July is used to determine summer employment levels because it is the peak summer month for employment. Looking at the labor force participation rate (the number of individuals working or actively looking for work compared to the population for the same age group), we see that, in July 2007, the national rate for the 16 to 24-year-old group was 66.9 percent, a 0.1 increase from July 2006 (66.7 percent). This is only the second increase in the participation rate in the last 12 years. The first was in 2006. 

In 2006 there were 24.7 million individuals in the labor force with 21.9 million actively employed. In 2007 there were 24.3 million in the labor force with 21.7 million individuals actively employed in July, a 200,000 decrease from the July 2006 actively employed number and a 400,000 decrease in the number of individuals in the labor force from the previous year. Young workers are concentrated in two industries, nationally: 22 percent worked in the leisure and hospitality industry (including fast-food restaurants) and 20 percent (a decrease of 1 percent from 2006) worked in retail trade. Nationally, 2007 decreases were also seen in agriculture, construction, information and among self-employed and unpaid family workers.

In July 2007, approximately 2.6 million youth were unemployed, which means they were actively looking for work and available to take a job. This was a decrease of 200,000 from the previous year. The youth unemployment rate was 10.8 percent in 2007, down from 11.2 percent in July 2006.

Back in 1989, the national participation rate peaked at 77.5 percent. The subsequent decline can probably be explained by the increase in school enrollment in July. Youths enrolled in school are much less likely to be in the labor force. Other key factors include the

• Increasing size of this age group.

• Softness of the labor market for the past few years.

• Restrictions applied to anyone younger than 18 years in jobs considered hazardous by the U.S. Secretary of Labor.

The big question now is whether the situation will worsen in the next three years, as the federal minimum wage increases. Many economists believe fewer teens will be employed if wage rates are bumped up. Student workers have competition from retirees and immigrants for job openings, with child labor laws also limiting job opportunities.

South Dakota Youth Worker Trends

Data for South Dakota youths 16 to 24 years old are based on quarterly administrative data on workers covered by unemployment insurance, which allows an estimate of the number of younger workers taking summer jobs. With third-quarter numbers representing the end of summer and the highest worker levels for the year, and first-quarter figures representing the lowest worker levels, a comparison of the two should provide a good indicator of summer jobs.

The following chart shows the last 10 years of worker levels for youth 16 to 24 years old. Prior to 2007, the previous three years had shown steady but moderate gains in employment. In 2007, summer employment numbers reflected a noticeable decrease, possible caused by an unstable economy, high gas prices and fewer federally funded projects. Industries affected by these factors would include retail sales, construction, and leisure and hospitality. Even though the minimum wage rate increase was not in effect until the middle of summer, this could also be a contributing factor for lower employment numbers.

South Dakota Youth Worker Industry Distribution

Based on South Dakota Labor Market Information Center (LMIC) research, it appears that the industry distribution of South Dakota’s young workers is comparable to the national picture. However, South Dakota lost summer employment workers in 2007 in 14 of the 21 industries (67 percent) shown on the chart, while nationally only six of the 15 industries (40 percent) lost summer employment.

The following chart shows the number and distribution of South Dakota wage and salaried workers age 16 to 24 years old by each industry for the third quarters of 2006 and 2007.

To read about the local perspective on summer jobs from South Dakota Career Center Managers,
Click here.

Click here for tips on finding summer employment.

If you have questions or need more information, contact Brian Bauer of the Labor Market Information Center at (605) 626-2314 or e-mail him at brian.bauer@state.sd.us.