Shortage of Adult Workers Makes Teens Employable Again
Minimum wage laws priced young workers out of the market before the pandemic and may do so in the future.
My son recently underwent what was once a common rite of passage: his first job. He now balances the demands of schooling with cleaning toilets, stocking shelves, and bagging groceries at a local supermarket. While once a normal experience for teens, compensated employment became rarer in recent years as young, inexperienced workers were rendered uncompetitive by rising minimum wages. The pandemic-era labor shortage made teens employable again. That opportunity may fade when adults return to the workforce and offer experience and maturity in return for artificially hiked pay.
"Honestly, without them, we'd have to close our doors," the owner of several Texas smoothie shops told Marketplace about teen workers earlier this month. Like many other employers large and small, this businessman has trouble hiring adults, and so turns to teens despite their lack of experience and crowded schedules. The "why?" of the worker shortage is up for debate, but economists point to a combination many factors, including pandemic-era lifestyle adjustments that lowered cost of living for many people, resistance to perceived health risks and related mandates, and government economic handouts which made it easier for people to make ends meet without working.
"We know two things about human behavior: First, if people have more money, they work less," Hoover Institution economist John Cochrane observed last month. "Second, if the rewards of working are greater, people work more. Our current policies offer a double whammy: more money, but much of it will be taken away if one works."
Whatever the reason, there's a pressing shortage of willing workers. The civilian labor participation rate is down from 63.3 percent before the pandemic to 61.6 percent as of the latest figures, indicating larger numbers of Americans not seeking employment. An inability to hire workers "in some regions resulted in reduced operating hours and service modes at select restaurants as well as supply chain pressures," Restaurant Brands International (which owns Burger King, Tim Horton's, and Popeye's) announced at the end of October. A November CNBC survey found half of all workers saying their companies are understaffed. That puts greater pressure on those who are employed, helping spur "the Great Resignation" of people quitting their jobs, which makes the need for new employees even more acute. That creates an opening for teenagers to take jobs that had been in short supply for them in recent years.
Before the pandemic, teen employment had become scarce. "Teens and young adults are still struggling to gain traction in the labor market," Brookings Institution researchers noted in 2015. "Labor force participation and employment rates continue to trend downward, as do median annual earnings."
Economists argued over why teens had disappeared from the part-time gigs at fast-food restaurants, supermarkets, and retail stores that were once a mainstay of adolescence and early adulthood. What many of them kept returning to was that the push for higher minimum wages of recent years had priced inexperienced young workers out of the market.
"We find that higher minimum wages are the predominant factor explaining changes in the schooling and workforce behavior of those age 16–17 since 2000," researchers found in a 2018 paper. "Higher minimum wages have led both to fewer teens in school and employed at the same time, and to more teens in school but not employed, which is potentially consistent with a greater focus on schooling."
Worse, perhaps by delaying their entry into the job market, higher minimum wages seemed to hit young workers in the wallet years down the line.
"We find no evidence that higher minimum wages have led to greater human capital investment," the authors of the paper added. "If anything, the evidence points to adverse effects on longer-run earnings for those exposed to these higher minimum wages as teenagers."
So, the pandemic-era disappearance of many adults from the job market was a welcome opportunity for many teens who, in contrast to their elders, want to work. Teens are getting jobs in numbers not seen since the heyday of malt shops and drive-ins. "The last time the unemployment rate for teenagers was lower than 9.6 percent was in November 1953, when it was 8.6 percent," the Bureau of Labor Statistics reported in August. Since summer, teen unemployment rose a bit as school resumed and (some) adults returned to job-seeking. But opportunities still abound as openings go unfilled.
"Many businesses are tapping teenagers because they can't find adults," USA Today reported last week. "Job openings reached a record 10.4 million in September."
Notably, teens are getting paid rather well as employers offer more but still have trouble enticing adults. That Texas smoothie entrepreneur pays $15 an hour in a state where that's more than double the statutory minimum. "More than two-thirds of his workers are high schoolers, putting in 10 to 20 hours a week," according to Marketplace. As he mops the floor and returns carts to a store where many unfilled jobs are listed on a sign by the front door, my son started at Arizona's minimum wage of $12.15 hour. Adjusted for inflation, that's over 20 percent more than I earned at my high-school job. Young workers are bringing home relatively generous paychecks because employers have to offer higher pay to attract workers and it's the kids who are willing to step up.
"Wages for teenagers working at small- to midsize retailers have risen from $9.40 in March to $10.33 in November," USA Today adds. "During that period, larger retailers, as well as warehouse and call-center companies, have boosted entry-level pay from a range of $10 to $12 to as much as $15 to $25."
The question, though, is what happens as the conditions keeping adults out of the labor market disappear and teens find themselves competing, once again, with workers who have more skill and experience under their belts. Teens will once again be relatively uncompetitive at wages artificially hiked by law. They may find themselves returned to their pre-pandemic status, once again priced out of a job market in which employers aren't allowed to pay the starting wages that young, beginning workers are worth.
For now, my son is happy for the work opportunity that has, perhaps only temporarily, again become part of teenage life. Hopefully, by the time adults are again snapping up open positions, he'll have earned the skills and trust to stay on the payroll. But that valuable experience will remain beyond the reach of many teens if the law prices them out of the job market.