The Bureau of Labor Statistics (BLS) Employment Situation Release for the month of June continues the trend of wage growth and employment growth seen in the last few months. Marking the eighty-first consecutive month of job growth, 222,000 jobs were added, averaging 194,000 over the last three months and 187,000 over the year. Jobs growth was revised upwards by 80,000 jobs as compared to last month’s report.
While increasing numbers of economists had pointed out that the nation was approaching full employment, today’s report has them changing their tune. The unemployment rate ticked up to 4.4 percent in June, but largely because more Americans joined the labor force and started looking for work. There appears to be even more potential for employment growth. The percent of prime age men (ages 25–54) in the labor force still stands at only 88.4 percent, down from 91.5 percent a year ago. Wage growth edged up to 2.5 percent over the year, not high enough to suggest that employers are seeing a true shortage of workers. The African-American unemployment rate dipped to 7.1 percent in June, down noticeably from 8 percent at the beginning of the year. Continued economic gains could further improve the employment situation for African Americans in the workforce.
The news is not all good. There is evidence that parts of the economy have peaked. After several years of record sales, Americans are content with their vehicles and sales have fallen. Notably, motor vehicle and auto parts manufacturing lost 8,000 jobs this month, after adding back nearly 300,000 jobs back from 2010 to 2016. The slowdown in auto is cutting into the overall manufacturing recovery with factories only adding 1,000 jobs in June. This deceleration will filter down into other parts of local economies like healthcare and education that have benefitted from the recovery of manufacturing–especially in communities in the industrial heartland.
While the summer months are the time when auto factories close for their “summer shut down,” these months are also the time when the next generation of Americans look to begin their career and build work experience. With the unemployment rate at just 4.4 percent nationally (the lowest level since 4.3 percent from this April), the job market for young people is better than it has been in years—but still not what it used to be, pre-recession. Young people represent another group of the workforce that could benefit from continued sustained expansion.
This first jobs report of this summer provides a window in the labor market for young people, whether they are teens seeking to get a toehold in the job market and bring badly needed income into their families, or young adults entering the critical early years of their careers.
Youth (ages 16–19) employment in 2017 has shown a slight improvement from recent years, and the labor force data for June shows that trend continuing for the start of the summer job season. In June, 1,023,000 teens gained jobs. That’s 332,000 more than in 2016, and much better than in 2010, when teen employment only bumped by 497,000 jobs (11 percent) in June.
Broader improvement in the labor market has failed to bring the level of summer employment among teenagers back up to historic levels.
But teen employment rates, which stood at 35.6 percent in June, still pale in comparison with their levels at previous economic peaks. In June 2000, teen employment rates stood at 51.4 percent, 15.8 percentage points greater than this year. In June 2007, the most recent period of low unemployment, it stood at 39.6 percent. In short, broader improvement in the labor market and economy approaching full employment in many communities has failed to bring the level ofsummer employment among teenagers back up to historic levels.
The causes of these low rates of teen employment are diverse. On the one hand, key sources of summer employment like restaurants are being crowded out by older workers, including senior citizens and those with other limited employment options. Moreover, teens (that can afford to do so) are increasingly pursuing alternative summertime activities, including summer classes and internships. Summer classes and internships may serve to develop teenager’s resumes and improve their prospects of educational success—sure to pay dividends in the long run.
But for lower-income teens, lagging summer employment is imposing true costs. Summer jobs continue to provide valuable opportunities, particularly for low-income youth. Unfortunately, it is the low-income youth who can benefit the most from summer jobs who are the least likely to participate in summer employment. From 2015 to 2016, less than 1 in 4 youth from low-income families (with annual incomes of less than $20,000) were employed, while 41 percent of teens with an annual family incomes from $100,000 to $149,000 were employed. And low-income black and Hispanic youth are the least likely to be employed during summer months, as illustrated by Figure 2 below.
Young Adult Employment
The summer is also a good time to take stock of the job markets for young adults, entering the workforce after graduating college or high school. Unemployment among young people continued at alarming levels throughout the early years of the recovery, with major implications for lifetime earnings, student debt, and family formation.
The situation for young college graduates has improved markedly. The unemployment rate for young college graduates (four-year institutions) stood at 6.9 percent in June, one percentage point lower than 7.9 percent recorded in June 2016—and much improved from 9.9 percent in June 2012.
Unemployment among young people ages 20–24 that have no college credential is still severe—around 10 percent. But this is an improvement from pre-recession levels: In 2000, unemployment among young adults with high school degrees was pushed down to 7.5 percent. Still, as Figure 3 shows, a true full employment economy could do even more for lesser educated adults.
The importance of these early experiences can’t be understated. When young adults without formal post secondary education remain employed, they have a better chance of early career on the job training. Small wage gains from such training can compound over a lifetime.
This summer, young people are benefiting from the best job market for early career workers in memory. But we can do better than 10 percent.
This summer, young people are benefiting from the best job market for early career workers in memory. But we can do better than 10 percent. There’s perhaps no stronger argument for continued support of a robust recovery than the vision of even lower unemployment rates for young adults.
Figure 4 contrasts this summer with other recent summer seasons. During the recession, young college graduates faced major barriers to getting that first job. Since then, the unemployment rate has dropped steadily to this year’s 3.9 percent—with young college graduates doing better than the national average. High school graduates are now at the same point they were at in the summer of 2007, but behind the pace of our last true full employment economy. Like in other good economic times (2000, 2007, 2014–2016), the unemployment gap between college and high school graduates has significantly narrowed.
Policy Alternatives: Summer Job Guarantees and Training Programs
What kinds of policies could mitigate both the cyclical and structural unemployment young people face? For teens, guaranteed summer jobs programs could be a start. In times of flagging demand or in communities where jobs are scarce even when the economy is booming, a robust summer jobs program can make up for chronically low levels of teen employment among low-income youth. Cities like New York have summer employment programs that have proven to be a successful means of earning some money and acquiring skills for hundreds of NYC youth, but summer youth employment programs are far from ubiquitous across the country.
…a robust summer jobs program can make up for chronically low levels of teen employment among low-income youth.
For young adults, particularly those with less than a college degree, training programs and apprenticeships could connect workers with well-paying jobs while giving them skills they need to build a rewarding career. Partnerships with government, schools and training institutes, unions, and employers can make apprenticeship an essential tool in building a High Wage America.