Young and out of work: an analysis of teenage summer employment, 1972-2012.

• Author: Mixon, J. Wilson, Jr.
• Position: Report

For many teenagers, a summer job was a rite of passage. Beyond the earnings gained from summer employment, evidence suggests /that summer work may have additional benefits, such as reducing participation in criminal activity (Heller 2014); reducing behavior such as drug or alcohol use, fighting, and damaging others' property (Sum, Trubskyy, and McHugh 2013); and improving subsequent academic achievement (Leos-Urbel 2014). Moreover, positive relationships found between youth employment and future labor market success (Ruhm 1995) and negative relationships reported between youth unemployment and earnings up to 10 years later (Mroz and Savage 2006), though not focused specifically on summer employment, suggest that teenage labor market outcomes affect the future.

Over the past four decades, however, the percentage of teens with summer jobs has fallen. Figure 1 plots the July employment-population ratio for white male, black male, white female, and black female 16 to 19-year-olds over the period 1972-2012. We use employment in July as the measure of summer jobs because school-year timing varies. In many areas, school years run from September through June, while in others the school year runs from August through May. Hence, July is the only month that should not have substantial overlap with school calendars. These data from the Bureau of Labor Statistics (BLS) include all years for which the BLS separately reports all four demographic subgroups. We consider the four groups separately rather than the aggregate teen employment-population ratio to allow for different behavior across demographic segments of the population. For example, Vedder and Gallaway (1993) document the divergent behavior of white and nonwhite unemployment from 1940 to 1990.

For both males and females, the employment-population ratio of whites is about 20 percentage points greater than for blacks. Both black males and white males exhibit downward trends in employment of approximately 0.6 to 0.8 percentage points per year. The employment-population rates for females tend to increase gradually until about 2000 before receding during the last decade. The net result is converging male and female employment-population ratios (conditional on race), though a large gap persists between blacks and whites. Not surprisingly, temporary dips in the employment rates following recessions in the early 1980s and early 1990s suggest teen employment is sensitive to cyclical macroeconomic conditions. However, any cyclical component seems overwhelmed by the more or less continuous decline in all series since 2000; a decrease following the recession of 2001 might have been expected but the decline continued for a decade until a slight uptick in 2011-12.

The downward trend in teen summer employment has provoked news headlines such as "Teen Job-Seekers Face Summer Bummer" (Robinson 2008) and "Toughest Summer Job This Year Is Finding One" (Goodman 2008), but, to our knowledge, the trend has not yet received scholarly attention. Hence, we examine reasons for the decline in teenagers' summer employment between 1972 and 2012. Vedder and Galloway (1993) argue that government labor policies often harm their intended beneficiaries, so we pay particular attention to the minimum wage as a possible contributor to the decline in youth summer employment.

Empirical Framework

Youth employment has been most extensively studied in the context of the minimum wage. Our empirical approach, based on previous research, uses a reduced-form model similar to that used in the minimum wage study of Neumark and Wascher (2004): (1)

[EPR.sub.t] = [[beta].sub.0] + [[beta].sub.1] [RealMinWage.sub.t] + [[beta].sub.2] Manufacturing [Employmen.sub.t] + [[beta].sub.3] [UnemploymentRate.sub.t] + [[beta].sub.4] [OlderWorkers.sub.t] + [[beta].sub.5] [CollegeEnrollment.sub.t] + [[beta].sub.6] [EPR.sub.-1t] + [[epsilon].sub.t],

where EPR is the U.S. employment-population ratio in July for each of the four demographic groups (white males, black males, white females, and black females). Separate consideration of...