More teens are working. Here’s why a job is ‘becoming more compelling’ for them, economist says

Teen summer jobs are back.

Last month, more than 5.7 million 16- to 19-year-olds participated in the labor market, Bureau of Labor Statistics data shows, marking the highest teen employment rate in June since 2007. While data shows that this is still far below the more than 8 million teen workers recorded in the late ’70s, the figures show that teen employment has steadily grown over the past decade. 

Economists say more teens have been drawn to the workforce because of a hot labor market with more attractive wages. Teens benefit, too, because participating in the workforce can provide them with valuable experience to help with employment and earnings later in life, according to economists.

And as long as the economy stays strong, experts aren’t expecting a dip in teen employment on the horizon.

“It actually is becoming more compelling for young people to work because the amount of money that they can make is higher than it used to be,” said Brad Hershbein, senior economist and deputy director of research at the W.E. Upjohn Institute for Employment Research.

“Even aside from minimum wage increases, just the market being strong has made it a compelling choice,” Hershbein said.

Despite recent gains, the employment-population ratio among 16- to 19-year-olds is still low compared with records set decades ago. At peaks in the ’50s and ’70s, around half of the teen population had jobs. Today, about one-third of teenagers are employed, according to BLS data.

Economists largely attribute that broad decline to a push for college education in the 1980s. A 1983 National Commission on Excellence in Education report called “A Nation at Risk” said the United States was falling behind other nations in education and served as a call to action for educators.

“As a consequence, there was a pretty big emphasis on trying to get people to stay in school longer,” Hershbein told CNBC. “And that’s when you had increases in after-school [programs], tutoring and more activities. The school days tended to get a little bit longer, and so that put a little bit of a cramp on teens’ ability to work.”

The college mentality really took hold in the 2000s, Hershbein said. Between 2000 and 2011, the number of teens in the workforce dropped from 7 million to 4.2 million.

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But since hitting that low, teen employment has been steadily trending upward. Economists say this is partly a consequence of the same factor that caused many teens to leave the labor force: college.

Citi global economist Rob Sockin told CNBC that young people seeing their peers struggling with student debt is influencing them to delay college to work or take on a job while in school.

“It probably speaks to the very high cost of education and the difficulties that some people are having in this environment with a very elevated cost of living with how high inflation has been in the cycle,” Sockin said.

Rising wages, particularly in food service and retail jobs, are also making jobs more attractive to teens, economists say. The average hourly pay for a teen is $17 an hour, according to ZipRecruiter data, with jobs in some cities offering more. New York, for example, has an average hourly pay for teens of $19, according to the data.

There’s always a seasonal component with youth employment, KPMG senior economist Matthew Nestler told CNBC, as many teens take on jobs in the summer while they’re out of school and then reduce their hours or cease working when classes resume.

Service jobs in particular also face the threat of automation, according to Sockin. Many jobs traditionally filled by teens such as grocery store clerks and fast-food cashiers are being replaced by machines, he said.

Economists say the overall direction teen employment takes depends heavily on where the economy is headed. A perfect storm of a tight labor market, rising wages, high education costs and curbed immigration could result in continued higher youth employment, Nestler said.

But the labor market has cooled dramatically from 2022, and economists see it reaching a “tentative plateau.”

“Further loosening of the labor market historically tends to hit youth employment,” Nestler said. “People aged 16 to 19 have the least amount of experience, the least formal labor market skills, so as a result, they tend to be the first ones let go.”