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Teenagers’ labor force participation

BLS data on the evolution of summer jobs

The FRED Blog has compared employment among teenagers with employment among older workers: Teens no longer participate in the labor market with the same vigor as they did up to 1978. That post also showed how teen employment is clearly seasonal, spiking during the summer when school’s out.

The FRED graph above plots the monthly, not seasonally adjusted labor force participation rate of those 16 to 19 years old (purple spikes) along with the annual, seasonally adjusted value (black dashed line). Clearly, the seasonal swings are extreme and the overall trend has changed over time.

Between 1948 and the 1978 peak, on average, 62% of teens were either employed or looking for a job during the summer months of June, July, and August. The rest of the year, their labor force participation rate ranged between 44% and 48%. Since then, both the seasonal spikes and dips gradually decreased. And, as of 2019, the summertime teen labor force participation rate was down to 41% and the off-season rate was down to 33%. (Of course, the regularity was wrecked by the COVID-19 pandemic.)

So, what’s changed with kids today? Maybe some of their music can help us understand the story…

  • In 1962, Brian Hyland’s “Summer Job” consisted of “taking care of the one I love” and “ice cream pops and groovy tans.”
  • In 2021, Chris Lane’s “Summer Job Money” also deals with a romantic infatuation, but the singer also laments the rising costs of a college education and laboring at a minimum-wage job to pay for it.

Structural changes in labor markets are at play here. As better-paid occupations have required more human capital, teens (and their parents) have devoted less of their time to earning a wage. Instead, they strive to advance their formal education. So, despite the claims of Alice Cooper’s “School’s Out,” school continues to occupy young people’s minds and time even in the summer.

How this graph was created: Search for and select “Labor Force Participation Rate – 16-19 Yrs., Monthly, Not Seasonally Adjusted.” From the  “Edit Graph” panel’s “Add Line” tab, search for and add “Labor Force Participation Rate – 16-19 Yrs., Monthly, Seasonally Adjusted.” Then edit Line 2 by changing the frequency to “Annual” and the colors of the lines in the “Format” panel.

Suggested by Diego Mendez-Carbajo.

Labor force participation rates of armed forces veterans

May the force be with you

The FRED Team has been reporting on a lot of dire economic data lately. Today, May the 4th, offers the chance for some light(saber)ness—using a multilayered Star Wars pun to salute our armed forces.

The FRED Blog has shown the labor force participation rates of men and women worldwide—in the U.S. and across the OECD. Today, we look at the labor force participation rate of men and women veterans of the U.S. armed forces.

The men’s rate is the solid orange line, the women’s rate is the solid magenta line, and the average across both genders is the dashed red line. As with the labor force participation rate of the overall civilian population, the rates in this graph are decreasing.

Notice how different the labor force participation rates of veteran men and women are, particularly relative to the average across genders. This is because the proportion of veteran men to veteran women is very high. This is called the composition effect. These past blog posts have additional examples of the composition effect on labor markets and on housing prices.

And yes: May the fourth be with you!

How this graph was created: Search for “Labor Force Participation Rate – Women, Total Veterans, 18 Years and Over.” From the “Edit Graph” panel, use the “Add Line” feature to search for and select the “Labor Force Participation Rate – Total Veterans, 18 Years and Over.” Do the same to add the series “Labor Force Participation Rate – Men, Total Veterans, 18 Years and Over.” From the “Format” tab, select line colors and styles to taste.

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: LNU01349526, LNU01349527, LNU01349528

Labor force participation rates across the OECD

Who's working depends on where you look

One critical element for the growth of an economy is an active working-age population: Growth can be hampered when (i) the overall population is aging and a larger share of the population is retired or (ii) a larger share of the working-age population simply isn’t working. The graph above shows, for four countries, the share of the population that’s 25 to 54 years of age—i.e., prime working age—with a job. The remainder of that population is either unemployed or not looking for a job.

This graph reveals some stark contrasts. Japan and the U.K. show steady increases, which helps counter the effects of their aging populations, a condition that’s of particular concern in Japan. Spain shows a very rapid increase, which demonstrates that such a statistic need not move in a sluggish way. The U.S., however, shows no significant movement in the 1990s and a decline since then. We know this isn’t due to an increase in unemployment, which is at its lowest rate in a long time.

To be fair, the increases in other countries are partly due to increases in women’s labor force participation. The U.S. experienced a surge in women’s participation much earlier and has apparently reached its plateau. Much of the decrease in U.S. labor force activity, as it turns out, has to do with men: Even a quick look at the graph below shows the steady decline in their activity. Understanding why this is happening is a topic of much current investigation.

How these graphs were created: For the first, search for “Participation Rate” and then use the sidebar to narrow down the choices. Then select the desired series (annual, in our case) and click on “Add to Graph.” For the second, searching for “United States Participation Rate” gives your the right options. Choose the annual series again, and click on “Add to Graph.”

Suggested by Christian Zimmermann.

View on FRED, series used in this post: LRAC25FEUSA156N, LRAC25MAUSA156N, LRAC25TTESA156N, LRAC25TTGBA156N, LRAC25TTJPA156N, LRAC25TTUSA156N

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