Stern, D., Finkelstein, N., Stone, J. R., III, Latting, J., & Dornsife, C. (1994). Research on School-to-Work Programs in the United States (MDS-771). Berkeley: National Center for Research in Vocational Education, University of California.

Floundering Youth in the U.S. Labor Market

Unemployment rates remain high for young people right out of high school. As of mid-1993, the unemployment rate among 18- and 19-year-olds stood at 19% nationally. Among 20- to 24-year-olds, it was 11%, compared to 5.7% among job seekers aged 25 to 54 (U.S. Department of Labor, Bureau of Labor Statistics, 1993a, Table A-8). High unemployment rates for young workers in 1993 were still showing the effects of the 1990-1991 recession, but even during the relatively prosperous period from 1985 to 1989, the unemployment rate among teenagers (ages 16 to 19) never fell below 15%.

The National Longitudinal Survey of Youth has revealed that between the ages of 18 and 27, the average high school graduate who did not enroll in postsecondary education held nearly six different jobs and experienced between four and five spells of unemployment. While spending a total of 387 weeks employed during those years, the average graduate also spent almost 35 weeks unemployed (Veum & Weiss, 1993).

High unemployment rates for young workers take a toll on career development. There is ample evidence that teenagers who acquire more work experience earn higher wages in subsequent years (D'Amico & Maxwell, 1990; Ellwood, 1982; Lynch, 1989; Meyer & Wise, 1982). D'Amico and Maxwell (1990) show that lack of work experience among young African American males accounts for about half of the difference between their wages and those of young white males five years after graduating from high school.

During the 1970s, the perceived cause of youth unemployment was excess supply, stemming from the large number of baby boomers then entering the labor market. However, in the 1980s, the youth labor market was occupied by the baby bust generation born in the 1960s. Concern about a surplus of young workers became worry about a shortage of young people qualified to fill jobs in the new service economy (Johnston & Packer, 1987). This anxiety was prompted not only by the smaller size of the youth cohort but also by the perceived inadequacy of their knowledge, skills, and attitudes (e.g., see Committee for Economic Development, 1985).

According to this latter view, youth unemployment is attributable in large part to lack of qualification for existing jobs. In a 1991 Harris poll, employers reported that they have to turn down five of every six young people who apply for a job (Harris and Associates, 1991):

The survey of officials of 402 companies found 30 percent giving a positive rating for recent high school graduates' ability to read well, and 22 percent crediting students with having learned basic mathematics. But only 13 percent said recent graduates could write well, and just 10 percent believed they had "learned to solve complex problems." (Weisman, 1991, p. 5)

These explanations for youth unemployment stress the supply side rather than the demand side of the labor market. An alternative explanation is that employers offer too few steady jobs with career prospects. As a result, many young people have to go through a "floundering" period (Hamilton, 1990; Osterman, 1989): drifting from one short-term job to another, quitting or being laid off, staying out of the labor market for a while or searching for work in a haphazard fashion, and accepting the next job offer that comes by. Although the U.S. does not always exceed other countries in youth unemployment--for example, mid-1993 unemployment rates for 16- to 24-year-olds were 23% in France, 17% in Britain, and 20% for the twelve-nation European Community as a whole (Riding, 1993)--the degree of job instability among young people is exceptionally high in the U.S. Among 20- to 24-year-olds who had less than five years of tenure with their current employer in the mid-1980s, the proportion who were still working for the same employer five years later was smaller in the U.S. than in Finland, France, Germany, Japan, the Netherlands, or Spain (Organization for Economic Cooperation and Development [OECD], 1994, Chart 6.4; these are the only other countries for which comparable data is available.).

The lack of steady career jobs in the U.S. affects mature workers, too. Americans continue to flounder in the labor market longer than their counterparts in other countries. Table 1 shows the percentage of workers in their late thirties who had been with their current employer less than five years, computed from Current Population Survey data in the U.S. and from comparable data in other countries where available (OECD, 1993, Tables 4.3 & 4.4). Among both males and females, the percentage with short job tenure was largest in the U.S., despite the fact that the age group shown for the U.S. was slightly older than for the other countries. It is worth noting that the U.S. cohort shown in Table 1 would have finished high school between 1961 and 1964, when average scores on Scholastic Aptitude Tests were at their all-time peak. Yet, in the middle years of their working lives, fewer of these Americans were established in long-term jobs than their agemates elsewhere.

High rates of unemployment among American youth and large proportions of midcareer workers who have not established a long-lasting relationship with their employers might conceivably reflect unwillingness of American workers to attach themselves to a job. If this were true and if employers preferred to have long-term relationships, then there ought to be a bonus for employees who stay longer. In fact, however, the actual salary increment associated with longer tenure is not especially large in the U.S. compared with Japan, for instance (Hashimoto & Raisian, 1985; Mincer & Higuchi, 1988).

In addition to chronically high unemployment, young people right out of high school also experienced reduced earnings in the 1980s compared to the 1970s, despite the smaller numbers of youth in the labor market. While real earnings of American workers in all age groups declined during the 1980s (Katz & Murphy, 1992; Levy & Murnane, 1992), the drop was steepest among younger workers (U.S. Department of Labor, Bureau of Labor Statistics, 1993b). Data from the National Longitudinal Surveys of young workers in the early 1970s (from the cohorts of Young Men and Young Women) and the late 1980s (from the Youth cohort) permit a comparison between the earnings of recent high school graduates in these two time periods. In their fifth year out of high school, males who graduated in the 1970s earned on average $12.62 an hour in 1991 dollars, but those who graduated in the 1980s earned $9.17, about 27% less. Female high school graduates earned $8 an hour in 1991 dollars during their fifth year out of high school in the 1970s, but those who graduated in the 1980s took in about 50¢ less, a reduction of about 6%. Unless the skills of male high school graduates deteriorated more than those of their female classmates, the asymmetry between males and females seems to point to demand rather than supply factors. In particular, reduction in traditionally male manufacturing jobs diminished the number of high-wage opportunities for male high school graduates, but growth in secretarial jobs traditionally held by females sustained the earnings of female high school graduates.

The operation of demand factors is also evident in the higher relative earnings of college graduates compared to high school graduates (Katz & Murphy, 1992; Levy & Murnane, 1992). The U.S. Department of Labor, Bureau of Labor Statistics (1993b) analysis of longitudinal data found that male graduates of four-year colleges in the 1980s earned 13% less in real hourly wages five years after graduation compared to male college graduates in the 1970s. In percentage terms, this reduction was less than half the loss in real hourly wages for male high school graduates. Among females, real hourly wages for college graduates five years after graduation were actually higher in the 1980s than in the 1970s. Unemployment rates for college graduates also stayed low during the 1980s in contrast to rising unemployment among high school graduates and dropouts (Freeman, 1991)--further evidence of shifting demand in favor of college-educated workers.

The gain in relative earnings of college graduates compared to high school graduates is widely interpreted as an indication of greater demand for mental skill in the workplace. Some additional evidence comes from a study by Murnane, Willett, and Levy (1992). Using 1970s data from the National Longitudinal Study of the High School Class of 1972 and 1980s data from the National Longitudinal Survey of Youth Labor Market Experience, they compared the correlation between test scores in mathematics and hourly wages five years after leaving high school for graduates who did not attend college. They found a significantly higher payoff to mathematical proficiency in the 1980s than in the 1970s.

In summary, the scarcity of stable employment in the U.S. has made it difficult for young people to find career jobs right after high school. They have had to spend several years floundering in the labor market, and many do not succeed in finding steady jobs even by age forty. Employment prospects for male high school graduates grew still worse in the 1980s as the number of manufacturing jobs diminished. An apparent increase in the payoff to mental proficiency during the 1980s indicates that high school must help students learn to think if graduates are to qualify for good jobs.

One immediate implication is that the success of a school-to-work program cannot be judged simply by attainment of a full-time job. Young people usually do not stay in their first full-time job. School-to-work transition must therefore be seen as a process that occurs over a period of years. It usually begins with part-time jobs during high school, often includes work combined with postsecondary education immediately after high school, and may also involve periods of further schooling later on. Successful school-to-work transition does not mean that individuals leave school abruptly or forever. It means that they are able to find and keep the kind of jobs they want, possibly with the aid of continued or intermittent schooling along the way. School-to-work programs must therefore aim to do more than qualify students for their first full-time job. Programs must also seek to ensure that students acquire the knowledge and skill necessary to change jobs and continue learning throughout their working lives.

Stern, D., Finkelstein, N., Stone, J. R., III, Latting, J., & Dornsife, C. (1994). Research on School-to-Work Programs in the United States (MDS-771). Berkeley: National Center for Research in Vocational Education, University of California.