Younger persons are coming into the labour market whereas employers are providing greater wages and advantages
A lifeguard works on the beach at Coney Island in the Brooklyn borough of New York on June 15, 2023.
Spencer Platt |
Dailey Jogan was delighted when she learned she would be earning $15 an hour and a few perks as the head coach of a swim team in Detroit. Her older brother's reaction seemed more like surprise.
At 18, Jogan has spent the summer organizing competitions as team leader for the 250-strong team. She also gets some free perks for the facilities at the park where they train, like access to the gym and a few free tickets to the cinema.
That $15 hourly wage is about 25 percent, or $3, more than her older brother made in the same position five years ago. And if he wanted to use the exercise equipment or go to the movies, he had to dig deep into his pockets to pay, just like everyone else.
“I was very pleasantly surprised,” said Dailey Jogan. “I feel very valued.”
This shift in wages and benefits underscores the changing employment prospects for millions of American youth workers in the wake of pandemic-related labor shortages. While other Covid-related shocks to the economy have faded in recent years, higher wages and additional incentives for young workers appear to be a new normal.
Data from Gusto, a payroll platform that serves more than 300,000 companies across the country, shows how much ground teens have made up. The typical wage for a newly hired worker ages 15 to 19 was $15.68 an hour in June, up more than 36% from early 2019.
That beats the growth rate for all workers regardless of age in private companies, which rose nearly 27 percent over the same period, according to federal data. In addition, Gusto statistics show that teens are uniquely insulated from changes in general economic conditions that have at times led to lower wages for some adults.
“I could probably overstate the benefit of teenagers in this labor market, but I think I'd have to go pretty far,” says Liz Wilke, chief economist at Gusto. “It's much better to enter the labor market as a teenager today than it was five or 10 years ago.”
Employers recruit employees
Beyond pay, companies targeting teens have added benefits—such as access to Jogan's gym and theater—to make the offer more attractive.
At the fast-casual chain Chipotle Mexican GrillWorkers have been eligible for a tuition reimbursement program since before the pandemic. Earlier this year, the California-based company added a wellness offering that includes six free sessions with a licensed counselor or psychotherapist. Chipotle also launched a matching program where eligible employees who make student loan payments can receive up to 4% of their salary from the company into their retirement account.
Chipotle's benefits package enhancements in recent years came after a survey of its U.S. restaurant employees — more than a third of whom are teenagers. While these offerings can drive up operating costs, Daniel Banks, head of global benefits, said they are worthwhile in attracting enough new employees to open more stores. They can also increase employee retention, keeping existing stores running smoothly.
Employees fill food orders at a Chipotle restaurant in San Rafael, California on April 1, 2024.
Justin Sullivan |
In fact, Chipotle found that employees in its apprenticeship program were twice as likely to stay and more than six times as likely to advance to management positions. Banks also said Chipotle's turnover rate is at record lows.
“We care a lot about our culture and our brand. We really try to focus on internal promotions and internal hires,” he said. “If we're able to give those individuals the right skills and tools to become an effective leader, it benefits the bottom line across the board.”
Elsewhere, small businesses are trying to keep up.
Nearly half of Erin Powell's employees at The Sugar Shack, a small business in Minnesota, are teenagers who perform tasks such as making coffee or baking pizza. Powell accommodates holiday plans, offers free meals during shifts and frequently offers raises. She also hosts holiday parties and tries to create a family-like work atmosphere.
Despite these efforts, she has sometimes seen young employees leave the company to seek higher wages at chain competitors such as StarbucksPowell feels caught in a dilemma: trying to do the right thing for her young employees, but at the same time being aware of the financial realities that can be achieved without economies of scale.
“Everyone is still competing for employees,” Powell said. But she tries to show employees that “sometimes bigger isn't always better.”
To keep rising labor costs in check, she takes on tasks that others would hire a manager for. Powell has also tried to curb waste in the company to avoid unnecessary spending.
“The holiday job is back”
Whether it's a raise or financial support for education, these perks seem to be luring young people into the workforce, marking a turning point for a group that has seen major declines in this area over the past few decades.
At its peak this year, government data showed that nearly 40 percent of people in this age group were employed, the highest proportion since 2009 but still well below peaks seen in the late 1970s.
“The summer job is back,” said Alicia Sasser Modestino, an associate professor of economics who studies youth development at Northeastern University. “I remember being completely wrong in the summer of 2021 when I said, 'Teens, just run out and grab these jobs because this isn't going to last.'”
For reference, the federal government found that more than 5 million young people were in employment last year. Gusto expects sports and recreation, education, and food and beverage to be popular summer job sectors for this age group.
According to Gusto's Wilke, teens are also showing up more frequently in less stereotypical industries, such as construction and nonprofits, because labor is still scarce in those sectors. Looking ahead, Wilke said, teens should continue to be able to find these perks and opportunities as long as the job market remains relatively healthy.
A smaller and smaller share of young workers earn the minimum wage that was once considered normal. According to government data, only about 3 percent of hourly workers ages 16 to 19 earned as much or less than the federal minimum wage last year. That's down from nearly 20 percent in 2013. (The federal hourly minimum wage has been $7.25 since 2009, although several states have their own minimum wages that are higher.)
Because teenagers typically start at the bottom of a company's pay scale, Wilke said it's easier to institute raises that represent large percentage changes than for higher-earning older colleagues. And companies are more likely to give younger workers disproportionate pay increases, she said, because they often don't require other components of a compensation package, such as insurance.
Recognizing a “balance”
While working teens today theoretically have plenty of money, there's one problem: the rising cost of higher education. Olivia Locarno said she's been saving money from jobs at Chick-fil-A and Starbucks in a savings account for books and dorm essentials.
The 18-year-old New Jersey resident still treats herself to dinner with friends and new clothes every now and then, but she says she's tried to stay away from unnecessary spending because she has to start classes at Marist College in the fall.
“It’s hard to just keep going Amazon and not spend money on things,” she said.
Yin Yang | E+ | Getty Images
Jogan is also saving her salary as a coach for her expenses while she attends Aquinas College in Michigan, where she will be a member of the swim team. She is also starting to think about future major purchases, such as a car.
By leading the so-called Mutants team, Jogan learned soft skills such as communication and problem solving. This is similar to what her older brother Thomas says he learned on the job and uses today in his job in supply chain management.
Thomas said he would have liked to have made as much as his sister did when he was her age. But he added that Dailey has to cover inflation with the extra money she makes. Thomas said there is no jealousy toward his sister – he is just happy she is carrying on the family legacy in a meaningful job.
“It should be in a good location,” said Thomas, 24. “Of course, things are more expensive now and so on, so there's a balance.”
Comments are closed.