Oregon’s Youth in the Labor ForceOctober 25, 2022
Since the spring of 2020, Oregon’s labor force has been on quite a rollercoaster as Oregon and the nation continue to battle COVID-19. It is true for the labor force as a whole, but it is particularly true for Oregon’s youth in the labor force. During the pandemic recession, unemployment rates skyrocketed in the spring of 2020 as many service sector businesses temporarily closed to reduce the spread of COVID-19. From March to April, Oregon’s unemployment rate jumped nearly 10 percentage points, reaching 13.3%. A large share of younger workers were employed in leisure and hospitality, which lost the most jobs in spring 2020. Nationally, the unemployment rate for teens (ages 16-19) jumped to an all-time high of 32% in April 2020. The unemployment rate was nearly 26% for ages 20 to 24, also an all-time high.
In past recessions, it took a number of years for high unemployment rates to decline. That has not been the case after the pandemic recession. Oregon’s unemployment rate started declining during the summer and fall of 2020 as businesses reopened and began hiring. By spring 2021, Oregon’s unemployment rate had already dropped below 6%. The unemployment rate has continued to decline and by May 2022 it dropped to 3.5%; essentially the same as the 3.4% unemployment rate in February 2020, prior to the pandemic.
The sharp decline in the unemployment rate occurred for youth in the labor force as well. The national unemployment rate for teens (ages 16-19) declined from 32% in April 2020 to 9.6% in May 2021. The last time the unemployment rate for teens in the U.S. was below 10% was 1953. Since May 2021, the unemployment rate for those ages 16 to 19 has edged up between 10% and 11%. In September 2022, the unemployment rate was 11.4%, nearly matching its pre-pandemic rate of 11.3% in February 2020.
The national unemployment rate for workers ages 20 to 24 has declined from a high of nearly 26% in April 2020 to 7.0% in September 2022. Prior to the recession in February 2020, the unemployment rate for this age group was 6.5%. Even though the unemployment rate isn’t quite back down to its pre-recession level, it is coming down much faster than in past recoveries. During the Great Recession, the national unemployment rate for those ages 20 to 24 remained above 10% for nearly seven years (80 months).
A Tale of Two Recessions
The pandemic recession has been a very different recession compared with the Great Recession that began in 2008. The contrast is sharp when looking at labor force statistics of Oregon’s youth. Although both recessions had steep job losses, the speed of the job loss and the recovery have been very different.
The Great Recession was long and drawn out. It took over two years of job loss before employment bottomed out. From that low point, Oregon employment took more than four years to reach its pre-recession level. The deep recession and long, slow recovery adversely impacted youth participating in the labor force. The youth labor force participation rate (LFPR) was already declining prior to the Great Recession, but it reached an all-time low in the wake of the Great Recession.
Prior to our recent pandemic recession, youth labor force participation was trending up in recent years, in particular among Oregon’s teens (ages 16-19), reversing what had been a downward slide for over 15 years. Back in 2000, the LFPR of Oregon’s teens was 57%. Since 2000, teens’ LFPR declined until it reached an all-time low of 34% in 2015 and 2016. Since 2016, a tight labor market has helped participation rates trend upward, which has increased teens’ LFPR to a recent high of 43% in 2020. In 2021, Oregon’s LFPR for teens took a step backwards and decreased to 38%. Nationally the LFPR for teens was 36% in 2021.
Nationally, the LFPR for teens and young adults has remained fairly steady during and following the pandemic recession. A large number of youth were at least temporarily unemployed, but they did not leave the labor force. We are not witnessing a decline in the participation rate like what occurred during the Great Recession.
As severe as the unprecedented job loss from the pandemic recession was, strong job growth and high demand for workers has occurred much sooner than after other recent recessions. As of August 2022, Oregon regained all of the jobs lost in the spring of 2020, recovering to its pre-pandemic employment level in just a little over two years. Job vacancies in Oregon remain at a high level as employers struggle to fill job openings due to the low number of unemployed Oregonians to fill those vacancies. Oregon’s Office of Economic Analysis is forecasting slow but continued employment growth over the next several years, which will mean continuing strong demand for workers in Oregon.
Opportunities on the Horizon
The strong demand for workers and the current tight labor market isn’t likely to disappear in the near future, similar to the tight labor market last experienced in the 1990s. Maybe not coincidentally, the 1990s is the last time a majority of Oregon’s teens participated in the labor force. We will have to see if in the coming years a tight labor market, employers struggling to find workers, and a historically low unemployment rate among teens will keep the teen LFPR trending upwards.
Efforts to provide young workers who lack work experience with job opportunities could have a beneficial impact on labor market outcomes and lifetime earnings. Youth need opportunities to gain initial on-the-job experience and be successful in the workplace so they can illustrate those essential skills to later employers.
With Oregon’s unemployment rate back near historic lows and a growing economy with high demand for workers, that opportunity for young Oregonians would appear to be right now.