Personal Finance Trends Help Wanted: Unemployment and Job-Readiness for Teens

Let's boil down the current employment situation: the labor market is seeing some signs of improvement, but growth remains slow. Although the national unemployment rate has been dropping since it peaked at 10.1 percent in October 2009, at 7.2 percent, it is still too high in the eyes of economists and policymakers, including the Federal Open Market Committee (FOMC).

Unemployment is even worse for teens. High school students who are looking for a job, or intending to look for a job soon after high school, should know that the unemployment rate among 16–19 year olds is a whopping 22.7 percent. Even more startling, the unemployment rate for black teens is 38.2 percent. This means that teens have to work especially hard at making themselves hirable.

The big picture
The FOMC remains concerned about the unemployment rate. At its October 29–30, 2013, meeting, the committee opted to keep the target range for the federal funds rate at 0 to 1/4 percent and reiterated that it will likely maintain this exceptionally low range for the federal funds rate as long as the unemployment rate remains above 6 1/2 percent. This low rate is one of the strategies the FOMC is using to support continued progress toward the Fed's dual mandate of maximum employment and price stability.

The Atlanta Fed's labor market spider chart reflects both good and bad news about employment. (The September 2013 version reflects August 2013 data.) The good news: the spider chart shows that some areas—temporary help services employment and hiring plans—have just about returned to their prerecession peak. The bad news is that lagging areas still exist: the labor market has too many marginally attached workers and the job finding rate, job availability, and hires are too low. (According to the U.S. Bureau of Labor Statistics [BLS], marginally attached workers are people not in the labor force who want and are available for work, and who have looked for a job sometime in the last 12 months but were not counted as unemployed because they had not looked for work in the last 4 weeks.)

What it means to teens
Let's look at some relatively good news: the U.S. economy added 193,000 jobs in August 2013 and 148,000 in September. The BLS's Employment Situation Summary indicated that September growth was mostly in professional and business services, transportation and warehousing, construction, wholesale trade, and retail trade. Although jobs in leisure and hospitality were unchanged in September, the industry over the last year has averaged growth of 28,000 jobs per month, especially in food services and drinking places.

Where teens are concerned, the growth in the retail and food industries might seem to be good news since these areas have historically been where teens find employment. But these days, many young workers have to compete with more experienced workers and retirees for jobs. And when they can't obtain employment, these teens lose out on valuable work and life experiences. So, what strategies can teens use to gain an edge in the job market?

Communication: More skilled but less of it
Sherrie Funk, industry chair for the Metro Nashville Public School's Hospitality and Tourism Partnership Council, says that communication is an important skill set that students need in order to succeed—written, verbal, and nonverbal communication. In addition, "students need basic computer skills, primarily Microsoft Office, and keyboarding—not texting—is a must," says Funk. "Students need to have a command of the English language and excel in grammar and spelling rather than text speak." They should also bone up on their interview skills and take special care with their personal appearance before an interview.

Funk also suggests that students be careful about what they post on Facebook and Twitter because employers often look at potential employees' Facebook pages during the hiring process.

Real-life learning
As high school students consider how they can prepare for current and future jobs, they should do all they can to learn about an industry in which they are interested, says Funk. Metro Nashville Public Schools high school students are doing this through internships with local companies, under the umbrella of the Academies of Nashville. In a smaller learning community, with instruction that is project-based, applied, and integrated, students are learning in the context of a career or academic theme.

Zoyii McDonald, a student at Nashville's McGavock High School, was selected from more than 600 applicants for her internship though the program. McDonald says, "My internship was more than just fun and educational. It was life-changing. It showed me how the real workforce works."

Another way students can gain real-world experience is to take a part-time job while going to school. Shondrea Carney, a senior at East Nashville Magnet High School in Nashville, has worked at a fast-food restaurant for more than two years. She says that her job has been a good first-time experience and that it's helped her gain a variety of work skills that she can use now and in the future, such as having better communication skills, getting along with others, having a good attitude, being polite, and coming to the job ready to work. Carney plans to pursue postsecondary education after she graduates from high school.

Education, which is one component of an individual's human capital, can have a significant influence on a person's joblessness. According to the BLS's 2012 data on earnings and unemployment rates by educational attainment, the average unemployment rate for people with less than a high school diploma is 12.4 percent, compared to 4.5 percent for those with a bachelor's degree.

Teaching about employment-related topics
The Federal Reserve offers a variety of resources for teaching about employment and human capital. Some of them are described below.

Invest in Yourself. When it comes to lifetime earnings, education makes all the difference. With the help of data from the Fed, students can see how each year spent in school improves their future opportunities. Students will identify a possible career in the Occupational Outlook Handbook and consider the steps necessary to achieve their goals. This lesson will help get students thinking about college applications and their plans following graduation. Students will work in groups and partners to complete hands-on activities, draw graphs, and write about what they learned.

Katrina's Classroom: Financial Lessons from a Hurricane. A free DVD-based curriculum developed to teach middle and high school students and their parents the importance of being financially prepared, especially in times of crisis. Lesson 4 and the video "Back to School" explore the importance of education as the foundation for greater future income.

The Classroom Economist. These modules feature videos, lessons in both PowerPoint and SMART Board formats, quizzes, and other content designed to clarify and enhance teacher and student understanding of core economic, personal finance, and Federal Reserve topics, including unemployment.

The Fed Explained. An animated video series that offers a range of content that explains the role of the Federal Reserve System and economic concepts. Engaging graphics and real-life examples help explain the various topics such as unemployment, GDP, inflation, and the Federal Reserve.

By Jackie Morgan, senior economic and financial education specialist, Nashville Branch

November 6, 2013