Oregon’s Youth in the Labor Force

by Pat O'Connor

August 10, 2021

Since the spring of 2020, Oregon’s labor force has been on quite a rollercoaster as Oregon and the nation battle COVID-19. That 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 in 2020 we saw unemployment rates skyrocket in the spring as many service sector businesses were temporarily closed to reduce the spread of COVID-19. From March to April Oregon’s unemployment rate jumped nearly 10 percentage points, reaching 13.2%. A large share of younger workers were employed in leisure and hospitality, which lost the most jobs in spring of 2020. Nationally we saw the unemployment rate for teens (ages 16-19) jump 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 during the pandemic recession. Oregon’s unemployment rate started declining during the summer and fall of 2020 as businesses reopened and began hiring. By spring of 2021, Oregon’s unemployment rate had dropped below 6%. The unemployment rate is higher than it was prior to the pandemic, but it is below the state’s long-run average, and that did not take years to occur, it took only seven months for Oregon’s unemployment rate to drop back below its long-run average.
The sharp decline in the unemployment rate occurred for youth in the labor force as well. The unemployment rate for teens (ages 16-19) has declined from 32% in April 2020 to 9.6% in July 2021. It doesn’t mark an all-time low, but the last time the unemployment rate for teens in the U.S. was below 10% was in 1953.

The national unemployment rate for workers ages 20 to 24 has declined from a high of nearly 26% to 9.2% in July 2021. Prior to the recession in February 2020 the unemployment rate for this age group was 6.3%. Even though the unemployment rate isn’t 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 brought about by COVID-19 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 it took more than four years for Oregon’s employment to reach its pre-recession level. The deep recession and long, slow recovery from the Great Recession adversely impacted youth participating in the labor force. Youth labor force participation rates were already declining prior to the Great Recession, but during the recession youth participation rates continued to decline and 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, reversing what had been a downward slide for over 15 years. Back in 2000 the labor force participation rate (LFPR) of Oregon’s teens was 57%; since 2000 the 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 from a low of 34% in 2016 to 43% in 2020.
Nationally the LFPR for teens and young adults has remained fairly steady during 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.     

So as severe as this pandemic recession was with the unprecedented job loss in the spring of 2020, the strong job growth and high demand for workers is occurring much sooner than it has after any recent recessions. Job listings in Oregon are at record levels as employers scramble to fill job openings as the economy fully reopens. The Office of Economic Analysis is forecasting strong employment growth over the next several years and are forecasting that Oregon will get back to its pre-COVID employment level by the fourth quarter of 2022; less than three years from when the recession began. The industry that is forecast to add the most jobs over the next year is leisure and hospitality, which is expected to add more than 30,000 jobs in Oregon. That bodes well for Oregon’s youth who make up a large share of that industry’s workforce.

Opportunities on the Horizon

The strong demand for workers is likely to create a tight labor market in the coming years, similar to the tighter labor market last experienced in the 1990s. Maybe not coincidentally, the 1990s takes us back to the last time when a majority of Oregon’s teens did participate in the labor force. We will have to see in the coming years if a tight labor market, employers struggling to find workers, and a low unemployment rate among teens will attract enough of Oregon’s teens into the labor force to keep the labor force participation rate of teens 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 the national unemployment rate for teens at its lowest rate in more than half a century and a fast-growing economy with high demand for workers, that opportunity would appear to be right now.

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