Slashed Summer Jobs Funding Hits Young Workers Hard

The White House is touting it as “recovery summer”: The economy is adding jobs, the unemployment rate is falling, housing is stabilizing and the $787 billion stimulus is working. But it certainly doesn’t feel that way to America’s young workers, who suffer the worst rates of joblessness of any demographic group — more than 18 percent, compared with 9.5 percent overall. And with July in full swing, their jobs situation is about to get worse.

[Economy1] States and regional governments have slashed the summer programs that helped more than 320,000 young people find work last year, as stimulus funding is running out and Congress has failed to re-up the funds. Indeed, $1 billion in funding for summer jobs died along with the jobs bill, now being split up and — for some of its components — passed separately. Even if Congress gets to the summer jobs fund, and passes it, for hundreds of thousands of workers, it will be August, and too late.

This is just one more headwind in what has become a perfect storm for youth unemployment, as young people, without long employment histories, compete for scarce positions with more seasoned workers. The unemployment rate for 16- to 24-year-olds hit 20 percent this spring, and has declined only slightly since then. In some cities, such as New York, it ranges as high as 40 percent. Nationally, one in four working-age teenagers is unemployed — for black teenagers, closer to one in two. In May, the economy created just 6,000 jobs for teens — 120 jobs per state, the smallest number in 40 years.

Spells of unemployment are particularly detrimental for young workers. They tend to have less in savings and less work history than their older counterparts, as well as more debt. Therefore, they are more prone than older workers to falling into poverty when they lose their jobs. And as fewer of them are married, they cannot rely on a spouse’s work for income or health benefits. “Without insurance coverage, these young adults risk both their physical health and their financial security,” the nonprofit Kaiser Family Foundation reported this winter.

Moreover, unemployment hurts young workers for longer than older workers. In an April report titled “The Kids Aren’t Alright,” the Economic Policy Institute’s Kathryn Anne Edwards and Alexander Hertel-Fernandez detailed the reasons why.

“Work during teen years is characterized as being highly path-dependent — work status in one period is very sensitive to work status in the time period before,” they note. “With a dramatic downturn in the young adult labor market, fewer young workers are being incorporated into this path” — from work in high school to work in college to work afterward. Economists often describe youth unemployment as a “permanent scar,” rather than the “temporary blemish” it is for older workers. Studies show that the lack of early work experience depresses wages for the rest of a worker’s life.

Summer jobs programs couldn’t fix all this, but programs funded with the $1.2 billion infusion from the American Reinvestment and Recovery Act certainly were helping. Nationwide, the summer jobs program — centered on aiding young people with barriers to employment, such as pregnancy, school drop-outs or low family income — placed 88 percent of participants into summer jobs. By November 2009, the program helped more than 355,000 young people in all 50 states.

Consider San Bernardino County, in southern California. The unemployment rate there is among the highest in the country — more than 14 percent — and the area has suffered from the lagging effects of the recession, especially the housing bust. Last year, stimulus funding meant work for hundreds of San Bernardino youths, and 43,500 young people across California. This year, the county planned to run the same programs, assuming the same level of federal funding, promised by legislators in Washington. (On the expectation of additional federal funds, and a decline in the unemployment rate, state and local governments used more than two-thirds of the available funds by November of last year.)

But the money is not there, and the county is shuttering parts of the program. It is not alone. Some places — such as Boston — have found companies or nonprofits to keep programs open. Many have not. Nobody knows how many fewer young workers will benefit, but a tally of big-city programs suggests the number is in the hundreds of thousands.

Nor does it look like federal aid will make a late arrival. Even when the Senate returns, it has no plans to resuscitate the jobs package — meaning young workers are on their own.

“We served a record number of kids last year,” says Cathleen Collins, a spokesperson for the New York Department of Youth and Community Development, whose summer jobs program placed 52,000 young people last year. “This year, we are getting less funding from the state, and [$18.5 million] less from the federal government. … We monitored [the jobs bill] on an ongoing basis. It really was not clear to us that the funds would go through. So, we had a program that we could ramp up if it did, but the program is smaller this year” — half the size of last year’s, though unemployment in New York City is higher.

Kalyani Thampi, a research analyst at the National Center for Children in Poverty, stresses that sustained, consistent investments in young people would be best. “It is worth it. It is cost-intensive, and time-intensive, and labor-intensive for governments to set these programs up,” she says. “But in the long term, these kids are given skill sets.” She also notes that the programs focus not on college graduates unable to get jobs, but on young workers who are more income-insecure to begin with — less educated, for instance. “Vocational training and pre-professional programs are becoming more and more important,” though the recession has forced governments to slash spending on such social-safety-net initiatives. “We have many, many unemployed youths who aren’t going to community college or to four-year degrees. They need to get jobs, and they need to be trained.”

In that sense, it is not just the young workers who are missing out — it is the American labor force, missing the opportunity to train young people in the fields of the future.