According to the Heritage Foundation, the labor force participation rate among youth (ages 16-24) decreased from 59.4 percent in 2007 to 54.9 percent in 2013.1 As Andrew Pack has highlighted in his article in this issue, one of the reasons for this decline is because youth are staying in school. This represents both a positive and a negative.
On one hand, more people than ever are graduating from high school. In 2013, the national average of freshmen who graduated from high school in four years was 81 percent, the first time ever that it has topped 80 percent.2
However, a high school degree is increasingly insufficient. According to Georgetown University’s Center on Education and the Workforce, by 2020 nearly two out of every three jobs will require postsecondary education and training beyond high school.3 While community colleges, in particular, are increasingly aligning their curriculum to meet the needs of local employers, labor force participation rates among youth remain stubbornly low. This is partially explained by people delaying retirement and professionals who lost jobs during the Great Recession and are now underemployed, working jobs that youth typically occupy in retail and leisure/hospitality industries.
For youth who are not in the workforce, this often means delayed acquisition of soft skills and professional network (or social capital) building—two ingredients, in addition to technical skills, that are essential to securing longer-term employment that pays livable wages. The competition for high-wage jobs is ever intensifying, particularly in cities such as St. Louis, where nine out of 10 jobs created between 2009 and 2013 were “low-wage.”
One initiative in St. Louis that aims to prepare youth to thrive in the labor market is STL Youth Jobs, a collaborative effort between the Incarnate Word Foundation, the Greater St. Louis Community Foundation, Mers/Goodwill and several financial institutions. For the last two years, STL Youth Jobs has provided summer employment opportunities for youth who live in the city of St. Louis. Mers/Goodwill has supplied individualized job coaching and mentoring, while banks and credit unions have delivered financial advice and guidance for youth in the program. The initiative served 200 youth in its first year and nearly 400 in the second year. It is poised to continue this growth in the summer of 2015.
Bill Emmons, assistant vice president at the St. Louis Fed, has noted, “There’s simply a larger pool of detached youth, and because the city has struggled, the region has had slow growth. So, anything that could contribute to a productive workforce would obviously have big returns.”
While it’s too early to know what the long-term impact will be for the St. Louis region, it is known that youth involved with the initiative are not only gaining confidence in their ability to secure employment once their summer job has ended, but are in fact finding jobs easier to come by given their work experience and their expanded professional network. Furthermore, more than half of the youth acknowledge that without this initiative, they likely would not have found employment.
There is increasing evidence to show that social capital, or what is developed by having a robust social network, correlates strongly with future earnings.4 STL Youth Jobs and other similar initiatives provide a gateway for youth to build social capital while also developing the soft and technical skills that are required to be successful in any job. This is especially important for youth from low- and moderate-income backgrounds, given their relative lack of professional connections compared with their middle- and upper-income peers.
To ensure that our workforce is prepared for today’s jobs and those of the future, it is critical that youth not only possess the required postsecondary education and training, but also develop the skills and social capital that come with participation in the labor market.
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Fed in Print: An index of the economic research conducted by the Fed.
FedCommunities.org is a portal to community development resources from all 12 Federal Reserve Banks and the Federal Reserve Board of Governors.