Teens join the workforce as employers offer higher wages and perks

When Daly Jorgan found out she’d be making $15 an hour and receiving some perks as head coach of a metro Detroit swim team, she was thrilled. Her brother’s reaction seemed more surprised.

Jogan, 18, has been running the tournament all summer as a staff leader for the 250-person team, and has also been given free use of the park’s training facilities and a few free tickets to the cinema.

At $15 an hour, she was making about 25 percent more than her brother had made in the same job five years earlier, or $3 an hour more, and like everyone else, she had to take money out of her wallet if she wanted to use the equipment or see a movie.

“It was a very pleasant surprise,” Daly-Jogan said. “I feel very valued.”

These changes in wages and benefits underscore the shifting employment outlook for millions of American teen workers in the wake of labor shortages caused by the pandemic. Even as other COVID-19-related shocks to the economy have faded in recent days, higher wages and additional incentives for younger employees appear to be the new normal.

Data from Gusto, a payroll platform that serves more than 300,000 US companies, shows just how far teenagers have come: The average hourly wage for newly hired workers ages 15 to 19 was $15.68 in June, up more than 36% from the start of 2019.

That outpaces the growth rate of all private-sector employment, regardless of age, which grew just under 27% over the same period, according to federal data.What’s more, Gast’s statistics show that teenagers have been especially protected from the broader economic changes that sometimes lead to lower wages for some adults.

“You could probably overstate the benefits to teenagers in this labor market, but I mean, it’s a stretch to do that,” said Liz Wilk, chief economist at Gast. “Compared to five or 10 years ago, now is a much better time for teenagers to enter the workforce.”

Beyond salary, companies looking to attract teenagers are making their offers more attractive with extra perks, such as access to Jogan’s gym and theater.

Fast Casual Chain Chipotle Mexican GrillAt Chipotle, employees were eligible for a tuition reimbursement program even before the pandemic. Earlier this year, the California-based company added a well-being program that includes six free sessions with a licensed counselor or mental health coach. Chipotle also launched a matching program that allows eligible employees to pay off student loans to receive up to 4% of their salary in a retirement account.

Recent additions to Chipotle’s benefits package were made based on a survey of U.S. restaurant workers, more than a third of whom are teenagers. While these perks can drive up operating costs, Daniel Banks, head of global benefits, said they’re worth it for enough new hires and store expansions. They can also boost employee retention and keep existing locations running smoothly.

In fact, Chipotle found that employees who participated in its education assistance program were twice as likely to stay with the company and more than six times more likely to reach a management position. Banks also said that Chipotle’s turnover rate is near an all-time low.

“Culture and brand are very important to us, so we’re focused on promoting and hiring from within,” he said. “If we can provide our employees with the right skills and tools to be great leaders, it will drive a better bottom line overall.”

Elsewhere, smaller businesses are struggling to catch up.

At her small Minnesota business, The Sugar Shack, nearly half of Erin Powell’s staff are teenagers, from making coffee to baking pizzas. Powell arranges holiday schedules, offers free meals during shifts, and often gives raises. She also hosts holiday parties and strives to foster a family atmosphere at work.

Despite these efforts, she has seen teenage employees leave for rival chains in search of higher wages. StarbucksPowell feels caught in the middle: trying to do the right thing for his young employees, but also acknowledging the economic realities of what he can offer without scale.

“Everyone is still competing for employees,” Powell said, but she tries to show employees that “bigger isn’t always better.”

To keep rising labor costs manageable, she has taken on responsibilities other companies would hire a manager for, and Powell has also worked to cut waste within the business to eliminate unnecessary expenses.

Whether it’s higher pay or financial support for education, these benefits seem to be attracting teenagers into the workforce — a turning point for young people who have experienced major declines in their workforce in recent decades.

At its peak this year, nearly 40% of members of that age group were employed, according to government data, the highest share since 2009 but still far from the peak recorded in the late 1970s.

“Summer jobs are back,” said Alicia Sasser Modestino, an associate professor of economics who studies adolescent development at Northeastern University. “I remember in the summer of 2021 saying, ‘Teenagers, just go out there and get these jobs. This isn’t going to last,’ and I was completely wrong.”

For reference, the federal government revealed that more than five million teenagers joined the workforce last year, and Gusto predicts that sports and recreation, education, and food and beverage will be popular summer jobs for this age group.

With labor shortages still present, teens are starting to show up more frequently in less-common fields like construction and nonprofits, Gast’s Wilke said. Looking forward, as long as the job market remains relatively hot, teens should be able to continue to find those perks and opportunities, Wilke said.

The share of teen workers earning the once-common minimum wage is declining: Just 3% of hourly workers ages 16 to 19 earned at or below the federal minimum wage last year, according to government data, down from about 20% in 2013. (The federal minimum wage has been stuck at $7.25 an hour since 2009, but some states set their own higher minimum wages.)

Mr. Wilke said that because teenagers typically start at the bottom of a company’s pay scale, it’s easier to give them bigger raises than their older, higher-earning colleagues. And because younger workers don’t often ask for other parts of their compensation package, such as insurance, companies are more likely to give them bigger pay increases, he said.

Today’s employed teenagers have money to spare in theory, but the rising cost of higher education is a big problem. Olivia Locarno says she saves the money she earns from working at Chick-fil-A and Starbucks for books and dorm essentials.

The 18-year-old New Jersey resident still occasionally spoils herself by dining out with friends and buying new clothes, but the cost of classes at Marist College starting in the fall has her cutting back on discretionary spending.

“It’s just hard to keep going Amazon And avoid spending money on things,” she said.

Jorgan, who will be joining the swim team at Aquinas College in Michigan, is saving up his coaching salary to cover tuition and is also starting to think about big purchases down the road, like a car.

For Jogan, leading the so-called mutant team has given her soft skills like communication and problem-solving that are similar to those her brother, Thomas, learned on the job and now uses in his job in supply chain management.

Thomas said she would have liked to have the salary level her sister enjoyed when she was her age, but added that Daily needs to save any extra money she makes to account for inflation. Thomas said there is no jealousy between the siblings, and she is just happy to see her continuing the family tradition with meaningful work.

“She should be in a good position,” said Thomas, 24. “Obviously, things are more expensive now, so there’s a balance to be struck.”