The national unemployment rate represents the proportion of working-age adults and teens in society not employed. While this number does not account for certain cash-based work opportunities that exist for youth, it serves as a fairly accurate picture of the employment outlook in the nation. The main challenge unemployment poses for youth is that it can cause jobs that are normally given to young people to be given to more experienced, out-of-work adults, as more experienced workers are competing for jobs below their qualification levels.
Lower Discretionary Income
The pushing-out effect that youth experience as a greater number of experienced adults secure minimum wage jobs can serve to lower or even eliminate a youth's discretionary income. Discretionary income is the term given to the income that is left over after paying all expenses, which, for youths, often includes things like gasoline, car insurance and cellphone bills.
Having a lower discretionary income can have either positive or negative effects on a young person. Some young people may react to being “broke” by engaging in more free activities, like playing sports with local friends. Others, however, can find themselves turning to crimes such as theft and violence if they find themselves with nothing to do and no way to make money.
A reduced number of jobs available to young people can also alter a young person's spending habits. Without regular income, youth are more likely to spend every dime that comes their way, whereas with a regular paycheck they are more likely to put money aside for large purchases such as cars and a first apartment. This can cause youths to turn to their parents more often for large purchases, which can put strain on both the young people and their parents.
Work Ethic and Financial Management
Psychological development is most impressionable at a young age. While working age youths are definitely out of the “soaking up information like a sponge” stage, there are still a few crucial changes that occur in people's psyche in their teenage years. One such vital development is the building and refining of a solid work ethic and money management skills such as budgeting, saving and investing. Youths with regular jobs gain an edge over others when it comes time to take on adult responsibility, as they are already prepared for the challenges of reporting to work on a regular basis and managing a regular paycheck. High unemployment can delay this development in teens.
Youth often work in minimum wage positions, so any increase in the minimum wage generally raises youths' hourly income. High levels of unemployment can create a situation where most people are simply grateful to have any kind of job, which can reduce people's desire to push for higher minimum wages. Legislators are less likely to push for a higher minimum wage in times of high unemployment, as well, since it can serve to discourage companies from hiring. This, in turn, effectively prevents average youth wages from increasing.