What the lull in teen hiring this summer tells us about the job market ahead of Friday’s report

By Alicia Wallace, CNN

(CNN) — When the latest official jobs report is released on Friday, economists are expecting it to show that hiring picked up in July and that the unemployment rate held steady at 4.2%.

Economists’ estimated monthly employment gains of 97,500 jobs would mark an increase from June’s lower-than-expected 57,000 jobs added. The bulk of last month’s employment growth is likely to come from one sector: healthcare and social assistance.

Friday’s report will likely underscore that the job market remains stable but in a low-flow state, with non-healthcare hiring a little sluggish and the unemployment rate largely unchanged.

“Low-hire, low-fire” — the well-worn moniker for the current labor market — is certainly catchy but, like most labels, it can’t capture all the inner workings or lived experiences. Americans are navigating a labor market with opportunities for some but not for all, sidelining job seekers and leaving many of the youngest job hunters without the foundational roles and skills needed for their futures.

“It’s like a drip feed,” said 18-year-old Scott Konopka of his recent search to land a summer job when he was back home from college.

The aviation double-major at Western Michigan University sent out about 100 applications to a slew of employers posting summer opportunities, including retailers, restaurants, landscapers and airports.

Konopka received three rejection letters and the rest was crickets. He eventually called up the Wendy’s restaurant where he worked after his senior year to see if they had any shifts to spare.

“I gave up with fighting the job market, and now I’m back doing my old job,” he said.

‘Just not a lot of appetite’

Certain cohorts — including teen workers — can serve as the proverbial “canary in the coal mine,” sounding the alarm that the labor market or broader economy are potentially unwell.

Summer jobs are often temporary, entry-level and in areas like leisure and hospitality. When the economy hits rougher patches, employers curtail hiring or tend to favor experienced workers, businesses lean more on technology to fill any labor gaps, and some consumers pull back on discretionary spending.

Earlier this year, outplacement and labor research firm Challenger, Gray and Christmas flashed a warning signal: Teen summer hiring was likely to be worse than last summer’s record low.

“We predicted a quiet summer last year, and it played out even quieter than expected. The dynamics that drove that slowdown — cost pressures, automation, employers waiting to see how consumer demand holds up — are all still in place, and in some cases, they’ve intensified,” Andy Challenger, the firm’s chief revenue officer, said in a statement.

The preliminary Bureau of Labor Statistics data for June shows the teen employment-to-population ratio at a nine-month low and the unemployment rate trending higher than a year ago.

“It tells us that employers do not have much appetite for taking on workers either full-time or even temporarily — there’s just not a lot of appetite to expand their workforce,” Kory Kantenga, head of economics at LinkedIn, told CNN, adding that the economic uncertainty is weighing on consumers as well. “They’re being more judicious about how they’re spending. That slows down growth. That slows down opportunities in the labor market.”

A critical stepping stone

Teen employment accounts for a roughly 3% share of the labor market, so changes there do not move the needle much for the overall headline job numbers, Raymond James economists wrote after the Challenger report.

And the slowing in hiring is likely more a reflection of structural and sector-specific pressures rather than a recession warning, the economists noted.

Still, these jobs matter to the young workers who need them, the Raymond James economists wrote, noting that teens can learn soft skills (communication, teamwork, responsibility) while achieving a better understanding of workforce expectations and the day-to-day realities of industries.

For teenagers like Ivanka Lopez, the summer job is a stepping stone on a career path.

Lopez, 15, hopes to become a pediatric anesthesiologist and is pursuing coursework to further that career. At the same time, she needs real-world work experience.

She has helped out at her family’s restaurant, but she wanted to chart her own path. Her persistence paid off, and she landed a summer job at an ice cream and chocolate shop.

At 15, she faces some limitations on the hours worked and certain machinery (including not being allowed to step inside the freezer); however, she has more than made do: She expressed pride in reaching a new training level where she was responsible for dipping all manner of sweet treats in chocolate and caramel.

“I find myself building a stronger work ethic that I feel would be good when I have other jobs in life, for school, and building my personality, too,” Lopez told CNN. “I feel lucky and blessed, because as things are right now, it’s really nice to feel like I could support my parents and myself in any way.”

The job market is changing

Friday’s jobs report could show a labor market that “remains stable, but without much spark,” EY-Parthenon economists wrote in a note to investors on Tuesday.

Labor supply remains restrained, with participation rates near post-pandemic lows, EY-Parthenon economists Gregory Daco and Lydia Boussard wrote.

“At the same time, many firms are choosing to retain workers through the uncertainty, relying on a cautious wait-and-see approach, attrition from retirements and resignations, and targeted or performance-based layoffs rather than broad workforce reductions,” they wrote.

The supply pressures are coming from a structural shift within the labor market: The population is getting older, Baby Boomers are retiring and immigration flows have been drastically reduced.

Hiring patterns also are changing, said Nela Richardson, ADP’s chief economist.

“Employers are reacting to a host of different drivers that’s shifting how they hire throughout the year,” she said. “So, a strong month or a weak month may just be a short-term change in a hiring pattern, rather than a longer-term signal of the outlook for the second half of the year.”

ADP on Wednesday released its latest snapshot on private-sector hiring activity, reporting that businesses added an estimated 44,000 jobs in July. That tally, if it holds, is the lowest so far this year.

Layoff announcements at two-year low

Other data has fed into a more bullish or rosy outlook for the labor market.

Jobless claims, a closely watched proxy for layoffs, have remained exceptionally low. In fact, in mid-July, first-time filings for unemployment insurance were the lowest seen since 1969.

New Labor Department data released Thursday showed that an estimated 199,000 initial claims (seasonally adjusted) were filed during the week that ended August 1. The current four-week running average for claims is the lowest since 2022 — the height of the post-pandemic job boom.

Layoff intentions also are trending downwards. Last month, employers announced plans to make 33,429 job cuts. It’s the lowest monthly total in two years, Challenger noted.

Separately on Thursday, the Chicago Fed’s latest unemployment forecast showed the jobless rate dipping to 4.1% in July from 4.2%, citing a decrease in layoffs and an increase in hiring.

And earlier this week, the Job Openings and Labor Turnover Survey for June showed a slight pickup in hiring and quits (an indicator of employee confidence) while layoffs were essentially unchanged.

Also, it’s possible that some statistical quirks that likely showed up as outsized leisure and hospitality job losses in June’s jobs report could reverse in July, economists say.

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