Alamy

THROUGHOUT its 104-year history, Ruttger's Bay Lake Lodge has employed a lot of teenagers. Each summer, around two-thirds of the 325 staff at the remote holiday resort are high-school and college students. The end of August sparks a crisis: the students go back to school, leaving Ruttger's, which closes in November, scrambling to find dishwashers, waiters and housekeepers.

This year, the resort's managers are less frantic than usual. Before Ruttger's opened in April, it got an uncharacteristically high number of applications from adults, even though many of its jobs pay below $7 an hour. Ruttger's is thus employing around 25% fewer teenagers than normal, even though they also applied in droves.

American teenagers are an atypically industrious lot. In most developed countries, teenagers work only if the family needs income. Yet the American teens most likely to work have historically been white, attended college, lived outside a big city, and (perhaps most surprisingly of all) had a family income above $40,000 a year. By contrast, poor inner-city kids have been much less likely to hold jobs.

A new report by the Centre for Labour Market Studies at Northeastern University in Boston points out that this has been the toughest summer-job market for teenagers in 37 years (see chart). The problem extends beyond seasonal work. Many starter jobs once filled by America's youth—at cash registers, griddles, dishwashing stations and on newspaper routes—have now been nabbed by adults.

The unemployment rate for people aged 16-19 (and seeking work) was 17.7% in July. That compares with 14.8% in the same month last year and 13.4% in 2000. More tellingly, if you include those who have given up looking for work, the employment-to-population (EP) ratio for teenagers has dropped to 38.7% this summer, compared with 44.5% two years ago. Andrew Sum, a professor at Northeastern, sees a “depression” in the teen-labour market.

Such language is a little dramatic. The employment situation varies by state, and even within states. Richard Judy, an economist, points out that in regions such as central Illinois and the Tampa Bay area in Florida, there are too few people to fill unskilled jobs. Others think that teenagers are simply concentrating on different things: a new report by the Bureau of Labour Statistics says more teens are studying during the summer than in past years.

That might perhaps help to explain the changing EP ratio for teenagers, but it does not explain rising unemployment among those teens who want to work. A lot of teens looking for jobs are not finding them. How much is this due to the current economic downturn and how much to deeper structural changes in the workforce?

The experience of teenagers hints at something of a crunch in service jobs at the bottom of the employment ladder. Some labour-market experts argue that lay-offs, or fear of them, have persuaded adults to take jobs which were once filled by college graduates, pushing some of the latter back down into jobs once held by high-school graduates and dropouts.

Minnesota, for instance, actually has one of the country's highest rates of teen employment (alongside Iowa, Nebraska, and Wisconsin). But job vacancies in Minnesota in the second quarter of this year were 41% below the same period last year. That prompted many adults to look for jobs once held by less skilled workers.

Another factor has been Wall Street. The drop in personal savings caused by the stockmarket plunge has prompted many older Americans either to postpone retirement or re-enter the job market. According to the AARP (formerly known as the American Association of Retired Persons), there are 8% more Americans above the age of 55 working now than there were a year ago. Many are in skilled fields such as consulting; but plenty are also doing odd jobs part-time. However, there are also longer-term forces at work:

•Immigration. The surge of new immigrants over the past decade has created a huge new labour pool, mainly along the east and west coasts and in big cities like Chicago. Many have little education: about a third lack a high-school diploma, three times the rate of native-born Americans. Many speak little English, and thus qualify only for the unskilled, low-wage jobs that teens used to pick up.

•Welfare reform. In 1996, Congress passed a law requiring welfare recipients to work or get job training in exchange for benefits. The number of people on welfare has dropped from 14m in 1994 to 5m today. Many who went from welfare to work were unskilled and took entry-level jobs.

•Demography. There is an unusually large number of teenagers around, thanks to a “baby-boom echo”—a generation born to the original boomers between 1977 and 1994. Tom Dilworth, a labour expert with the Employment Policies Institute in Washington, DC, points out that around 35m echoers had turned 16 by last year (“eligible worker” age). They now account for around a fifth of the total workforce. The EPI estimates that by 2010, nearly 74m members of the echo generation will be 16 or over, accounting for about 37% of eligible workers. An ever-increasing number of these young workers are Latinos.

A teenager having trouble finding a job might seem a harmless form of preparation for the rigours of the “proper” job market; after all, few are their family's primary wage earners. But there is now quite a lot of research arguing that such experiences can have serious consequences. A 2001 study for the EPI by Thomas Mroz and Timothy Savage from the University of North Carolina at Chapel Hill linked teen joblessness to lower lifetime earnings, future unemployment and a variety of other social ills.

Inevitably, there have been calls for special help. Northeastern's Mr Sum, for instance, wants a federal jobs-stimulus programme for young Americans. Others argue that some proposed laws are actually damaging chances for teens. Mr Dilworth at the EPI points to a health-insurance bill proposed by Senator Edward Kennedy, which he says would make it more difficult for employers to hire teens.

Naturally, some things may improve if the economy does. But some things have probably already changed forever. These days, Mr Judy notes, “paper delivery by kids on bikes is something out of Norman Rockwell”. But perhaps it was inevitable that adults would take over the newspaper routes. How many teens want to get up at 5am anyway?

Copyright © 2002 The Economist Newspaper and The Economist Group. All rights reserved.

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The Employment Policies Institute publishes “The Long-Term Effects of Youth Unemployment”, by Dr Thomas Mroz and Dr Timothy Savage, October 2001. See also the AARP.