Teenagers enter the workforce as employers offer higher wages and benefits

Dailey Jogan was happy to learn that as Detroit Metro’s head swimming coach she makes $15 an hour and a few perks. Her brother’s reaction looked more like surprise.

At 18, Jogan spent the summer organizing parties, serving as leader of a team of 250 people. She also received some freebies at the park where they practiced, such as access to a gym and a few free movie theater tickets.

The $15 an hour salary is about 25 percent higher than what her brother was making in the same position five years ago, which was $3 an hour. If he wants to use exercise equipment or watch a movie, he has to dig into his wallet and pay like everyone else.

“I was very pleasantly surprised,” Daley Jorgan said. “I feel valued.”

The changes in wages and benefits underscore the changing employment prospects for millions of U.S. teen workers in the wake of the pandemic-induced labor crunch. While other COVID-19-related economic shocks have dissipated in recent years, higher wages and additional incentives for younger workers appear to be the new normal.

Data from Gusto, a payroll platform that serves more than 300,000 businesses across the country, shows how well teenagers are progressing. In June, the typical wage for newly hired workers between the ages of 15 and 19 was $15.68 an hour, up more than 36% from the beginning of 2019.

That exceeds growth rates for all workers, regardless of age, and private wages grew nearly 27% during the same period, according to federal data. What’s more, Gusto’s statistics show that teenagers are uniquely insulated from changes in broader economic conditions that sometimes lead to lower wages for some adults.

“I may be overstating the benefits of this labor market for teenagers, but, I mean, I have to go a long way to do that,” said Gusteau chief economist Liz Wilk. “It’s a better time for teenagers to enter the workforce than it was five years ago or 10 years ago.”

In addition to salaries, businesses that attract teens offer additional perks — such as Jorgen’s gyms and theaters — to sweeten the deal.

Located in fast casual chain Chipotle Mexican BBQWorkers have been eligible for the tuition reimbursement program since before the pandemic. Earlier this year, the California-based company added a wellness offering that includes six free sessions with a licensed counselor or mental health coach. Chipotle also launched a matching program in which eligible employees with student loan payments will receive up to 4% of their pay from the company in their retirement accounts.

In recent years, Chipotle has added benefits programs following surveys of its U.S. restaurant workers — more than a third of whom are teenagers. While the products may drive up operating costs, global benefits director Daniel Banks said they are worth hiring enough new employees and opening more stores. It also improves employee retention, keeping existing locations running smoothly.

In fact, Chipotle found that employees who participated in the education assistance program were twice as likely to stay and more than six times as likely to be promoted to management positions. Banks also said Chipotle’s sales are near record lows.

“Our culture and brand are very important to us. We really try to focus on promoting from within and hiring from within,” he said. “Being able to provide these individuals with the right skills and tools to become effective leaders helps improve the bottom line across the board.”

Elsewhere, small businesses are struggling to keep up.

Erin Powell At The Sugar Shack, a small business in Minnesota, nearly half of her employees are teenagers, doing tasks such as making coffee or baking pizza. Powell adapted to the holiday schedule, offering free menus during shifts and often offering raises. She also hosts holiday parties and strives to create a family-like workplace atmosphere.

Despite these efforts, she sometimes sees teenage employees leaving chain competitors for better pay, such as Starbucks. Powell felt caught between a rock and a hard place: She was trying to do the right thing for young employees while also acknowledging the financial realities of what she could offer without the scale.

“Everyone is still fighting for workers,” Powell said. However, she tried to show employees that “sometimes bigger is not always better.”

To control rising labor costs, she took on the responsibilities of someone else’s hiring manager. Powell is also trying to reduce waste within businesses to cut unnecessary expenses.

Whether it’s a pay raise or financial support for education, these benefits appear to be attracting teens into the workforce. It marks a turn for the group, which has declined sharply in this area in recent decades.

At its peak this year, nearly 40% of people in this age group were employed, government data shows. That’s the largest share since 2009, but still well below the highs recorded in the late 1970s.

“Summer jobs are back,” said Alicia Sather Modestino, an associate professor of economics at Northeastern University who studies youth development. “I remember being totally wrong in the summer of 2021 and saying, ‘Teenagers: run out and grab these jobs because this isn’t going to last.'”

For reference, the federal government found that more than 5 million teenagers entered the workforce last year. Gusto expects sports and entertainment; education; and food and beverage to be popular summer job industries for this age group.

With the workforce still tight, teenagers are also starting to show up more frequently in less stereotypical industries like construction and nonprofit work, Gusto’s Wilke said. Looking ahead, she said, as long as the job market is relatively hot, teens should continue to be able to find these benefits and opportunities.

A shrinking share of teen workers earn the minimum wage, which was once considered commonplace. Only about 3 percent of hourly workers ages 16 to 19 earned at or below the federal minimum wage last year, according to government data. This is down from nearly 20% in 2013.

Because teenagers typically start at the bottom end of a company’s salary spectrum, it may be easier to implement a raise that amounts to a substantial percentage change than for higher-earning, older colleagues, Wilke said. Companies may be more likely to offer big wage increases to younger workers because they typically don’t need other parts of a compensation package, such as insurance, she said.

While today’s employed teens are theoretically well off, there’s an elephant in the room: the rising cost of higher education. Olivia Locarno said she put money from her jobs at Chick-fil-A and Starbucks into a savings account to buy books and dorm room necessities.

The 18-year-old New Jersey resident still eats out with friends from time to time and treats herself to new clothes. But she said she has been trying to resist discretionary spending because of the cost of Marist College’s fall classes.

“It’s hard to continue Amazon Instead of spending money on stuff,” she said.

Jorgan is also saving on coaching fees at Aquinas College in Michigan, where she will be a member of the swim team. She also started thinking about big-ticket purchases like cars on the road.

For Jorgen, leading a so-called team of mutants taught her soft skills like communication and problem-solving. It’s similar to what her brother Thomas said, who learned these things from gig work and uses them in his job in supply chain management today.

Thomas said he wishes he could have been treated the same way his sister was when she was his age. But he added that Daley does need to use the extra money she makes to combat inflation. Thomas says there’s no sibling jealousy — he’s just happy to see her carrying on the family legacy in meaningful work.

“She should be in a good spot,” Thomas, 24, said.