Happy Labor Day, Youngins’
Hot dogs, hamburgers, and apple pie. Oh its great to be a working American on Labor Day. Unless of course, you’re under 19 with a 25.7% chance of being unemployed.
Minimum Wage and Teens
I was surprised to see that the rise in unemployment was limited even after minimum wage took a hike to $7.55 an hour. However, teens paid the biggest price. With most teenagers working jobs near minimum wage, they were the most likely to be cut as the cost of labor skyrocketed far beyond their “worth” to the business.
Teen Unemployment Will Last Longer
I would think that the extreme amount of unemployment in the younger populace will continue for far longer than for other age groups. Talent is cheap, extremely cheap, so cheap that unskilled crafts are finding very skilled workers. If the choice between a teenager and an MBA toting Harvard grad has to be made, it would only be my bet that the MBA lands the job. Seems crazy, but these kind of scenarios exist today, especially considering the already inflated importance of degrees in the workplace.
Which Industries are Affected
The lack of employment among teens is sure to hurt more than a few industries. Off the top of my head I’m thinking education companies, teen apparel and branding companies, and other sectors that cater to the expendable income of teens.
Not Just Their Money
I’m thinking there could be some very real trading possibilities in this data. Unfortunately though, teens are not only funded by their own jobs, but also money given to them by their parents. So things like clothing and other “nonessentials” might not be as directly affected. Teens tend not to skimp on luxury.
Best Chance on Recovery
The best chance to play the unemployment effect is on the rebound. Since the numbers are already caluclated into the dip, I’m looking to move when unemployment goes down. Below is a chart of one particular stock, Abercrombie and Fitch (ANF), a clothing retailer, that I would think perfect to play as unemployment with the younger population subsides. The stock is trending very well, and far from its highs, making it a perfect rebound candidate when the economic outlook clears up.
