Unemployment among US teenagers has climbed to levels not seen since early 2021, a sign that hiring in some parts of the economy has slowed and that one of the strongest labor markets in generations could be weakening.

The unemployment rate for Americans ages 16 through 19 came in at 13.2% in October, up from 9.2% six months earlier and the highest rate of joblessness for teens since February 2021, according to US government data.

The uptick in jobless teens comes as overall US unemployment has remained under 4% for 21 straight months with job openings still outpacing the supply of potential workers, and the Federal Reserve's rate hike push has yet to fully moderate wage growth. But the rise in teenage unemployment could indicate a looming slowdown for the wider labor market.

"Teens are often a leading indicator of where the job market is heading because they are usually the last to be hired and the first to be fired," said Alicia Sasser Modestino, an associate professor of public policy and urban affairs and economics at Northeastern University in Boston. "So if the labor market does soften in the coming months, I would expect it to appear first in the youth job numbers."

Unemployment among younger teens at post-COVID high

Unemployment for teens ages 16 through 19 averaged 11% through the first 10 months of 2023, up from 10.7% in 2022. The unemployment rate for 18- and 19-year-olds was 12.6% in October and has averaged 11.1% through the first 10 months of 2023, right where it was in 2022.

Meanwhile, the unemployment rate for 16- and 17-year-olds climbed to 14.6% in October, the highest unemployment rate for this group since November 2020. The unemployment rate for 16- and 17-year-olds averaged 10.9% through the first 10 months of this year, compared to 10.2% in 2022. The unemployment rate for 16- and 17-year-olds in October is up about 480 basis points from where it was a year earlier, a sign that business owners who previously felt they needed to retain summer help due to the scarcity of labor supply now believe they can let these workers go.

"Businesses who had relied on teens during the summer may have been less likely to keep them on for the fall if they felt less certain about the future economic outlook," Modestino said.

The number of job openings in the US fell to 8.73 million in October, down from the high of 12.03 million in March 2022 and the lowest number of job openings since March 2021, the US Bureau of Labor Statistics reported Dec. 5. Retail job openings fell to 543,000 in October, down from the peak of 1.34 million in March 2022. Leisure and hospitality job openings fell to 1.22 million, down from the peak of 1.86 million in December 2022.

Restaurants, which struggled to hire and retain staff during the COVID-19 pandemic, may be giving more shifts to full-time employees over teen workers who may be viewed as temporary help, according to Neely Tamminga, co-founder of advisory service DISTILL.

"We are observing a rise in teen unemployment as yet another sign the labor market is weakening or normalizing, at best," Tamminga said.

The job market for teenagers serves as a good barometer for overall labor market conditions, which remain good, according to Luke Pardue, an economist at Gusto.

"Although things have cooled down from the red-hot conditions over the past two years, the job market remains historically strong," he said.

While the teen unemployment rate hit 13.2% in October, it remains below the 14.4% average from 2015 through 2019. Similarly, the unemployment rate of 3.9% in October may have been up from the post-pandemic low of 3.4% but is still much better than the 4.4% average from 2015 through 2019.

If the US enters a recession, teen unemployment will likely spike as employers move to selectively hire workers with more experience and businesses that tend to hire younger people — restaurants, retail stores, amusement parks and resorts — will curtail hiring as consumer spending slows, said Daniel Zhao, an economist at Glassdoor.

"Workers with less experience or formal training can also be hit harder by recessions as employers can afford to be choosier when unemployment is high," Zhao said.

More teens seeking work

Some of the rise in teen unemployment could be due to the rise in the labor force participation rate, a measure of the population in the workforce, Zhao said. The rate jumped to 37.9% in October, the highest rate since June 2009.

The rise may be partially due to a potential shift in seasonal patterns for teen employment throughout the pandemic and the "truly unusual" teen employment recovery post-pandemic, Zhao said.

During the pandemic, teen unemployment fell below 10% for the first time since 1956. In addition, the post-pandemic recession recovery was the first since 1980 where teen labor force participation recovered to pre-recession levels.

The ongoing shift in the teen labor force could be a sign of whether they seek employment or higher education.

"Over the last few decades, teens have increasingly left the labor force in favor of school or summer activities to prepare for college," Zhao said. "With increasing questions about the [return on investment] of a college degree amid high student debt and a recently hot job market, the pandemic recovery may hint that future recoveries will not see such a sharp step down in teen labor force participation."

If the US economy stumbles into another recession, the teenage labor picture will likely shift again, said Gregory Daco, chief economist at EY-Parthenon.

"A recession would likely lead to lower participation as kids would favor school, but we would initially see a rise in the unemployment rate as the transition to school wouldn't be immediate," Daco said.