Teens enter the workforce as employers offer higher wages and benefits

Dailey Gogan was thrilled when she learned she would be making $15 an hour and a host of perks as head swim coach for the Detroit Metro team. Her older brother's reaction seemed more like surprise.

At 18, Gogan spent the summer organizing meets as the leader of a team of 250 people. She also got some freebies for the facilities inside the park where they practiced, such as gym access and some free tickets to the movie theater.

That $15 an hour is about 25 percent, or $3 an hour, more than her older brother was making at the same job five years ago, and if he wants to use the exercise equipment or see a movie, he has to dig into his wallet like everyone else.

“I was very pleasantly surprised and feel very appreciated,” said Daily Gogan.

The pay and benefits shift underscores the changing job prospects for millions of American teen workers in the wake of the pandemic-induced labor crisis. While other COVID-19-related shocks to the economy have dissipated in recent years, younger workers are increasingly getting higher wages and extra benefits.

Data from Gusto, a payroll platform that serves more than 300,000 businesses nationwide, shows just how far teens have come. The median hourly wage for new workers ages 15 to 19 was $15.68 in June, up more than 36% from the start of 2019.

That’s outpacing the growth rate for all workers regardless of age on private payrolls, which rose just under 27% over the same time period, according to federal data. What’s more, Gusto’s statistics show that teens have been uniquely insulated from shifts in broader economic conditions that have sometimes led to lower wages for some adults.

“I could probably overstate the benefits that this labor market could bring to teens, but I mean, I’m going to have to work hard to get there,” said Liz Wilke, chief economist at Justo. “It’s a much better time for teens entering the labor market than it was five or 10 years ago.”

Beyond the pay, companies targeting teens have added extra perks — like a gym and theater access — to sweeten the deal.

In a fast casual restaurant chain Chipotle Mexican RestaurantWorkers have been eligible for the tuition reimbursement program since before the pandemic. Earlier this year, the California-based company added a wellness offering, which includes six free sessions with a licensed counselor or mental health coach. Chipotle also launched a matching program, where eligible employees who pay off student loans will receive up to 4% of their pay from the company into their retirement account.

Chipotle’s benefits package has been added in recent years after it surveyed its U.S. restaurant workers — more than a third of whom are teenagers. While the offerings can add to operating costs, global benefits chief Daniel Banks said they’re worth it to get new hires and open more stores. They can also boost employee retention, which in turn keeps existing locations running smoothly.

In fact, Chipotle found that employees who participated in the education assistance program were twice as likely to stay with the company and six times more likely to move into management roles. Banks also said that employee turnover rates at Chipotle are near all-time lows.

“Our culture and our brand are very important to us,” he said. “We really try to focus on internal promotions and internal hiring,” he added. “Being able to provide these individuals with the right skills and tools to be effective leaders helps drive bottom line results across the board.”

Elsewhere, small businesses are trying to keep up.

Nearly half of Erin Powell’s employees at The Sugar Shack, a small Minnesota business, are teenagers, taking on roles like making coffee or baking pizza. Powell makes sure to accommodate vacation schedules, offer free menu items during shifts and give frequent raises. She also hosts holiday parties and tries to foster a family-friendly atmosphere at work.

Despite these efforts, I have occasionally seen teenage employees leave for higher wages at rival chains like StarbucksPowell feels caught between a rock and a hard place: trying to do what's right for her young workers, while also recognizing the financial realities of what can be offered without the need for size.

“Everyone is still competing for workers,” Powell said, but she tries to show employees that “sometimes the biggest isn’t always the best.”

To keep the rising labor costs manageable, she took on responsibilities that others would have hired a manager for. Powell also tried to reduce waste within the company to cut unnecessary expenses.

Whether it’s higher wages or financial support for education, these blessings seem to be luring teens into the workforce, a turnaround for a group that has seen a steep decline on this front in recent decades.

At its peak this year, government data showed that nearly 40 percent of people in this age group were working. That’s the highest share since 2009, but still far from the highs of the late 1970s.

“Summer jobs are back,” said Alicia Sasser Modestino, an assistant professor of economics who studies youth development at Northeastern University. “I remember being completely wrong in the summer of 2021 when I said, ‘Teenagers: Just go out and get these jobs, because this is not going to last.’”

For reference, the federal government found that more than 5 million teens were in the workforce last year. Justo expects sports, entertainment, education, and food and beverage to be popular summer job sectors for this age group.

Teens are also starting to show up at a higher rate in less stereotypical sectors, such as construction and nonprofit work, where the labor force is still tight, according to Gusto’s Wilke. Looking ahead, she said, teens should be able to continue to find these perks and opportunities as long as the job market remains relatively hot.

A tiny percentage of teen workers make the minimum wage, which used to be common. Only about 3 percent of hourly workers ages 16 to 19 were paid at or below the federal minimum wage last year, according to government data. That’s down from about 20 percent in 2013. (The federal minimum hourly wage has been at $7.25 since 2009, though many states have higher minimums.)

Because teens typically start at the bottom of a company’s pay scale, Wilke said it’s easier to implement pay raises that equate to big percentage changes than it is for older colleagues who earn higher salaries. Companies may be more inclined to give big pay gains to younger workers, she said, because they often don’t require other parts of the compensation package, such as insurance.

While today’s working teens are theoretically wealthy, there’s a big problem: the rising cost of higher education. Olivia Locarno says she put the money she earned from her jobs at Chick-fil-A and Starbucks into a savings account to buy books and college supplies.

The 18-year-old New Jersey resident still makes sure to eat out with friends and buy new clothes from time to time. But she said she tried to resist discretionary spending because of the costs of starting at Marist College in the fall.

It's hard to just keep going. Amazon “Don't spend your money on things,” she said.

Gogan is also saving her coaching salary to cover her expenses while at Aquinas College in Michigan, where she will be a member of the swim team. She's also started thinking about big-ticket purchases in the future, like a car.

For Gogan, leading the so-called Mutants team taught her soft skills like communication and problem-solving, similar to what her older brother, Thomas, said he learned on the job and uses today in his job in supply chain management.

Thomas said he would like to be paid the same rate his sister was when he was her age. But he added that Dailey needs to increase the extra dollars she makes to account for inflation. Thomas said he doesn’t feel jealousy among the siblings — he’s just happy to see her carrying on a family legacy with a meaningful job.

“You have to be in a good position,” said Thomas, 24. “Obviously things are more expensive now and so on, so there's a balance.”