The Young and the Restless

If you rely on teenage workers, you may have noticed there's a shortage. What's going on?

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Successfully employing teenagers helped Rob Nagel grow his Point Pleasant Beach, New Jersey-based business, Surf Taco, from one restaurant in 2001 to seven today. "They're the foundation," says Nagel, 37. "They're on the front lines taking orders, giving the customers food, connecting with the customers. Overall, they're responsible for whether I'm successful or not." The bad news for entrepreneurs like Nagel is that fewer teenagers work these days. The labor participation rate for 16- to 19-year-olds dropped to a low of 41.3 percent in 2007, according to the Bureau of Labor Statistics. That's down more than 10 percent from 1990, the first year teen labor rates began falling from a 1989 peak of 55.9 percent.

More emphasis on school, especially summer school, is the most commonly cited reason for the trend, says Mitra Toossi, a Bureau of Labor Statistics economist. However, she adds that labor participation rates for nonstudents have fallen as well, making the decline in teen workers even more mysterious—but it's a fact that entrepreneurs must face nonetheless.

Many entrepreneurs rely on teen workers, but none more than restaurant owners. Eateries are the largest employers of young people. According to the National Restaurant Association, 32 percent of Americans got their first work experience in a restaurant and about 25 percent of today's restaurant workers are between age 15 and 19. However, many restaurants report employing fewer teens than they did a few years ago.

Restaurants are responding by seeking more senior workers, recruiting from different ethnic labor pools, and deploying new technology and better training to boost productivity. But they're not giving up on teens, says Hudson Riehle, senior vice president of research for the National Restaurant Association. Work-study programs, academic assistance initiatives and mentoring efforts all try to make work a part of education rather than a competitor.

Nagel, who employs more than 100 teens and expects $8 million in sales this year, recruits through window signs and high school guidance counselors but gets some of his best results from employee referrals. "They can put an ad on their MySpace or Facebook page and get more responses than [I can by] going through a guidance office," he says.

Entrepreneurs will likely need to be even more creative and persistent in the future, as the teen labor participation rate looks like it's stuck in a long-term downward trend. Says Toossi, "It's not going to increase any time soon."

—By Mark Henricks, who writes on business and technology for leading publications and is author of Not Just a Living.

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