Youth Employment and Financial Capability
THE OPPORTUNITY AND THE CHALLENGE A young person’s first job is a critical developmental step toward adulthood. A first job provides an opportunity for youth to engage with the financial system and also infuses earnings into the local economy. In cities across the nation, youth employment programs are the single most significant way that hundreds of thousands of teens are introduced to the working world each year. With municipal ingenuity as well as private sector and philanthropic support, some city leaders and partners have developed innovative, locally-financed summer employment programs in recent years. Related year-round programs complement summer efforts, typically for smaller numbers of youth.
Municipal leaders and others supporting these developments have spotted the point-in-time opening that youth employment provides to improve financial practices and financial health outcomes for the adult workforce of the future. Along with steady growth in the number of young people employed, experiments have emerged in several cities that use the payroll process to enroll youth in bank accounts and promote saving toward goals like advanced education or transportation. These efforts can produce promising results. Youth who are in these programs may be more likely to open accounts and save more money than those not in employment programs. Findings from a 2013 evaluation of MyPath, San Francisco’s financial capability program for youth, found that short-term programs with behavioral economics features can yield significant gains in the financial capability of economically vulnerable participants in youth employment programs.
When financial capability programs are combined with income, incentives and account access, young people’s understanding of the financial concepts being demonstrated can be particularly encouraging for developing lifelong habits. Results from the national Saving for Education, Entrepeneurship, and Downpayment (SEED) matched savings demonstration project underscore this concept. The study found that having a matched savings account focused on long-term goals, combined with financial education, resulted in youths’ improved financial awareness, a positive view of self, an orientation to the future and a sense of security.