New from the Money Scoop
It's a far cry from the freewheeling spending of recent years, when teens splurged on $100 Coach wristlet handbags, $60 Juicy Couture T-shirts and $80 skinny jeans from Abercrombie & Fitch.
Now jobs for teens are less plentiful, and parents who supply the allowances are feeling the economic pinch themselves.
The stalwart retailers of teen apparel, such as Abercrombie and American Eagle Outfitters Inc., are reporting sluggish sales, defying the myth that teen spending is recession-proof: It holds up longer, but can eventually fold.
It's even becoming cool to be frugal.
Last week, Ellegirl.com, the teen offshoot of Elle magazine, launched a new video fixture called Self-Made Girl, which shows teens how to make clothes and accessories. The first video offers tips on how to create a prom clutch.
"It's a little tacky in the economic unrest to tote a big logo bag," said Holly Siegel, the site's senior editor. She said it's no longer about teens "one-upping each other," but rather where they can get it cheap.
Victoria Bradley, a 16-year-old from Springfield, Mo., says the $80 she earns each month from baby-sitting is being eaten up by more expensive school lunches, late-night snacks with friends and stylish clothes.
Now, she says, she and her friends head for the thrift store or just browse at the mall.
"I used to be able to buy a T-shirt and jeans every couple of months," Victoria said, adding some of her friends are even "making their own clothes or altering their old ones to fit or look better."
Victoria's mother, Michelle Bradley, said she and her husband cut back spending on themselves last year, and early this year also started paring back "frivolous" buying for their three girls.
"We have made a conscious effort to not use credit cards," said Bradley, who stopped paying for Victoria's text messages last month. The top priority is school supplies and choir fees.
The job market for teens isn't what it used to be, either: Nathan Reeser, a Cincinnati 15-year-old, lost his job making pizza four months ago and has had to cut back on spending. He's shopping more at Target and less at Abercrombie & Fitch's Hollister stores.
"Now, I just get money from my parents, but they don't have as much because of taxes and everything else," he said.
Teen hiring has slumped by 5 percent since March 2007, with many mom-and-pop stores, which typically hire younger workers, laying off employees. Hiring in the overall job market fell by just 0.1 percent during the same period.
That's still not as bad as the 13 percent drop in teen hiring in the early 1990s. That means that if the larger job market mirrors the last teen hiring slump, "we're not out of the woods," said Michael P. Niemira, chief economist at the International Council of Shopping Centers.
Economists say this teen spending slump could be the worst in 17 years, when teen frugality led to the demise of once-hot Merry-Go-Round Enterprises Inc. and ushered in an era of flannel shirts and torn jeans.
Last month, teen retailers suffered an 8 percent drop in sales at established stores. The good news is that the under-20 crew is still spending on tech gadgets like iPods, cell phones and headsets, analysts say.
What makes this slump different, says Deloitte Research chief economist Carl Steidtmann, is the soaring cost of basics such food and gas, which have a direct impact on younger consumers.
Gas could reach $4 a gallon this summer, and prices for teen favorites like pizza and potato chips have all climbed, squeezing the amount of cash teens can spend elsewhere.
Sales at teen retailers open at least a year averaged a 0.5 percent decline last year, compared to a 3.3 percent increase in 2006 and a 12.1 percent gain in 2005, according to a UBS-International Council of Shopping Centers tally.
Retailers like American Eagle and Tween Brands Inc., which operates Limited Too, have cut their earnings outlooks amid deeper-than-expected sales declines. Abercrombie & Fitch reported a disappointing 10 percent sales drop in March, while Pacific Sunwear of California Inc. announced earlier this year it was shuttering its urban-inspired Demo stores.
Among the few bright spots is Aeropostale Inc., whose jeans are about 30 percent cheaper than Abercrombie & Fitch. Candace Corlett, principal at consulting firm WSL Strategic Retail, said low-price chains like H&M and Steve & Barry's should do well.
And Urban Outfitters Inc., which operates its namesake stores and the Anthropologie brand, has held up well. Trend experts believe that's because it has a thrift-store feel.
Secondhand clothing chains have seen business surge this year as teens and their parents buy popular brands like Gap, Banana Republic and Juicy Couture at a fraction of the regular price.
Kerstin Block, president and co-founder of Buffalo Exchange, a Tucson, Ariz.-based chain that sells second-hand clothing, said Gap jeans there run $9 to $20. A new pair runs $50 to $60. Block noted that buying second-hand is also appealing to a growing eco-friendly sentiment among teenagers.
"It is way cooler to get a super deal on that shirt rather than being able to spend the most money on something," said Anna D'Agrosa, director of Consumer Insights at The Zandl Group, a market research company focusing on teens. "Kids are becoming really aware of what is happening to their economy and to their families."
AP Business Writers Lisa Cornwell in Cincinnati and Marcus Kabel in Springfield, Mo., contributed to this report.
No state minimum wage law.
Under a voluntary flexible work hour plan approved by the Alaska Department of Labor, a 10 hour day, 40 hour workweek may be instituted with premium pay after 10 hours a day instead of after 8 hours.
In the District of Columbia, the rate is automatically set at $1 above the Federal minimum wage rate if the District of Columbia rate is lower.
KANSAS The State law excludes from coverage any employment that is subject to the Federal Fair Labor Standards Act.
LOUISIANA There is no state minimum wage law.
No state minimum wage law.
NEBRASKA 07/24/2009 $5.85
NEW HAMPSHIRE $6.50
NEW JERSEY $7.15
NEW MEXICO $6.50
NEW YORK $7.15
NORTH CAROLINA $6.15
NORTH DAKOTA $5.85
RHODE ISLAND $7.40
No state minimum wage law.
SOUTH DAKOTA $5.85
No state minimum wage
WEST VIRGINIA $6.55
This document was last revised in December 2007.
U.S. Department of Labor
Frances Perkins Building
200 Constitution Avenue, NW
Washington, DC 20210
The poll also found:
_The biggest worriers are those expecting to buy soon. Of that group 43 percent frets that their home's value will drop in the next two years, compared with 25 percent of those not expecting to buy soon.
_Fifty-nine percent think now is a good time to buy.
_Half think this is a very tough time for first-time buyers, an increase from two years ago. Nearly two-thirds think it's harder for first-home buyers than it was five years ago.
The AP-AOL Money & Finance poll was conducted from March 24-April 3 by Abt SRBI Inc. It involved telephone interviews with 1,002 adults nationwide, for whom the margin of sampling error is plus or minus 3.1 percentage points.
Included were interviews with 769 homeowners, for whom the sampling margin of error is plus or minus 3.5 points. The margin of sampling error for other subgroups was larger.
How Does Your Salary Stack Up?
Published by Parade magazine: April 13, 2008
Americans are optimistic and resilient by nature. We’re upbeat about our personal prospects despite our anxiety about the current economy. Almost two-thirds of respondents to a national survey say they’re hopeful about what 2008 has in store for them, even though a majority of them, like many experts, believe we are already in the midst of a recession.
Wages Are Down
It’s tough out there: Hiring has slowed, unemployment is rising, and most salaries haven’t kept pace with the cost of basics such as groceries, gasoline and health care.
The U.S. is losing jobs for the first time since 2004. February’s loss of 101,000 jobs was the biggest drop in five years and the third monthly loss in a row.
Both high-end and low-end retailers are reporting slower sales, a sign that consumers at every income level are tightening their belts. As demand falls, many employers have cut their workers’ hours. The Labor Department says more than 600,000 people now work part-time because they can’t find full-time work. A growing number of Americans have been out of work for more than six months. The unemployment rate is expected to rise from 4.8% to 5.5% this year—and experts say it would be even higher if so many people hadn’t given up looking for work.
The nation’s median salary last year was $36,140 (half of all workers made more, half made less). After inflation, that’s almost 0.5% below the 2006 median salary. The average 2007 pay increase was less than 4%, and many Americans got smaller raises or none. Meanwhile, the Consumer Price Index rose 4.3%. We now spend almost 5% more for food, 8.6% more for hospital services and a whopping 35% more for gasoline than we did a year ago.
Health Costs Soar
Health-care costs also are on the rise. Americans whose jobs provide health insurance paid about 11% more for it last year and probably will pay an additional 10% in 2008. Coverage is even more expensive for independent contractors.
Paychecks Won’t Stretch
Even people with good jobs feel they’re losing ground.
The Job Market Contracts
A major housing downturn and nationwide belt-tightening are having a big impact on the job market. The biggest layoffs have been in construction, manufacturing and financial services. Indeed, experts predict that up to 20% of securities-industry workers may lose their jobs. Bear Stearns—Wall Street’s fifth-largest investment bank—collapsed in March and was sold at a fire-sale price. Many of its 14,000 employees may be laid off.
As consumers spend less, hotels, restaurants and other service companies are experiencing their slowest growth in years, so they’re holding off on hiring.
And older workers aren’t retiring. In the mid-1980s, only 18% of people in their late 60s worked. Today, that figure is 29% and growing .
Consumers Cut Back
Americans are responding to today’s economic realities by spending more cautiously, borrowing less and trying to save more.
The soaring cost of oil, now around $100 a barrel, also has driven up the cost of petrochemical-based products—from lipstick, shampoo and shower curtains to polyester clothing and computer parts.
Where the Jobs Are
Even in a recession, some sectors of the economy are likely to keep growing—among them education, health care, security services and information technology. As entertainment increasingly is distributed online, there’s a growing demand for designers, writers and art directors with tech skills.
Good Jobs For Right Now
In a struggling economy, some jobs are more recession-proof than others
Energy. Jobs related to oil, gas and nuclear power remain essential and in demand. Positions range from scientists to engineers to rig and well workers.
Security. The Defense and Homeland Security departments are attempting to fill 83,000 civilian jobs, from auditors to program analysts.
Accounting. Managing corporate finances is especially important during lean times.
Wireless Support. With a mobile workforce, companies need professionals who can maintain wireless networks and protect information security.
Database Administration. As companies become more reliant on data for research, sales, and marketing, there is an increased need for database administrators.
Good Jobs For The Future
Many of the fastest-growing, best-paying jobs are in new media, law and information technology
In an economy reliant on technology, professionals who can design, develop and maintain computer systems are crucial. Chief information officers are commanding salaries of more than $200,000. Systems analysts can make more than $91,000.
Lawyers are in high demand in areas including intellectual property, corporate law and litigation. First-year attorneys are starting out at $72,500 in small firms and as high as $137,000 at large firms. Legal-support workers are finding jobs plentiful and salaries healthy too. Legal librarians make as much as $69,500 a year, while calendar clerks can earn up to $46,750.
The rapid growth of the Internet is fueling a boom in online media jobs. A creative director, responsible for website content and presentation, can attract a salary ranging from $80,000 to $120,000. On the business side, advertising salespeople are earning up to $103,500.
PARADE’s annual “What People Earn” salary roundup is not a scientific study. Photo captions reflect the salary information provided by the participants and available sources. Celebrity earnings were compiled through published sources and with the assistance of Salary.com. Additional research and photography coordinated by J. Tyler Pappas Creative.