Economists are constantly coming up with offbeat and fun economic indicators. We’ve seen the economy explained through hemlines, long-distance relationships and even the toughness of marine recruiting ads.
In this spirit, let me unveil a new indicator—the American Idol indicator.
This indicator uses the number people attending Idol auditions each year to tell us if younger workers are more discouraged about their employment prospects. The idea here is that people are more likely to go to an AI audition if they have a lot of time on their hands – presumably because they are unemployed, underemployed, or have given up looking for a job. So a rise in the number of auditions might correspond to a rise in the unemployment rate, while a drop in auditions might signal things are getting better.
As it turns out, PPI’s American Idol indicator suggests younger workers are feeling better about their employment prospects over the coming months. The graph below compares the unemployment rate of workers aged 16-29 with the number of American Idol auditions since 2007. Rules of AI auditions stipulate contestants must be American citizens that are between the ages of 15-28.
Since 2008, when the recession caught up with the labor market, a rise in the number of American Idol auditions has corresponded to increases in the youth unemployment rate. When auditions dropped in 2011 the unemployment rate fell along side.
This year’s first round auditions, which came to an end last Friday, shows total auditions dropped by almost 40 percent over 2011. And this year’s large drop off in auditions corresponds – so far – to further declines in the youth unemployment rate (the data is through June). So while this year’s lower audition totals may not be a good sign for next season’s ratings, it just might be a very good thing for young workers and the broader labor market in the coming months.
Could the drop-off in ratings this year be explained by the declining popularity of the show? Maybe – but maybe not. If it was just about a decline in ratings or popularity, we should have seen the numbers consistently falling. They did not, even as ratings have steadily declined since 2007.
Could the jump in 2010 be little more than a Steven Tyler-Jennifer Lopez “bump?” Probably not. Though there was much fanfare after they were announced as the new judges their effect is more is more likely to be on ratings. First round auditions are given in front of producers; the judges aren’t even there. Similarly, their recently announced departure was unlikely a factor in the low turnout auditions for this year as auditions started well before the announcement.
Indicator aside, any recovery in lost ground for young workers is welcome. The younger segment of the labor force was particularly hit by the last recession. Besides workers aged 16-24 having an unemployment rate twice the national average, the recession exacerbated an already worrying trend of these workers leaving the labor force altogether. Meanwhile, young college grads working full-time have seen their real average earnings drop 15% over the last decade. We could see these affects play out for years to come.
There is a reason why American Idol is one of the highest rated, longest running shows in the history of television. And it could be the same reason why AI audition trends may give insights to the youth labor force at large. To many, AI epitomizes the “American Dream” of upward mobility – that there is an opportunity for anyone to make it big. And people hold on to those opportunities, no matter how small the probability of winning. Especially when the alternative involves declining real wages and poor employment prospects with rising debt.
Of course, the relationship between Idol auditions and youth unemployment may merely be a fun coincidence. But any sign that job prospects for young Americans might be brightening is fun indeed.