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March 12, 2012

Unemployment Rates by Educational Attainment

In the "Men as Helpless Victims" thread, we have been discussing the relationship between educational attainment and unemployment.

For the past twenty years, the federal government's Bureau of Labor Statistics has tracked unemployment and labor force participation by level of education. Their data is anything but ambiguous. For every single year over the past two decades, there has been a clear correlation between education level and both unemployment and labor force participation.

Higher education is positively correlated with labor force participation and low unemployment. Here is the data for unemployment vs. education level:


As you can clearly see, the gap in unemployment rates between workers with a college degree or higher (green) and those with only a HS degree (dark blue) holds pretty constant over the entire 20 year period. In general, unemployment is about twice as high for HS grads as it is for college grads.

For those with less than a HS degree (tan line), the gap is even larger. Now let's look at labor force participation:


Once again, there is a constant (and quite clear) correlation between labor force participation and education level. But there's something else going on that isn't immediately apparent from simply inspecting the data:

Those with a college degree or higher have the lowest unemployment rates over time, and the unemployment rate increases as attainment decreases. The unemployment rate approximately doubled for each group during the recent recession. Since those with low educational attainment already started out with higher unemployment rates, this doubling translates into larger absolute changes for these attainment groups. That is, while we see similar patterns for all groups, higher educational attainment is associated with smaller changes in unemployment.

The relationship between education level and both unemployment and labor force participation is both robust and consistent over time. The final chart is quite interesting - it shows male vs. female unemployment rates over time:


Note that there are only 3 times when a wide gap opens up between male and female unemployment, and each one occurs either at or immediately after an economic downturn:

The unemployment rate time series for men and women also begins in 1948. Traditionally, women have had greater employment stability than men during economic downturns.

We are not sure what to make of this chart, but we suspect there's a James Taranto column lurking in there somewhere :p

Posted by Cassandra at March 12, 2012 05:28 PM

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Well, I have a theory. A college degree does not demonstrate you are fit for a particular job, per se. But it does demonstrate that you are trainable, you know how to meet a deadline, you can (theoretically at least) get up on time and be somewhere on a schedule. In other words, you're probably a good risk for employment. Without that, you may be and do all those things, but you've got no proof of it. So if you're looking for a job, having that degree puts you at an advantage, regardless of what the degree is in. Sure, a BA in History isn't exactly OJT for an IT job, but my company has had several History majors. And all for that reason.

Posted by: MikeD at March 13, 2012 08:42 AM

Interestingly enough, I never told my sons that college would get them hired.

I told them that the purpose of college was to produce an educated citizen. Getting a job was something they needed to figure out.

In life, I've seen all kinds of people with "highly marketable" degrees who can't think their way out of paper bag. And I've seen people with liberal arts degrees who were well rounded and could learn almost any task quickly and well.

I have some experience with hiring - not extensive, but some. I've found that personal qualities are just as important (if not more) than credentials, but I've also learned the hard way that hiring someone who has great personal qualities but has to overcome a huge experience or knowledge deficit means WAY more training and mentoring on my part.

In a professional environment there are certain skills one should be able to take for granted. Not all college grads have these skills, but if they graduated with decent grades from a good school, they are more likely than not to have them.

It's not that you don't want to give someone a chance - I've done that. It's more a question of whether you want to deal with a steep learning curve.

Posted by: Cassandra at March 13, 2012 09:25 AM