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Digging into labor data: Unemployment is largely a problem of least educated

Unemployed workers listen to remarks during a Dec. 1 news conference on the expiration of unemployment benefits.
REUTERS/Kevin Lamarque
Unemployed workers listen to remarks during a Dec. 1 news conference on the expiration of unemployment benefits.

Here’s important context for our stubbornly high unemployment rate: It is largely a problem of the least educated.

Americans with college degrees have been close to full employment throughout the Great Recession. And this holds especially true in Minnesota.

So the groups with the greatest stake in Washington’s fight over extending unemployment benefits are those who dropped out of high school or never entered a classroom after high school graduation.

For the most part, these are the people who are making the desperate tradeoffs between paying bills and buying food. They are putting off health care. They earned far less to begin with, and they’re hit much harder during tough times.

They also are less likely to vote.

Education defines a gap
The national unemployment rate was 15.3 percent for high school dropouts in October, according to the Bureau of Labor Statistics. And the rate was 10.1 percent for high school graduates who’d never gone to college.

Compare that with a 4.7 percent unemployment rate for those with a bachelors’ degree or higher.


National education-employment gap

Unemployment rate Oct. 2010 (percent, seasonally adjusted)

National education-employment gap
Source: Bureau of Labor Statistics

In Minnesota, the gap is even wider. The unemployment rate for high school dropouts was 19.2 percent on average during 2009, according to the Bureau’s latest state-level statistics. [PDF]

And get this: For Minnesotans with college degrees, the 2009 average rate was 3.4 percent.

Even taking your education a bit beyond high school seemed to help shield the recession’s nasty blows. Minnesotans who had completed some college classes or earned an associate degree scored an average unemployment rate of 6.6 percent during 2009 – compared with 8.9 percent for high school graduates who never attended college.


Minnesota’s employment-education gap

Average unemployment rate, 2009 (percent)

Minnesota's employment-education gap
Source: Bureau of Labor Statistics

Natural unemployment
You may know highly educated people who lost jobs during the Great Recession. I do.

To be sure, attorneys have been laid off, teachers have been terminated, companies have cut engineers from their staffs and some hospitals have let go of nurses. This can be devastating for the individuals who got the pink slips, especially those with hefty college loans to repay and families to support.

But there is always some churn in the job market.

Macro economists argue over the definition of full employment. Some have maintained that the ideal unemployment rate is zero, meaning that everyone who wants a job has one.

That’s an elusive ideal. As a practical matter, economists talk in terms of more realistic measures, such as the “natural” unemployment rate

The target has moved over the years, but since World War II, the United States generally has said we have full employment when the unemployment rate stands at about 3 percent for people aged 20 and over.

In other words, Minnesota enjoyed conditions very close to full employment last year for college graduates with their 3.4 percent unemployment rate.

Getting worse
Dig deeper into the BLS data, and you see that the education-employment gap has grown over the past decade. The least educated have fallen further behind during this recession than they did in earlier economic downturns.

And there’s reason to worry that the prolonged period of joblessness we’re suffering now will make their plight even worse. Federal Reserve Chairman Ben Bernanke expressed concern last week over workers who have been without a job for a long time, Bloomberg reported.

“This is very unusual and very worrisome because people who are out of work for an extended period, their skills tend to erode,” Bernanke said at a meeting with business leaders in Columbus, Ohio.


The employment gap defined by education has grown since the last recession

The employment gap defined by education has grown since the last recession
Source: Bureau of Labor Statistics
*National rates for the civilian population aged 25 and older

About 6.2 million Americans — 42 percent of those without jobs — have been unemployed for more than six months. As Bernanke suggested, they could be left further and further behind as the economy recovers with little need for their rusty job skills.

Not in your rear-view mirror
The education-employment gap is not a problem the college-educated can watch in their rear view mirrors as they race toward economic recovery.

Minnesota’s demographics make it a pressing problem for the state’s future economic well being.

One reason that Minnesota’s unemployment rate held lower than the national rate through most of this last recession is that the state’s economy is built on a relatively well-educated workforce. Jobs here tend to require professional and technical skills. And workers here have the skills to fill them.

But that is set to change. The relatively well-educated and well-skilled baby boomers are getting ready to retire.

Meanwhile, the populations that are projected to grow the fastest are in Latino and black communities — where, for one reason or another, kids are far more likely to drop out of high school.

This is the big-picture problem looming in the background as a new Legislature gets ready to convene in St. Paul. Our new crop of lawmakers and our new governor (who ever that may be and whenever he gets seated) have more challenges facing them than the daunting task of balancing the state’s budget.

Their actions or inactions on a range of issues — from higher education funding to programs aimed at keeping kids in school — are going to set the employment prospects for a new generation of Minnesota workers.

Sharon Schmickle writes about national and foreign affairs and science. She can be reached at sschmickle [at] minnpost [dot] com.

Comments (17)

  1. Anonymous Submitted by Anonymous on 12/06/2010 - 07:20 am.

    Okay those are the OFFICIAL unemployment numbers. What about the REAL numbers – U6 – which includes people not employed full time but who would like to be, and discouraged workers? Nationally that number is over 17 percent. How does education fit into those patterns? I have a hunch that once you fill in the blanks in the U6 education will be much less ameliorative.

  2. Submitted by Richard Schulze on 12/06/2010 - 07:26 am.

    Many people hold a delusional belief that we can compete with China, India, Malaysia et al by reducing costs. If only we get rid of unions, if only we get rid of environmental rules, if only we get rid of all taxes, then our companies can compete with these up & comers. That’s insane unless you think that lowering American standards of living by a factor of 10 or 100 is a good idea.

    The fact is that in a tight job market, it’s become essential to have a college degree, since that’s the easiest way for the personnel managers to make the first cut through a thick pile of resumes. For most job applicants the sole function of a degree is to allow them to answer, “yes” when asked, “do you have a degree?” Because “college”, however we may define it, has become a de-facto requirement for getting a decent job, colleges have a captive market and can charge whatever they want, rather like an unregulated monopoly utility. Textbook publishers, by the way, do exactly the same thing, and theirs is also a large contribution to the rising cost of college education.

    Somehow we need to get back to a paradigm of education in which students only go to school to learn things that they will actually use in their jobs. If people want to pay privately to study other things, or if they’re good enough to win scholarships to study them, fine, but this idea that everyone needs “a degree” (in something, anything, just prove that you showed up in school for 4 years) in order to get a good job is onerous and unproductive. We need to bring back the idea of trade schools, which were unfairly stigmatized as catering only to those students who merely wanted to “work with their hands” and who weren’t “college material”. The skills for most modern technical jobs can be taught in a year or two. If someone wants to code HTML or SQL, why expect them to get a bachelor’s degree in computer science or mathematics, complete with 2 years of prerequisites ranging from chemistry and calculus to history and literature? The company really has no interest in hiring a programmer with a “liberal education”. They want someone who can hack code quickly and accurately. A one-year trade school program could teach any smart person the requisite skills.

  3. Submitted by Bruce Johnson on 12/06/2010 - 09:35 am.

    With at least 5 applicants for any job, employers will take any easy criterion to reduce the applicant pool and make their decisions easier. Education is a key as the data shows, but other criteria include age and ‘fit’ that allow all sorts of discrimination that may not have much to do with the ability to perform on a job.

  4. Submitted by Jason Carle on 12/06/2010 - 09:48 am.

    Richard, we have those types of schools now, they are vocational and technical schools, and they are indeed very good at teaching a specific skill.

    However, the role of a 4 year “liberal” school is not so much to teach a skill as it is to teach people to think, and to educate them, to broaden their horizons, and to expand the scope of their thinking and creativity to enable them to make new scientific descoveries, to create new technologies, to invent new things, and to think and create in ways not done before. Which will lead to the creation of jobs for those that just want to code HTML or SQL…

  5. Submitted by Mary Johanson on 12/06/2010 - 09:50 am.

    I work with at risk students. Our school standards are set for going to college period. Not all students are college material nor do they want to go to college. Trade school should be a part of high school . So when they graduate from high school they have a skill asnd can join the job market. It is important to set up a win win scenario for all. If they fail, we all fail. Lets face it. All the unskilled labor jobs have been outsourced…I agree with Richard Schulze. We need to re-think how we look at higher education. Not to lower learning standards, but to give different options for different students. We do it for the mentally & physically disabled, and the gifted students. There is nothing for at risk students. They are the 19% unemployed and or(future inmates) Pay now or pay later.

  6. Anonymous Submitted by Anonymous on 12/06/2010 - 10:06 am.

    Just saw some new stats: Unemployment for college grads was 4.4 percent in September; it is now 5.1 percent in November. Something is happening.

  7. Submitted by Sharon Schmickle on 12/06/2010 - 10:11 am.

    Rob,
    I haven’t seen data sets linking educational attainment with discouraged workers and underemployed workers. Are you suggesting that those groups would close the education-unemployment gap? If you or any other readers know of such data, let’s get it into this comment thread.
    Meanwhile, thanks for your interest in the article.

  8. Anonymous Submitted by Anonymous on 12/06/2010 - 10:24 am.

    Sharon – I don’t have any proof of that, but it seems logical that it might be the case, as white-collar jobs are increasingly off-shored. Your post suggests that if we just had better education we wouldn’t have all these economic problems, which I don’t believe is true. David Sirota has addressed this a couple of times.

    http://davidsirota.com/index.php/flattening-the-great-education-myth/

  9. Submitted by Thomas Swift on 12/06/2010 - 10:34 am.

    Richard has made an important point. It’s time we relegated Liberal arts majors to the roles they are best suited to fill; busy work for scions of wealthy families.

    Additionally, colleges and universities should be re-thinking their curriculums to fit the needs of the societies that support them. Engineers do not need “Gender and Global Politics” any more than they need to audit English literature, yet as a candidate for a EE Masters program at the U of M, those are two of the “electives” I was “free” to choose from, while Astronomy and Geology were forbidden to IT students.

    My colleagues and I often remark on the dearth of new blood entering our profession, but it is notable than many of the young Turks we do encounter have entered the field through tech school or Community Colleges.

    While I do believe that Engineering and the Sciences require people with college educations to advance the fields, practical use can, and is be made every day by smart people trained through shorter, more focused curriculums.

    I believe that there is very little information not worth knowing, and I believe that there will always be a place for personal investigations into subjects that have limited, or no value in the marketplace. However I do think the time for inclusion of “pasttime studies” into practical fields of study is, well, past.

  10. Submitted by Virginia Martin on 12/06/2010 - 01:45 pm.

    Tom Swift: Thanks. Another laugh for the day.

  11. Submitted by Jeff Klein on 12/06/2010 - 04:08 pm.

    Yeah, wouldn’t it be great if we were all just a bunch of mono-skilled automatons who could perfectly fit – and only fit – our specific cog in the great machine of capitalism? Then we wouldn’t have all those pesky thoughts that would upset the system.

  12. Submitted by Lynda Friedman on 12/06/2010 - 04:11 pm.

    Great article, Ms.Schmickle. I would be interested too in finding data about “real” unemployment/underemployment of college graduates or those with advanced technical training. However I am really wondering (perhaps, Mr. Schulze can enlighten me)why it should be the responsibility of the whole community to train people for specific skilled positions in unique industries? What role should the businesses who benefit from these specific learned skills directly have in paying for the training for their employees? I can see how a wide-ranging education would benefit the whole community, but not skill training for one business or one industry. It seems almost like building sports stadiums used 10 to 12 times a year for wealthy sports owners rather than roads or bike paths we all can use every day. . .

  13. Submitted by Thomas Swift on 12/06/2010 - 07:13 pm.

    Well, Jeff, I can’t speak for everyone but being a cog in the great capitalist machine has taken me to the far corners of the Earth, paid for my continuing education, and provided me and my family with a *very* (wink) comfortable life.

    I can’t comment on the effect my thoughts, good or bad, might have had on the system, but I do remember what I was thinking when I saw a product I had helped develop and test pumping blood in a man’s chest, and I remember what I thought when he visited us in our offices a few months later, after he had received a donor heart our LVAS allowed him to wait for..

    I remember what I was thinking the first time I saw a machine I helped design and program create ionizing radiation that sterilized packages that might hold the LVAS that saved the life of the fellow I mentioned above.

    All in all, Jeff, I’d have to say that my career as a cog has been singularly satisfying so far, and I’d be remiss not to admit that, while not once did my interest and study of US history, or philosophy, or falconry, or any other area of personal interest and study move me any further along the circuitous path along my assigned corporate wheel took me, I went ahead and studied them anyway.

    Call me a rebel, I guess.

  14. Submitted by Ray Schoch on 12/06/2010 - 07:36 pm.

    The only unemployment number that REALLY matters is the personal one. A relative with a Master’s degree from the U was laid off in Minneapolis without cause (Minnesota is an “employment at will” state, so no cause or justification has to be given. Just “have your cubicle cleared out by 4 o’clock) and was unemployed for 19 months. The field you’re in and the degree to which there’s an over or under-supply of people with that skill set makes a big difference.

    Lynda Friedman raises an issue that I’ve thought about often, while I watch colleges and universities, like health care, transform from public services to corporate entities. While my day job was teaching social studies in a public high school, I worked at plenty of other places over the years, and a common thread through conversations with a variety of bosses was precisely the issue Lynda raises.

    Businesses would love it if the public, the “whole community,” trained young (and not-so-young) people in specific skills, so that employers could immediately plug those people into their operation without having to do any of the training themselves. This strikes me as yet another means by which profits are privatized while costs are made public, and Lynda’s question is more than a little relevant: to what degree should the businesses benefitting from specialized training programs paid for with public (and yes, the student’s) dollars share in that expense?

    Beyond that, what’s the point of an education? Do we want people educated to be citizens, or do we want people educated to be employees? We might want both, but my former employers would come down heavily on the “employee” side of that equation, while the people I know in local and state politics and government lean pretty heavily toward the “citizen” side. As a teacher, my bias is toward the “citizen” side, as well. Not many jobs that actually require much in the way of education are being done the way they were done a generation ago, and an education that provides language and thinking skills also provides flexibility that will serve its recipients, and the society, far better than training in a specific skill set that’s obsolete before that person’s working life is anywhere near completion. Given the ubiquity of computers in the workplace, and the fact that data is entered into most of them by way of a keyboard, learning to type seems a general skill useful to just about everyone, and it’s something that probably every kid ought to learn, and at public expense. However, learning a drafting program, or an accounting one, or a graphics one, is something specific to a particular job, and I’d argue that it’s the employer who ought to pick up the tab for employees learning the new versions of that software as they’re produced.

    It would almost have been worth the cost to enroll in “Gender and Global Politics” if I could have been assured that Mr. Swift would be in attendance. Those would have been entertaining sessions, I’m sure… I come down a bit toward the middle there, however. Jeff Klein’s criticism has merit, and there’s real danger for both individuals and the society in producing “college” graduates who know nothing about anything outside their particular fields of employment – I’d argue that their educations are egregiously incomplete. However, because colleges and universities have become so corporatized – in terms of their operating model, even if they’re not necessarily “in the pocket” of particular corporations – a good case can be made, I think, that they’re not immune to course requirements that are, to be polite, self-serving to some degree.

  15. Submitted by Dennis Ringstad on 12/06/2010 - 07:40 pm.

    “Meanwhile, the populations that are projected to grow the fastest are in Latino and black communities — where, for one reason or another, kids are far more likely to drop out of high school.” Really for one reason or another? It’s called poverty! And the rich snobs of our country are going to make sure the poor stay poor and stupid because greed is a disease and greed needs cheap labor. Working poor parents can barely afford food and rent let alone the idea of higher education for their kids.

  16. Submitted by Richard Schulze on 12/07/2010 - 06:41 am.

    Consider how much of GDP growth was housing-related before the bubble popped. Those are the primary unemployed, and the rest are consequences of that collapse. We could put lots of construction workers back to work repairing our roads and bridges. Check out what the American Society of Civil Engineers has to say about their condition; even allowing for their self-interest, it’s grim. But no, we cant do that, because Republicans only believe in going into debt to finance tax cuts for the rich.

  17. Submitted by Lynda Friedman on 12/07/2010 - 09:41 pm.

    Mr. Schoch, thanks for answering with such clarity and elegance my earlier questions. Surely, you were fortunate enough to have enjoyed a “liberal” education as well as the gift of a life-long hunger for knowledge which I am sure you passed on to at least some of your students.

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