Sunday, January 25, 2009

Education and Unemployment

While the unemployment rate is reported as one number, the likelihood of someone being unemployed varies greatly by level of education as shown by this graph from the BLS:
More can be seen by looking at the employment status of those age 25+ by by education level in Dec 08:

Google Spreadsheet

Not only does unemployment go down with higher education but also the likelihood of dropping out of the labor force altogether. While fewer than 1/2 of those without a high school diploma are in the labor force, over 3/4 of those with a college degree are. Following up on my previous post, since many of those not in the labor force are actually discouraged workers that would like to work, if they were included in the unemployment rate the difference between education levels would be even greater.

While the population of individuals with a college degree is more than twice as much as those that did not graduate HS, the number of unemployed people is almost equal, and the number of people not working (unemployed + not in labor force) is actually greater for those without a HS degree.

The impact of the recession has also differed based on education level.

Google Spreadsheet

Those with no HS diploma had the greatest increase in their unemployment rate, going up 3.4% (10.9-7.5) . On the other hand, those with a college degree had the greatest % increase in the unemployment rate, going up 76% (3.7/2.1-1).

I am curious if the stimulus package will help reduce unemployment more for educated or uneducated individuals and if that is taken into account at all in the kind of jobs that they hope to create.

This also makes me wonder how much the unemployment rate of a country is determined by its education system. If all those that dropped out from HS were able to graduate, would their unemployment rate drop from 10.9% to 7.7%? Or is it all relative, so even if they did graduate, if they were still in the lower 25% of educational attainment they would still have a 10%+ unemployment rate?


Laurent GUERBY said...

Great work! Exactly the kind of reaction I expected from my article.

Note: I sent by email my data+graph with explicit authorization to quote without attribution to Calculated Risk, Mish Global Analysis, The Big Picture and Naked Capitalism. So far no one picked it up.

Fat Knowledge said...

Well, hopefully one of those blogs will pick it up. I would think that unemployment and unemployment statistics is going to be a hot area for discussion right about now.

Laurent GUERBY said...

I hope too ... Now eleven blog authors contacted.

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