Jobs Created of Better Quality - Analyst Blog
Over the last year, the economy is actually doing a much better job of creating "good jobs" than it has been in creating "bad jobs." The total number of new jobs for people 25 or older is 1.242 million. Of those, 1.093 million went to people with a Bachelor's degree (or better). High school graduates have been the big losers, on balance losing 187,000 jobs, but high school dropouts have seen the addition of 218,000 jobs.
So on balance, a very small gain for those who never went to college. The Junior College set saw an addition of 118,000 jobs. For the month, 257,000 jobs were created for those over 24 years old (per household survey). Of those, 32,000 went to dropouts, just 7,000 to high school grads (or GED), 124,000 to those with some college or an Associates degree and 94,000 to those with at least a Bachelor's degree.
The unemployment rate for high school dropouts fell to 13.2% from 13.8% in October. It is down from the year-ago level of 15.7%. The drop for the month is actually far less impressive than the drop in the unemployment rate alone would indicate. The participation rate among dropouts fell to 47.0% from 47.4% last month but up from 46.6% a year ago.
The percentage of high school dropouts actually employed was actually unchanged at 40.8% for the month but is up from 39.3% a year ago. Thus there has been a very real improvement in the job prospects for the least educated in the society relative to a year ago, but the drop in the unemployment rate for the month was mostly an illusion.
Higher Education Increases Chances of Employment
Just finishing high school or getting your GED substantially increases your odds of having a job. The unemployment rate for high school grads (with no college) fell to 8.8% from 9.6%.in October. It is down from the 10.0% rate a year ago. In all three months, the level was still far below that for dropouts.
This month, the unemployment rate for dropouts was 50.0% higher than for those who at least finished high school. The improvement in the unemployment for high school grads was for the month was an illusion. The participation rate for high school grads fell to 60.3% from 60.6% in October. A year ago it was 61.1%. Thus, the improvement in the unemployment rate from last year is also an illusion.
The employment rate for high school grads rose to 55.0% from 54.6% in October, but is unchanged from a year ago. Note that the participation rate and the employment rate are much higher for High School grads than for dropouts. The payoff from graduating is thus actually much higher than the unemployment rate differential (as big as it is) would indicate.
Those who went to college but did not finish, or only got an Associates degree, had an unemployment rate of 7.6%, down from 8.3% in October, and down from 8.7% a year ago. But the real picture was not nearly as upbeat. The participation rate for Associate degree holders fell to 68.4% from 69.0% and is down from 69.8% a year ago. The employment rate fell to 63.2% from 63.3% on the month and is down from the 63.8% level of a year ago.
There is still a sizable payoff in terms of employment prospects from going to community college, although the difference is not quite as dramatic as the payoff from simply graduating from high school. The high school grad unemployment rate is 15.8% higher than that of the junior college set. The employment rate is 13.0% lower.
For those who stay in school to get their BA (or higher) the unemployment rate was unchanged at 4.4% for the month, and is down from 5.1% a year ago. The participation rate rose to 76.0% from 75.8% in October, but is down from 76.6% a year ago. The percentage of college grads with jobs rose to 72.6% from 72.5% last month, but down from 76.6% a year ago.
The graph shows the long-term history of unemployment by level of education. While the level of unemployment is always higher the less education one has, the relatively uneducated really get hit hard when the economy turns south.
Unemployment by Age
While the unemployment rate for young adults is much lower than that for teens, it is still extremely high. The older you are, them less likely you are to be unemployed (well, the numbers just go to 55 and older, so things get a bit more fuzzy over 65, when participation rates tend to drop like a rock).
Teen unemployment fell to 22.7% from 24.1% last month and from 24.5% a year ago. The unemployment rate for people 20-24, those who are just entering the full-time workforce, was 14.2% up from 14.0% in October, but down from 15.9% a year ago. Even though one can assume that the jobs going to those in their early 20's are of low quality, the decrease in the year-over-year decline is good news, but the level is a huge problem.
If young adults cannot get jobs, they tend to remain living with Mom and Dad. This slows the rate of household formation, and hence the demand for housing. That makes it difficult for the economy to absorb the huge housing inventory overhang (not to mention for Mom and Dad's sanity).
The unemployment rate for those a bit older, the 25 to 34 year old cohort, which is the prime age for first-time home ownership, fell to 9.2% from 9.8% last month and down from 10.4% a year ago. Lowering the unemployment rate amongst these people will be a key to resolving the housing problem. We are making progress, but still have a long way to go.
Several studies have shown that not being able to get a job right after finishing school hurts people not only short term, but the effects lasts their entire working career. The graph below shows the history of unemployment rates by age.
Overall the data seems to have two key messages: 1) Stay in school -- it will greatly improve your employment situation, regardless of the overall state of the economy, and 2) While we need to do a better job of creating jobs for all levels of education, it appears that the jobs that the economy is producing are of relatively high quality. Either that of employers are now demanding higher levels of education that they would have accepted lower levels for in better economic times. Unfortunately, the data cannot really tell us which is the case.
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