Sunday, February 19, 2012

U.S. Education Gap In Unemployment Shrinks

In March last year I discussed that the United States has an unusually large gap in rates of employment and unemployment based on the level of education. In most countries such data aren't available, but in two Asian countries where it is available, South Korea and Taiwan, there was virtually no difference at all, at least in unemployment.

The U.S. gap remains very large, but it has actually dropped during the latest year. Between January 2011 and January 2012, the unemployment rate dropped by 1.2 percentage points for high school dropouts from 14.3% to 13.1%, 1 percentage point for people with only a high school diploma from 9.4% to 8.4%, 0.9 percentage points for people with "some college" from 8.1% to 7.2% while being unchanged at 4.2% for people with a bachelor's degree or more.

The trends in the participation rate (which mostly reflects trends in "hidden" unemployment) reinforces these trends, so the difference in the changes for employment rates is even bigger. The employment rate for high school dropouts rose by 1.1 percentage points from 38.6% to 39.7%, for people with only a high school diploma it was unchanged at 54.6%, for people with "some college" it fell from 64.5% to 64.2% while the employment rate for people with a bachelor's degree or more fell from 73.2% to 72.4%.

Given that the big gap was for reasons I explained in my original post mostly irrational, it is good that this convergence happens, at least to the extent that it reflects higher employment and lower unemployment among people with little education. While it is natural that people with a higher education should on average earn more, this should manifest itself in terms of higher wages or salaries for highly educated compared to persons with little education, not higher unemployment for people with little education.


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