No College Degree? Jobs Picture Is Bleak
When it comes to unemployment it's been a tale of two recessions, with level of education playing an unprecedented role in whether you've been pink slipped or not.
Wednesday brought more conflicting news on the employment front. Payroll company ADP (ADP) said the economy added 114,000 private sector jobs in July, while consultancy Challenger, Gray & Christmas said layoffs spiked 60 percent to a 16-month high.
Those mixed signals come ahead of the most important reading on the economy there is these days: the government's official monthly employment report on Friday.
What's more clear is that when it comes to joblessness, having a college degree is more important than ever, according to John Silvia, chief economist at Wells Fargo Securities (WFC), in his latest note to clients.
"Sometimes life is unfair and so too goes the labor market," Silvia says. "Labor market weakness in the latest recession has been compounded by long-term changes in the supply and demand for labor. Education is the dividing line."
Although past recessions have been easier on college grads than high school grads, the needs of a 21st century economy have magnified the stark difference between education level and joblessness.
Indeed, workers lacking high school diplomas saw their unemployment rate jump 6.6 percentage points in June vs. a 2.3 point increase for college grads.
That's been the trend for years. Just look at the huge spread between the rate of change in unemployment for the college educated (the green line at the bottom) and those with no high school diploma (the gray line at the top) in this chart, courtesy of Wells Fargo Securities:
True, college-educated workers fared better than their less educated counterparts during the recession of 2001, too, but a decade of technological change has only served to widen that gap. As Silvia notes:
Unemployment for college grads was 4.4 percent in June compared to 14.3 percent for workers without a high school diploma and this large gap has persisted between the two groups, averaging 10 percentage points since 2009.That's because half the jobs added since employment bottomed have been in the professional & business services and education & health services industries, says Silvia.
A college education is an increasingly expensive proposition for everyone -- and prohibitively so for far too many folks. Sadly, it also appears to be an investment that no one can afford to forgo.
Image courtesy of Flickr user Burt Lum, CC 2.0.
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