Friday, November 06, 2009

The value of college in a recession 

I thought I might take the latest employment report (pdf) and dig into Table A-4, showing unemployment rates by educational attainment:

Education level October 2008 October 2009
Less than H.S. 10.4% 15.5%
H.S., no college 6.5% 11.2%
H.S. some college 5.3% 9.0%
Bachelors & up 3.1% 4.7%
Ironman has been noticing for more than a year that teen unemployment has been rising dramatically, and the new numbers today show a teen unemployment rate of 27.6% (over 40% for blacks.) But the striking thing to me here is that the 20-something who doesn't finish a four-year degree has experienced a much larger increase in unemployment than I thought I would find. Maybe this is normal; I don't know. What I do know is that I'm showing this table to my students to remind them why they should stick out college and get their diplomas.

I also note on Table A-8 many re-entrants into the labor force. How many of these are formerly stay-at-home spouses now trying to find work again?

Notice as well the increase in duration of unemployment: half of people unemployed are now out of work more than 18.7 weeks. More than a third are out over six months. It's hard to imagine Congress not passing a lengthening of unemployment insurance eligibility in this situation, even if it does lead to a lengthening of spells of unemployment. (The counterargument is that it provides for better job matching, which is plausible. Heritage did a study on extended unemployment insurance last year worth reviewing.)

Nothing really stands out for me from the payroll data, at least on first glance. I said yesterday that I thought we'd be just short of 200,000 jobs lost, and 190k is pretty close. It would not normally lead to an increase in unemployment rates of 0.4% but the rate of decline in labor force participation slowed down a bit. Paul Ashworth noted that temporary workers picked up, which is a good sign, but only if sales pick up in this last quarter. The markets focus on the bottom line, but I focus on the top.