A recession for the less educated--so far

Posted by: Michael Mandel on April 04

This morning’s employment report leaves no doubt that we are in a recession, with less-educated workers being hardest hit so far. Private sector employment has fallen for four straight months, since November (which will turn out to be the beginning of the recession…see my post here). The private sector decline of 300K since November is concentrated in construction, manufacturing, retail trade, and temp services—mostly industries which tend to employ less educated workers, on average.

Still staying strong are education and health care. Education has a lot of educated workers, not surprisingly, while health care has a fairly even mix of high-end and low-end workers The combination of private and public education, private health care services, and private social assistance have added 239K jobs since November. Employment in professional and technical services is up as well, adding 44K jobs. Without these areas, the economy would be in a steep decline.

Given the industries which are slumping and those which are still expanding, it makes sense that the unemployment rate has soared for less-educated workers since November, while actually falling for college-educated workers. For example, the unemployment rate for high school grades rose from 4.5% to 5.1%, while the unemployment rate for bachelor’s degree and higher fell from 2.2% to 2.1%

The question now is whether the layoffs on Wall Street will end up hitting educated workers hard enough to change this equation. Finance and insurance employment is only down by 13K since November, but surely more is coming.

I’m going to do more analysis of the jobs report later in the day (Update: As of Sunday, not yet)

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Reader Comments

Robert

April 4, 2008 10:06 AM

I am the Trade Act/Rapid Response Coordinator for our local One-Stop career center. We have had several factory closings in the past year.

We are finding that many people that return to work are earning significantly less than they were before. The unemployment rate doesn't reflect this, nor does it reflect people working part time when they want full time and people working for temp agencies with no benefits or job security. Table A-12 from BLS from March 2008, unemployed + marginally attached= 9.3% + unknown workers who have accepted job at much lesser wage, in my estimate "true" unemployment is over 10%.

Brandon W

April 4, 2008 11:50 AM

This is from an interesting article I read yesterday (source linked):

"According to the February jobs report, there were 565,000 more part-time workers who wanted full-time jobs than a year ago. That's a 21.1% jump in the number of those who are under-employed.

In addition, a rapidly increasing number of people are being forced to take more than one job. There were 161,000 more workers in February who held more than one part-time job than there were in January. One economist said this is a further indication of how bad the market is."
Source: http://tinyurl.com/6fbloj

I think underemployment is at a crisis stage. On the other hand, suppressed overall wages ought to be expected from globalization and the addition of over a billion people to the global workforce in the span of 15 years.

The multi-national corporations have known exactly what they're doing. And since they basically control Washington you're not going to hear a lot about underemployment from the government. Sorry to be conspiratorial, but let's face reality here. They've known what they're doing to wages in the U.S., they planned it this way, and they've made a concerted effort to hush it up.

We don't have "underemployment", we have exactly what the multi-national corporations have wanted and created. It's one of the horrible prices we have to pay for 25 years of rah-rah cheerleading of laissez-faire economics.

Kartik

April 4, 2008 03:16 PM

This isn't really a recessionary trend, but rather the natural progression of creative destruction.

More jobs will always be created at the top of the skill ladder, while they are lost at the bottom of the skill ladder.

This is true even in developing economies.

Now, if the US workforce's educational level is maxed out, and the percentage of college graduates is not rising, then the economy may not grow. There is no rule that the demand for workers has to match the existing skill level of the workforce. It is quite conceivable that opportunities are growing in jobs that exceed the skill level of the vast majority of Americans.

mike

April 4, 2008 03:32 PM

When we as consumers in the country go stop going to discount store and buying all are goods there and demanding 5 dollar shirts and cheaper and cheaper house hold goods.Then maybe just maybe we can start to bring back some manufacturing to this country.Not everybody can make 60,000k a year with benifits work 40 hrs and get a vacation are ancestors did have it that way when they built this country and it will never work if ever body wants to live in a 2500sqft 4 bed 3 bath home in the burbs

Nodir Ruzmatov

April 5, 2008 12:48 AM

I personally think that Unemployment is even higher then reported, Because report does include only unemployed workers. So for example if someone has part time job, he's considered as employed. And statistics shows us that number of part time workers are increasing , because workers are not able to find full time jobs. Now how it effect Educated workforce?
There were article about "College Graduate's" yesterday and i like that article. Article talked about unemployment and US recession and author suggested to college students delay their graduation till US economy recovers.

Bob

April 5, 2008 02:15 AM

Our economy is in a recession, I don't care what the politicians are calling it we are in a damn recession. The Fed is incompetent, the stock market sucks, the real estate market sucks, people are being laid off, our country has a humongous budget deficit, a very large trade deficit, we're fighting two wars, consumers are losing confidence, they are eating out less, WHAT THE HELL IS GOING ON HERE? Are we talking about America, the land of prosperity? Cause I don't see it.

cm

April 5, 2008 02:25 AM

Kartik: "It is quite conceivable that opportunities are growing in jobs that exceed the skill level of the vast majority of Americans."

Employers are not looking just for "skills". In the professional field managers are often looking for easily guided (goaded?) employees with good technical skills but untarnished "passion", "motivation", and underdeveloped experience in "how the cat jumps", i.e. sensing office politics and protecting their self-interest. Also on the technical side, knowing "too much" tends to make people more difficult to (micro) manage and goad.

So for (unfortunately) common "management" styles, skill/experience and manageability are conflicting goals, hence it's so difficult to find "desirable" employees.

If this sounds too cynical, it may in part be rephrased as the difference between a well-qualified graduate and an experienced "old hand" being knowing how to do things vs. what is likely to (practically) work or not -- not just technically but organizationally, and what are the important things to pursue out of all that is possible.

The more of the latter "baggage" somebody has, the more difficult it is to herd them along.

Trog

April 5, 2008 05:35 AM

Tens of millions of low skilled & manufacturing jobs have been oustourced to Asia. The Chinese & Indians have been breeding like rats - over 2.5 billion of them and rising fast ! Who can provide jobs to such a large mass of people ?

Blissex

April 5, 2008 06:40 AM

Table A-12 from BLS from March 2008, unemployed + marginally attached= 9.3% + unknown workers who have accepted job at much lesser wage, in my estimate "true" unemployment is over 10%."

There is always the argument that the rate of unemployment in the USA is ZERO, and those who are claiming to be unemployed are just lazy people living off the wealth that the long Republican boom of the past decade has given them.

If they needed the money, they would be moving to where the jobs are and competing and stealing jobs from mexican immigrants by offering to work harder for less money than the mexican are asking. As long as there is a single mexican immigrant working in the USA, the USA unemployment rate is ZERO, thanks to the long lasting Bush prosperity that have made millions of americans so rich that they can afford to lazily watch those mexican immigrants work in their stead.

If there was any unemployment in the USA, it would be unemployed USA citizens who would be trying to emigrate to Mexico or Canada hoping to get jobs there, taking the jobs that mexicans and canadians were too rich and lazy to do, undercutting them.

Or else there is something really wrong with the above arguments... :-)

dw

April 5, 2008 08:22 AM

I too think the unemployment rate has been cooked, and the proof is the lack of wage growth. if we had really had so unemployment, wages should have gone up, instead they have stagnated, and have for more than 6 years. There is a lot claims by business that they can't find people. But that usually means they can't find them with lots of experience and will work little to no money. and thats a hard employee to find. unless your a lottery winner who is just bored

Davey

April 5, 2008 11:12 AM

Mike, I'm guessing from the quality of your writing that you are in the "less-educated" cohort. You might want to re-read the article and instead of wishing for days gone by, prepare yourself for the future. And the future belongs to those who have educated and prepared themselves to function in today's job market. Cm can be excused for his cynicism; the more skilled one is, the less easily that person can be "goaded" or replaced. If all you can do is load the cloth into the machine that makes the 5 dollar shirt, then you do not have much skill. Maybe you should learn how to service the machine? Or maybe build a better one.

A few years ago I went into a factory here in North Carolina that makes thread for carpets. When I looked out onto the factory floor, there was row upon row of spinning machines whirring away. There was one person. He was sweeping the floor. He can now be replaced by a Roomba, and as soon as somebody figures out how to do that, he will be.

Educate yourself, learn to do something that few can do, and you're fine.

Mike Mandel

April 5, 2008 12:04 PM

CM
you raise such an interesting question. The interaction between skills and ability to be managed/lead is a tricky thing. It goes right to the question of what the schools are supposed to be teaching.

D

April 5, 2008 03:27 PM

Cm, interesting comment. H1B employees come to mind as a subset of people that would fit your category of "desireable" employees. People from a different culture, different power-distance expectations, eagerness to please, are just some factors that would make an employee more goadable. Maybe all Bill Gates wants are more easily manageable employees.

Pretty low standards for management if you ask me. Sooner or later, everybody figures out "how the cat jumps."

D

April 5, 2008 03:28 PM

Cm, interesting comment. H1B employees come to mind as a subset of people that would fit your category of "desireable" employees. People from a different culture, different power-distance expectations, eagerness to please, are just some factors that would make an employee more goadable. Maybe all Bill Gates wants are more easily manageable employees.

Pretty low standards for management if you ask me. Sooner or later, everybody figures out "how the cat jumps."

Quinn

April 6, 2008 05:01 AM

When service industries have little to service and municipalites have lost incoming revenues there will be little to differentiate between low education and higher education in the unemployment lines.
When incomes to finance schools and universities decline those in the teaching profession enter the ranks of those looking for other positions of employment,likewise local government employees. Banks and insurance companies already reduce staff.The large lay-offs on Wall Street were not the building maintenance staff.

Keith

April 6, 2008 08:40 AM

The sad thing is, it's the same "less educated" people that are ultimately shooting themselves every time they go shopping. They all want the good wages and benefits, but also want to pay the cheapest possible price at the store. The only people that can produce those goods at those prices are outside the US, people who are often being exploited and have much worse wages and no benefits.

The globalization trend is going to even out the standard of living, world wide. Since there a few billion dirt-poor people world wide willing to work for almost nothing then the standard of living in America is going to be pulled down (it will become more aligned with the global average).

The "golden age" of America is ending, unless people get back to work and start thinking more about where the things they buy actually come from. Most American's never seemed to care one whit about the poor, oppressed, and exploited foreign works that make the stuff (or pick the vegetables) that they buy in the store. They're just happy to get the low price and to hell with them. But when it starts happening to them... whoa, suddenly it's different.

prasad

April 6, 2008 01:54 PM

Recession is a situation where the Business Community wants to retain the Profit Margin which they have been enjoying "unduely" since American Inception - (a bit exaggerated). This Business Community is so deep root into the fed and state gov's that no one can do any thing about it. Finally it affects only the average American Citizen who is a consumer and who is "compelled" to be a "consumer" by the Business Community so that they will get their margins right all the time.
Hence the Business Community is least bothered about the American Citizens. they are bothered about their money and investments..so they "AXE" whenever and where ever they want....So, ask the question: What FED doing ? The unfortunate situation in America is "An American Citizen has NO SAY what so ever"...Hope you understand what I am referring to.
Same is situation for "Oil Price hikes too".
I feel bad. We know the reasons.

Jay

April 6, 2008 02:17 PM

Cm: I think experience matters less and less in the future moving forward. Which is why employers look for employees that are easier to deal with rather than employees that bring "baggage", as you call it, that in reality could very well be "baggage".

Changes in technology and especially rapid changes render "experience" much more obsolete than before.

Dale W

April 6, 2008 02:32 PM

Just look at the employment adds in the Sunday papers. They should be full this time of the year, and the trades will take the brunt of it.

Our business is off 30% from last year, lost major dollars last year, and we can just hope to survive.

And we have 2 less workers than last year, and it will stay that way.

jbm_thestateofaffairs.com

April 6, 2008 03:54 PM

Cm's comment on managers protecting their self interests is a big priority. Many managers hire "yes men", and not the "skilled labor" that we hear is missing from the US job pool.

Robert, thanks for the statistics. While my city is a worst case scenario, job hunting in the US throughout the 2000's has seemed to be more difficult than ever before, and I think your stats put a face on the problems.

gym-bob

April 6, 2008 09:45 PM

The United States economy is being reshaped due to the techno-global revolution that probabbly began a decade ago.The digitization of production makes labor fungible.We can move jobs to the low cost producer.For a short time it seemed that consumers benefited from "everyday low prices" and that labor market weakness was the other guy's problem somewhere far off in the rust belt.But the tecno-global revolution has proven a great wage leveler.Global wage equilibrium will be reached by US wages declining as Asian wages rise.Engineers, CPA's, x-ray techs and the like will be affected as have auto workers.Capital is controlled by the few and labor supply has doubled in ten years. Simple supply/demand. ouch!

random

April 7, 2008 12:47 PM

"Employers are not looking just for 'skills'. In the professional field managers are often looking for easily guided (goaded?) employees with good technical skills but untarnished 'passion', 'motivation', and underdeveloped experience in 'how the cat jumps', i.e. sensing office politics and protecting their self-interest."

Personally, I wouldn't go as far as masterminding office politics in the hiring process. Otherwise, I think your argument is very compelling. After all, today's managers are employees who were promoted to help others do what they used to do, but instead of helping their reports get their work done, they try to do the job themselves using their subordinates as a multitasking tool. Hence, they have all the incentive to just hire whoever wants to please.

In addition, because a lot of companies take so long to hire someone, they end up with those who loyally wait for a company to call them back while the best and the brightest are busy sorting through all their job offers and picking whatever employer would be best for them, not the other way around. If you're a job applicant and you loyally sit and wait for whatever company last interviewed you to call you back, doesn't that mean that you might lack initiative?

cm

April 8, 2008 12:30 AM

Mike Mandel: I that case I suppose schools should be teaching "the art of forever staying young and innocent".

D: 'Sooner or later, everybody figures out "how the cat jumps."' -- For which age, years of experience, and lacking display of naive exuberance are good proxies.

Jay: I beg to differ. Just to name one example, after so many new programming languages, "paradigms", product versions, and fads, the principles and "base skills" of software development have not changed in decades. In other fields it's similar. The most important part of experience is judgement borne out of years of exposure to work and solving practical problems.

Random: Good point about manager careers, esp. in tech fields that have a "dual career ladder" concept. As for the multiple offer selection argument, while it sounds plausible, I think you are overrepresenting how quickly one can land offers for multiple good jobs. I also have observed that those with the best schmoozing and social-engineering skills are not necessarily also the most technically superb.

Joe Cushing

April 8, 2008 09:49 PM

CM,

I'd take an old person over a young one any day. Give me somebody who's 65, and I'll show you somebody who's productive. 65 year old people started working when they were 5. 22 year old people started work somewhere between 18 and not yet. I used hire old people and foreigners in retail. I'd do it again in any field. We need to adjust our child labor laws and get more kids in the work force.

random

April 9, 2008 10:19 AM

"Give me somebody who's 65, and I'll show you somebody who's productive. 65 year old people started working when they were 5. 22 year old people started work somewhere between 18 and not yet."

Huh? Someone who's 65 was born at the height of World War 2. By then the Great Depression ended and the economy was mostly industrial. A five year old on the factory floor was a hazard and there was sufficiently advanced machinery that would eliminate the need for more workers, especially children. In the 1940s, kids did things like deliver or bag groceries, mow lawns and ran errands for the sick, elderly and neighbors for a small fee. And many were well older than five. You must be thinking of farm kind in the very early 1900s and 1910s and child workers in factories of the late 19th century.

As for 22 year olds, most start work between 14 and 15 as baggers, cashiers and retail clerks. They're just a few years older than their 1940s counterparts and on par with the baby boomers. The reason why they start work later is because rather than living an average of 45 to 50 years, we live closer to 75 to 80 years and kids are mandated to stay in school longer to get an education without having to rush off to work in the middle of their homework. This is why work has been pushed back by laws. Not because lawmakers want kids to be lazy but because kids need to stay in school. The last time kids started work at 5 years of age, half the population was illiterate and much of the other half never even went to high school. College didn't start being a major part of education until the 1980s.

So Joe, are you telling us that you want us to treat the world as if we lived 70 to 90 years ago and there haven't been profound changes in our economy, education and life expectancy? In today's economy anyone without at least a GED and under 16 wouldn't be able to work in a position outside of retail, making their work opportunities very limited. An employee without a high school diploma at the least is of little use to a company that doesn't sell food, clothes or electronics directly to customers.

David Donar

April 15, 2008 07:19 PM

No matter how politically stupid Barack's comments were about how bitter the blue collar worker is, it still rings true about their economic plight.

http://politicalgrafitti.blogspot.com/2008/04/bitter-midwesterners.html

Joe Cushing

April 17, 2008 11:54 AM

I never said kids shouldn't go to school. The reality is there are lots of peole who don't enter the work force at all until they are 18 or some even 22. Kids also don't have to work at home as much as they did 60 years ago. They don't all bag groceries today either. That is a good job for kids though. I don't think they need to be working in dangerous jobs. Our loger and longer school schedules are not helping kids get better educations. Look at Findlands system. They start later (age 6), go for few hours, and have less homework, yet they are still ahead of us.

jacob

January 9, 2010 06:44 PM

Love to see this discussion! It’s great to see you all working through the issues and also, it’s great to see recommendations for testing. In the end, it’s what your actual users do and prefer that should be your biggest driver in making these decisions.
Great article and discussion!
part time worker

jacob

January 9, 2010 06:47 PM

Love to see this discussion! It’s great to see you all working through the issues and also, it’s great to see recommendations for testing. In the end, it’s what your actual users do and prefer that should be your biggest driver in making these decisions.
Great article and discussion!
part time worker

Thank you for your interest. This blog is no longer active.

 

About

Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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