Lakshman Achuthan at the ECRI made an interesting Tweet today. “Recovery is Focused on Those Without High School Diploma“.
The Tweet refers to his January post Fresh Data: Cheap Labor.
Let’s investigate Achuthan’s claim and update the data as of today’s jobs numbers. First, let’s take a look at his chart and comments from January.
Achuthan comments ….
Since 2011, when the E/P ratio for those with less than a high school diploma bottomed, that metric has regained almost two-thirds of its recessionary losses (orange line in chart). But the E/P ratio for high school or college graduates – i.e., eight out of nine American adults – has not recovered any of its recessionary losses, and has barely budged in four years (purple line). This data underscores how the jobs recovery has been spearheaded by cheap labor, with job gains going disproportionately to the least educated — and lowest-paid — workers, many of whom have to work multiple jobs to make ends meets. This is scarcely supportive of Janet Yellen’s description of a “much healthier” consumer in justifying the Fed rate hike.
That looks interesting but the dual vertical axis levels distort the picture. Let’s update the picture with current data, on one chart.
Employment Population Levels by Education Level
The BLS defines Employment Population Ratio as “The proportion of the civilian noninstitutional population aged 16 years and over that is employed.”
Education level is only available for those 25 years old and up so that is our starting point.
- The chart shows the employment population ratio for those with a college education has generally been falling since February 1992. That’s when the data series began.
- The chart shows the employment population ratio for those with a high school education or more has generally been falling since July of 1997 when it peaked at 63.5.
Not only do Achuthan’s dual axis distort the real picture, so does his starting time line. Whatever is going on did not start with the great recession.
Employment by Education Level
I agree with Achuthan that many have to work multiple jobs. I also agree that most of those jobs are low-paying and BLS numbers overstate the strength of the jobs market.
However, Achuthan’s key point about “job gains going disproportionately to the least educated” is simply wrong.
Mike “Mish” Shedlock
Instead of employment levels by education, income levels in those categories might make for some interesting chart porn?
LMAO great stuff, Professor! Some Friday afternoon humor is always welcome.
Like says recovery like cheap slaves.
Plus–the BLS data has shown lean times for the young kids. Not great for hte sweet spot age group of 25-55 and the seniors not able to retire so easily.
ECRI?? Are they still around? When’s the recession?
Let more illiterate indigent savages without papers pour across our borders unimpeded.
For they will save America’s economy. lol.
Achuthan is a dope. If the recovery was so great for only those with high school diplomas, then why on earth is unemployment for that group remained high while falling severely for those with college degrees ?
As the Professor said, let’s look at income levels instead. I suspect the ones with a college degree are more motivated, they want to buy things, they have debt to pay off, so they’re working two and three jobs to do it, and they’re not making much. They’re still living in the dream.
Brought to you by those who want to increase the wages in the rest of the world while pulling our’s down, and all to get the skim.
Amen, while I did not pursue a degree (I learned my skills in the Navy via O-J-T), I worked in the best paying jobs in America from 76 till 03 as a software developer who has software and hardware skills.
From 03 till 10 I was fortunate to find one contract each year to the (avg) tune of about 30 K per year.
From Aug 10 till Feb 16 there was NOTHING even though I have the same skills that the majority of H-1B applications are for as a Systems Analyst.
Granted, my formal education is not good, but my skills, knowledge, and wisdom far outweigh that IF a person is looking for someone that CAN DO THE JOB instead of someone that has a piece of paper saying they understand the theory.
We ran into a little problem with person who had a 4 degree in engineering technology. It’s not as intense a curriculum as 4 year degree in engineering that requires calculus. This person worked his way up from a wrench turner to an engineering department manager, to a program manager, than back to an engineer. In the last two years before retiring, he created such a mess due to incompetence that all his work had to be redone. This has cost 8 months of schedule, so far.
When the present department manager got the go-ahead to hire more people to help work off the backlog, he promptly threw out every candidate who did not have a true engineering degree. There may have been a candidate, like yourself, who CAN DO THE JOB; however, companies are becoming risk averse when hiring.
I also heard about one candidate who was rejected because he is several years older than everyone in the department. Half the department is planning to retire in the next 2-3 years. The manager wanted candidates who would be around for at least 10 years.
Contractors also have a bad reputation when manages are looking for permanent employees. Again, the feeling is they won’t stick around for a long time. What managers fail to understand is the wealth of knowledge contractors have from working in a range of industries. It’s prejudices like these that hurt individual careers and shareholders wealth.
“The chart shows the employment population ratio for those with a high school education or more has generally been falling since July of 1997 when it peaked at 63.5.”
That’s interesting, since the economy hadn’t partied like it’s 1999, yet.
It was October 1998, when Greenspan blew the top off the Nasdaq with his 3/4% rate cut. But then, Ross Perot’s “sucking sound,” was already eliminating higher paying jobs by then.
Greenspan blew hard to try to neutralize the “giant sucking sound” of jobs going offshore. Simultaneous blowing and sucking. The blowing caused people to get into a lot of debt, and the sucking took their good-paying jobs away.
But, who cares, as long as the CEO’s and shareholders made out all right (sarc).