2 Very Different Unemployment Pictures

The Dow (INDEX: ^DJI  ) plunged on Friday after May's dismal jobs report. But depending on a single factor, your situation is probably either much worse, or much better, than the headline numbers show.

There are two very different unemployment stories right now. One group of people is actually doing pretty well these days. For another group, we truly are in a depression.

The distinguishing factor? Education:

Sources: BLS.

What gets me about this chart isn't just the difference between educational backgrounds, but the change among each group since 2007. Unemployment for those with a bachelor's degree is up less than 2 percentage points since the recession began in 2007. For those without a high school diploma, it's up more than three times that much -- 6 percentage points. Workers with a college education have been pinched over the last five years. Those without have really been walloped.

It's the same story for average weekly earnings. Those with a bachelor's degree have seen their weekly earnings rise nearly 25% in the last decade. For those with a high school diploma, wages have increased about 20%. If you don't have a high school diploma, your wages have increased just 18% over the last decade, on average. Not only do educated workers earn more, but the gap between what they earn compared with non-educated workers is widening. Fast.

I interviewed Mesirow Financial chief economist Diane Swonk last year, who said:

We peaked in educational attainment in this country in the 1970s, just at the very moment that we were yielding the industrial age to the information age, and paying a premium for ideas and education and higher levels of education rather than manual labor. As a result, the bottom 50% of wage earners started to stagnate in wages, while the top 90th percentile -- 10% -- had those graduate degrees [and] because they were short in supply, started to see their wages absolutely skyrocket.

Makes me wonder: What would happen if these numbers were plastered on billboards in high schools across the country? You tell me.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Follow him on Twitter @TMFHousel. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (6) | Recommend This Article (8)

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  • Report this Comment On June 06, 2012, at 4:15 PM, kyleleeh wrote:

    One could make the argument that for all education levels unemployment has roughly doubled.

    What I see in my area is a huge disparity by sector rather then education. Technology and health care workers are doing great regardless of education level, but a Cal Poly Architect can't find work.

  • Report this Comment On June 06, 2012, at 7:27 PM, TMFMorgan wrote:

    ^ True, but I'm not sure the proportion change is more meaningful than the raw number of change.

  • Report this Comment On June 07, 2012, at 10:22 AM, Pifalo wrote:

    I would find it interesting to see how the levels of personal debt have changed over the same period of time, broken out by the same education categories. I suspect, over the very long term, that the increased costs of higher education are still negated by increased earnings for college education, but short-term these costs are more burdensome.

    To me that would make a strong case for aiming to keep the economy strong by also keeping higher education costs in check.

  • Report this Comment On June 07, 2012, at 1:12 PM, wolfman225 wrote:

    Simply posting the graph in classrooms would do nothing to help the unemployment disparity. In fact, it could potentially make things much worse.

    Student loan debt is one of the biggest potential financial problems on the horizon, made worse by the huge numbers of students pursuing majors in the so-called "soft sciences" such as poli-sci, medieval & contemporary arts & literature, "women's & gender studies", etc. Majors with little or no marketable value, but attractive to students due to their light classwork requirements.

    Simply posting stats that seem to indicate a direct relationship between well-paying careers and a college degree, without providing the context of which degrees are most sought after, which degrees are most marketable post-graduation, will simply lead to a further exacerbation of the problem.

  • Report this Comment On June 07, 2012, at 1:46 PM, damilkman66 wrote:

    I agree with the "soft science" observation. it is one thing to go into six figure debt when you have a medical degree. How are you going to pay the debt when you have a film degree?

    I believe one item we could learn from the German model is to push vocational training. Not everyone can be a techie. For those who have hands on skills they can still make big money if they are highly skilled in their craft. A Chinese worker six weeks removed from the farm is not going to know how to craft a high performance engine turbine.

  • Report this Comment On June 07, 2012, at 2:49 PM, wolfman225 wrote:

    ^Great points. America was once very well served by a system of apprenticeship programs, where students with either an interest or demonstrated aptitude were given the opportunity to improve their skills under the guidance of a tradesmaster. In today's educational system, however, the bureaucracy and the unions have such a stranglehold on who is/is not "qualified" to teach a given subject that it's nearly impossible to bring in business and & trade professionals, and most parents can't afford the costs of a separate tradeschool tuition.

    Not everyone is college material. Nor should they be expected to be. There is no shame in being "working class" or "blue collar". I'll compare the average annual salary (and value to society) of a top mechanic to some 23yr old barista with an advanced Social Sciences degree any day.

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