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Employment losses are largest for the least educated

The FRED Blog has discussed how unemployment rates are inversely related to educational attainment and how they change during recessions. In short: Workers with more education are richer in so-called human capital and tend to be able to adapt more easily to changes in large-scale labor market conditions.

The FRED graph above shows employment levels after the COVID-19-related recession began. The length of the bars represents the percent change,  relative to a year ago, in the number of employed people 25 years and older. And these workers are divided into groups according to educational attainment.

Workers who didn’t graduate from high school had the largest losses in employment. Workers who did graduate from high school, including those  with some college or an associate degree, also experienced significant losses in employment but fared a bit better. Workers with a bachelor’s degree or higher were able, for the most part, to remain employed.

The second FRED graph shows the same four groups of workers but for the previous recession, from December 2007 to June 2009. Although these bars don’t go as far into negative territory, we see a similar pattern: At least initially, the more-educated labor force was more resilient. As the recession passed the 12-month mark, however, all education groups started to report losses in employment.

Low educational attainment isn’t necessarily a permanent trait, so it’s possible for workers who are laid off to exit the labor force, gain more human capital through formal education, and re-enter the labor force as more-educated workers. When they do this, they can expect to enjoy steadier employment. To learn more about education’s effects on employment stability, read the work of Isabel Cairo and Tomaz Cajner.

How these graphs were created: Start from Table A-4 of the Current Population Survey, select the series you want shown, and click “Add to Graph.” From the “Edit Graph” panel, select units “Percent Change from Year Ago” and click on “Copy to all.” From the “Format” tab, select “Graph type: Bar.” Adjust the sample period to match the dates displayed in each graph.

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: LNS12027659, LNS12027660, LNS12027662, LNS12027689

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