The FRED Blog has discussed many aspects of the college experience: income and wealth gains from graduating college, how to pay for a college education using a 529 saving plan, and how the type of college experience impacts future earnings. Today we trace the impact of college experience on unemployment.

The FRED graph above tracks the unemployment rates for two groups of young men: high school graduates with no college exposure and those with some time in college and/or an associate’s degree.

First, the unemployment rate for these workers with some college experience tends to be lower, suggesting there’s a stronger demand for workers with some college-level skills. This observation is supported by related research on the trends of declining employment in the manufacturing sector and increasing employment in the service sector, such as healthcare, which tends to favor workers with some college-level skills.

Second, the unemployment rate gap between young men with no college and young men with some college was most pronounced after the 2008 Great Recession. Research by Harrington and Khatiwada (2016) argues that employers favored older, more educated workers, which left high school graduates with far higher unemployment.

Third, that unemployment rate gap disappeared altogether during the first months of post-pandemic recovery and has remained at historically low levels since then. One explanation is that the post-pandemic recovery created labor shortages, forcing employers to become more willing to hire workers without college experience. Today, partial college education is no longer associated with lower unemployment.

How this graph was created: Search FRED for “Unemployment Rate – High School Graduates, No College, 20 to 24 years, Men.” Click on “Edit Graph” and use the “Add Line” tab to search for “Unemployment Rate, Some College or Associate degree, Men” and select the age 20-24 series.

Suggested by Oksana Leukhina and Gus Gerlach.