YOU'RE HIRED! EVENTUALLY...
July 15, 2010
Despite all the recent attention given to the growth in the unemployment of highly educated people from the financial sector, joblessness is concentrated among the young, the less educated and the least skilled, says Gary S. Becker, the Rose-Marie and Jack R. Anderson Senior Fellow at the Hoover Institution.
For example, according to the March 10 report from the Bureau of Labor Statistics:
- Seasonally adjusted unemployment rates in February were 16 percent for high school dropouts, 11 percent for high school graduates, and only 8 percent for people with some college or an associate degree.
- The rate was a quite low 5 percent for those with a bachelor's degree or higher level of education.
- Similar disparities were found by age and skill level, with the youngest and least skilled faring worst.
Although more educated and older workers are far less likely to become unemployed, once they do lose their jobs they have a much tougher time finding another that pays close to what they had been earning, says Becker:
- This is why college-educated and older workers constitute a much larger percent of the long-term unemployed than they do of the total number unemployed.
- As a result, the long-term unemployed are less likely than other unemployed workers to find jobs quickly after the economy begins to pick up.
- These differences in long-term unemployment are easy to understand; many kinds of low-paying jobs are available to the young and to high school dropouts in all parts of the country.
- These workers can find other jobs relatively easily if they become unemployed, even though the new jobs may not last as long and they may have to seek still other jobs.
Unfortunately, several suggested remedies to cut the rate of long-term unemployment will be ineffective. Many people believe the solution is to retrain the long-term unemployed. However, retraining adults of all ages, but especially older workers, has generally been a failure: it is much too costly relative to the benefits in terms of new jobs. The only real remedy for the long-term (and other) unemployed is rapid economic growth, says Becker.
Source: Gary S. Becker, "You're Hired! Eventually," Hoover Digest, July 2, 2010.
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