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Identifying Labor Underutilization Problems across Education and Household Income Groups in the U.S.

Unemployment Problems Among Workers Across Education and Income Groups in 2013–2014

The average unemployment rate of U.S. workers between January 2013 and December 2014 was 6.8 %. [1] But there is much more to the story. Around that average rate of unemployment stands a significant degree of inequality. Findings in Figs. 7.2, 7.3, and 7.4 show these socioeconomic disparities in unemployment rates in 2013–2014.

By Educational Attainment Group When looking at educational attainment groups, unemployment rates varied quite widely. The unemployment rate was highest by far for those workers who did not have a high school diploma or GED, decreasing steadily with increased years in school (see Fig. 7.2). Workers that were high school dropouts or without a GED fared the worst with an unemployment rate of 13.9 %. The rate fell to 8.4 % for those that were high school graduates or held a GED,

Fig. 7.2 Unemployment rates among workers (16 and over) by educational attainment, 2013– 2014 averages (in %)

Fig. 7.3 Unemployment rates among workers (16 and over) by household income, 2013–2014 averages (in %)

continuing downward to 4.1 % for those with a bachelor's degree and a low of 2.9 % for those with a master's degree or higher. The least educated workers were almost five times more likely to be unemployed than those with the highest levels of formal educational attainment.

To illustrate the degree to which workers in different educational groups were affected by the rise in unemployment rates, we compared their unemployment rates in 2013–2014 with those in 1999–2000 (see Table 7.1). Unemployment rates rose for members of each of the six educational groups; however, the absolute size of these increases was higher the less education one had completed. High school dropouts and graduates with no college experienced unemployment rate increase of about 4 percentage points, while workers with a bachelor's or higher degree saw unemployment rates rise by 2 percentage points or less. The unemployment rate gap between high school graduates and bachelor's degree holders widened from only 2.3 percentage points in 1999–2000 to 4.3 percentage points in 2013–2014. By Household Income Group Unemployment rates of workers also varied quite considerably across household income groups. [2] Unemployment rates were highest

Fig. 7.4 Unemployment rates among workers (16 and over) by educational attainment and household income, 2013–2014 averages (in %)

among lower-income workers and fell steadily and steeply as household income increased (see Fig. 7.3). Workers in the lowest household income group (under

$20,000) had an unemployment rate of 19.2 %, with the rate falling to under 9.2 % for those with household incomes of $20,000–40,000. Workers in households with low-middle to middle incomes ($40,000–75,000) had unemployment rates of 5–6 %, with the rate under 3 % for workers in the most affluent households (those with annual incomes of $150,000 or more). Workers in the lowest income group were seven times more likely to be unemployed than those in the most affluent households in 2013–2014.

By Separate Educational Attainment/Household Income Groups To identify the link between unemployment rates, educational attainment and household income, workers were combined into 36 separate educational attainment and household income groups, with unemployment rates calculated for each. The groups ranged from high school dropouts in households with low incomes ($20,000 per year) to workers with a master's or higher degree that were in the most affluent households

Table 7.1 Comparisons of the unemployment rates of adults 16 and older by educational attainment, 1999–2000 and 2013–2014 (in %)

Educational attainment

(A)

1999–2000

(B) 2013–2014

(C) Percentage point

change

<12 or 12, no diploma or GED

9.7

13.9

+4.2

H.S. diploma or GED

4.4

8.4

+4.0

13–15 years, no degree

3.6

7.4

+3.9

Associate's degree

2.6

5.3

+2.7

Bachelor's degree

2.1

4.1

+2.0

Master's or higher degree

1.5

2.9

+1.4

All (16 and over)

4.1

6.8

+2.7

Source: Monthly CPS household surveys, public use files, 1999–2000 and 2013–2014, tabulations

by authors

($150,000 or more per year). The range in unemployment rate proved extraordinarily broad. The unemployment rates for these workers ranged from a high of 22.6 % for workers from low-income households and no high school diploma, to 9.4 % for high school graduates with below average incomes ($20,000–$40,000,) to a low of only 1.4 % for workers in the most affluent households ($150,000 and over) that held a master's or higher degree. Workers from the lowest income households who did not have a high school diploma were 16 times more likely to be unemployed than the best educated workers from the most affluent households (see Fig. 7.4). Well-educated Americans from high-income families lived in a super full employment labor market, while less educated, low-income workers were facing Depression-level unemployment rates.

  • [1] In 2009 and 2010, the unemployment rate of U.S. workers was 9.5 %.
  • [2] These statistics come from monthly Current Population Surveys, where respondents are asked to report total combined income received by the household members during the past 12 months. The incomes are reported in categorical form. The income includes wage and salary income, farm/ nonfarm, self-employment incomes, Social Security/Supplemental Security Incomes, pensions/ interests/dividends incomes, net rental income, cash public assistance income, unemployment or workers' compensation incomes, pension or retirement incomes, and all other incomes.
 
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