Friday, December 4, 2009

Unemployment rate of college graduates

This post on how a GWU student was not able to find employment in the current economic climate made me wonder how bad unemployment was among recent college graduates.

The WSJ ran a story on Simpson's paradox and the"mystery" of why the following is the case:

Measured by unemployment, the answer appears to be no, or at least not yet. The jobless rate was 10.2% in October, compared with a peak of 10.8% in November and December of 1982.

But viewed another way, the current recession looks worse, not better. The unemployment rate among college graduates is higher than during the 1980s recession. Ditto for workers with some college, high-school graduates and high-school dropouts.

So how can the overall unemployment rate be lower today but higher among each group?

It also provided this graphic:

The rate looked low to me for college graduates (green) at 4.9% which is higher than 3.6%. (Dropouts are red at 14.9% and all adults 25 and over is black.)

Unfotunately, the BLS data does not provide an educational breakdown for the age 20-24 group which is the group that is of interest in the article. Among this age group (all educational levels), the unemployment rate as of Oct 2009 was 15.6 % compared to Oct 1982 of 15.8%.

If we're taking the past to be a reflection of the future then it doesn't look too good for this age group. The monthly unemployment rates in 1982 continue to increase before declining in March, 1983.

Nov 1982: 16.4%
Dec 1982: 16.3%
Jan 1983: 16.0%
Feb 1983: 16.2%
Mar 1983: 15.6%

These numbers do not take into account the measurement errors around the estimates of the unemployment rates (so, for instance, 15.8% may not be statistically different from 15.6%).

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