A recent report shows why education may be key to lowering the unemployment rate.
In a nod to the increasing importance of a college degree, a report from the Brookings Institution finds a shortage of educated workers is keeping unemployment high – and holding back economic recovery.
Following a study of the largest 100 metro areas in the U.S., the authors found unemployment rates are 2% higher in large metro areas with a shortage of educated workers – and have been consistently higher since before the recession. They also found metro areas with lower educational attainment (and higher education gaps) had lower rates of job creation and job openings.
The Seattle-Tacoma-Bellevue metro area has one of the highest demands for workers with a bachelor’s degree or higher. In 2012, nearly half of all job openings required at least a bachelor’s degree, while nearly 1 in 3 required an associate’s degree. Just 20% of jobs required a high school diploma or less.
More highly educated workers were also less likely to be unemployed, and those that were could be more picky. In 2011, there were 6.2 job openings for every unemployed worker with a bachelor’s degree or higher. For those with a high school diploma or less, there were just 1.8.
The trend toward educational attainment shows no signs of slowing. The Washington State Employment Security Department projects occupations requiring a bachelor’s degree or higher will increase by 90,500 jobs (11.9%) from 2008-2018. The average annual wages for these occupations is $79,785.
Meanwhile, the share of jobs for those in occupations that do not require formal education beyond high school will decline slightly. Average annual wages for these occupations range from $27,901 to $38, 869.
Here’s how the Brooking’s reports sums up the importance of higher education:
Educational attainment makes workers more employable, creates demand for complementary less educated workers, and facilitates entrepreneurship. To better train less educated adults, non-profit organizations, community colleges, and governments can use detailed job openings data to align training curricula and certifiable skills with employer demand.
Of course, a college degree doesn’t make you recession-proof. Economist Dean Baker points out that people with bachelor’s degrees have also struggled throughout the recession – albeit not as much as those without higher education credentials. But there’s little doubt that higher education is good for the economy.
The goal of policymakers and business leaders should be to invest in education and develop a highly educated workforce, which will help to create and sustain a vibrant economy. The Brooking’s report makes a strong connection between education and entrepreneurship, stating: “Less educated regional labor markets may lack entrepreneurs who start or expand businesses, leading to fewer overall openings and fewer openings for less educated workers.”
But the current trend of cutting billions from education and saddling students with high tuition and debt is hampering our economy and discouraging young people from buying homes, cars or starting businesses. Meeting the needs of our evolving economy will require rethinking our public investments – and perhaps a new approach to college financing.