KY Policy Blog

Higher Education Helped in the Recession, but Doesn’t Guarantee a Good Job in Recovery

By Sean Litteral
September 13, 2012

Those with higher education fared better in the recession and are more likely to obtain the new jobs being created in the recovery. However, those new jobs tend to pay lower wages than the jobs that were eliminated during the downturn.

Thus while more education can help shield families from recession, the path to greater family economic security must also include policies that spur the creation of more good quality jobs.

A report released last month by the Georgetown Public Policy Institute highlights how the recession impacted those with different levels of education. Since the recession began, unemployment rates have been high, even for college graduates. However, while the unemployment rate is currently 9.4 percent for high school graduates – and peaked at 13.4 percent in 2010 – the unemployment rate for college graduates has never exceeded 6.3 percent.

The Georgetown study finds that at the peak of the recession – between December 2007 and January 2010 – those with a high school diploma or less were more than three times likelier to lose their job than those with more education. Of the net jobs lost – 7.2 million – those with a high school diploma or less accounted for nearly 5.6 million of the job losses compared to 1.75 million for those with an Associate’s degree or at least some postsecondary education. Over this same period, those with a Bachelor’s degree or higher experienced a gain of 187,000 jobs.

More than two-thirds of the jobs lost during the recession were in construction and manufacturing—industries that historically have provided decent wages even for those without a postsecondary degree. The manufacturing industry alone accounted for 2.7 million of the losses – approximately one out of every six workers. And the construction industry lost 2.5 million jobs, more than a fifth of its workforce.

Likewise in Kentucky, from December 2007 through the trough of the recession in February 2010, the construction and manufacturing industries recorded 66,300 jobs lost. These two industries accounted for over 56 percent of the recession-induced Kentucky job losses.1

In the past couple of years as the economy has begun to recover, even jobs in occupations that traditionally have required low levels of education are now occupied by those with higher levels of education. Over half of the job gains in the recovery in these occupations went to individuals with some college or an Associate’s degree.

However, it is important to note that the new jobs that have been created are in many cases lower wage jobs than those that were previously eliminated. A new report by the National Employment Law Project indicates that while low-wage jobs accounted for only 21 percent of the total jobs lost during the recession, 58 percent of recovery growth has been in low-wage jobs. Mid-wage jobs account for 60 percent of recession losses but only 22 percent of recovery growth.

The job quality challenges can be addressed in part through more investment to spur faster overall job growth, reduce unemployment rates and create jobs in the sectors where they are needed. Proposals to expand investment in infrastructure, for example, can help create jobs in the construction sector, while aid to state and local governments can help stem the loss of mid-wage jobs in government due to state and local budget cuts.

And in the long run, higher levels of education in Kentucky will help more of the state’s residents obtain jobs with greater security. In Kentucky, nearly one in two adults aged eighteen to sixty-four are without any postsecondary education and only 27.2 percent have an Associate’s degree or higher.2 However, the state continues to cut funding for postsecondary education. As noted in a previous post, the state cut inflation adjusted per student funding by 23 percent between 2008 and 2012 – and additional cuts were made to postsecondary education in the 2013-2014 budget.

  1. KCEP analysis of Bureau of Labor Statistics data provided by the Economic Policy Institute.
  2. Working Poor Families Project, Population Reference Bureau, analysis of 2010 American Community Survey.

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