Recovery Widens U.S. Education Gap

Moody's

The U.S. recovery, now in its fourth year, has accentuated the connection between education and economic well-being. Differences in educational attainment have been a major factor in unemployment, as workers with college or advanced degrees are having an easier time finding jobs. The unemployment rate for high school graduates is hovering just above 7.3%, while the jobless rate for holders of college degrees older than 25 has been less than 4% since September 2012.

The gap between the two rates, which reached 600 basis points during the depths of the Great Recession, has yet to return to its historical average since 1992, which is 296 basis points.

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The situation is likely to persist for some time. Payrolls in manufacturing, where many individuals without a college degree find employment, are expected to decline through mid-2014. Moreover, wage growth in lower-paying positions has fallen behind the general economy. And though college graduates face a lower unemployment rate, anecdotal evidence suggests that a sizable share of those with degrees are underemployed. It will be several years before the labor market fully heals.


Kyle Hillman is an Associate Economist at Moody's Analytics.


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