Lakshman Achuthan at the ECRI made an interesting Tweet today. “Recovery is Focused on Those Without High School Diploma“.
The Tweet refers to his January post Fresh Data: Cheap Labor.
Let’s investigate Achuthan’s claim and update the data as of today’s jobs numbers. First, let’s take a look at his chart and comments from January.
Achuthan comments ….
Since 2011, when the E/P ratio for those with less than a high school diploma bottomed, that metric has regained almost two-thirds of its recessionary losses (orange line in chart). But the E/P ratio for high school or college graduates – i.e., eight out of nine American adults – has not recovered any of its recessionary losses, and has barely budged in four years (purple line). This data underscores how the jobs recovery has been spearheaded by cheap labor, with job gains going disproportionately to the least educated — and lowest-paid — workers, many of whom have to work multiple jobs to make ends meets. This is scarcely supportive of Janet Yellen’s description of a “much healthier” consumer in justifying the Fed rate hike.
That looks interesting but the dual vertical axis levels distort the picture. Let’s update the picture with current data, on one chart.
Employment Population Levels by Education Level
The BLS defines Employment Population Ratio as “The proportion of the civilian noninstitutional population aged 16 years and over that is employed.”
Education level is only available for those 25 years old and up so that is our starting point.
- The chart shows the employment population ratio for those with a college education has generally been falling since February 1992. That’s when the data series began.
- The chart shows the employment population ratio for those with a high school education or more has generally been falling since July of 1997 when it peaked at 63.5.
Not only do Achuthan’s dual axis distort the real picture, so does his starting time line. Whatever is going on did not start with the great recession.
Employment by Education Level
I agree with Achuthan that many have to work multiple jobs. I also agree that most of those jobs are low-paying and BLS numbers overstate the strength of the jobs market.
However, Achuthan’s key point about “job gains going disproportionately to the least educated” is simply wrong.
Mike “Mish” Shedlock
