Friday, October 08, 2010

Unemployment by Level of Education and Employment Diffusion Indexes

by Bill McBride on 10/08/2010 12:34:00 PM

By request ...

Unemployment by Level of Education Click on graph for larger image in new window.

This graph shows the unemployment rate by four levels of education (all groups are 25 years and older).

Note that the unemployment rate increased sharply for all four categories in 2008 and into 2009.

Unfortunately this data only goes back to 1992 and only includes one previous recession (the stock / tech bust in 2001). Clearly education matters with regards to the unemployment rate - but education didn't seem to matter as far as the recovery rate in unemployment following the 2001 recession. All four groups recovered slowly.

Earlier this year, the group with "less than a high school diploma" recovered a little better than the more educated groups - possibly because of the tax credit related increase in construction - but that changed in September as the unemployment rate increased sharply.

For the group with some college or an associate degree, the unemployment rate is at a new high for this employment recession.

Diffusion Indexes

This is a little more technical ...

Employment Diffusion Index The BLS diffusion index for total private employment declined to 49.8 from 54.1 in August. For manufacturing, the diffusion index declined to 46.3 from 48.2 in August.

Both indexes are down sharply from earlier this year.

Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS. From the BLS:

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.
The increases in the diffusion indexes in 2009 and earlier this year, was a clear positive in the monthly employment reports. However the decrease in the diffusion indexes over the last few months (falling below 50% for both in September), is disappointing.

Earlier employment posts today (with many graphs):
  • September Employment Report: 18K Jobs Lost ex-Census, 9.6% Unemployment Rate
  • Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks