Chart of the day, college-dropout edition

By Felix Salmon
May 22, 2012

dropout.png

In March 2010, the unemployment rate for high-school graduates 25 years or older peaked at 11.9%. Since then, it has dropped 4.2 percentage points — a pretty impressive showing, in just two years — and now stands at 7.7%.

In the same period, the unemployment rate for college dropouts 25 years or older also fell, from 9.5% to 8.0%. But that drop, of 1.5 percentage points, is much smaller. And now college dropouts have a higher unemployment rate than their friends who never went to college at all.

And these two series are very comparable: both sets include about 34 million people.

Now these numbers aren’t seasonally adjusted, and you can see that the unemployment rate for high-school graduates is pretty bumpy. As a result, it might well rise again soon. But the big picture is clear: unemployment among college dropouts is proving much more stubborn than it is among most of the rest of the population.

Jed Graham lists a number of reasons why that might be the case. For one thing, with the majority of Americans now attending college, even if they don’t all graduate, college is less of a destination for the elite than it used to be. The elite will always get jobs, but as students become less elite, they’re  less assured of having great careers once they graduate.

And for another thing, college dropouts are still significantly more likely than high-school graduates to have a job: their employment rate is higher, even if their unemployment rate is lower, since they have a significantly higher labor force participation rate. On the other hand, the reason for the higher labor force participation rate is just that fewer people used to go to college, which means that among people 68 years or older, high-school graduates vastly outnumber people who went to college. And once you’re over 68, you can be excused for no longer being in the labor force.

So what’s going on? Graham’s convinced there’s something real here:

Labor Department data show that while the jobless-rate advantage of college dropouts over high school finishers has disappeared and turned negative, the advantage of two-year-degree holders over college dropouts is way above the historical norm.

Meanwhile, the jobless rate differential between high school finishers and two-year-degree holders is right in line with its historical average. This suggests that the principal mover is a decline in employment outcomes among dropouts.

I suspect that the conjoined forces of for-profit colleges and student loans are a significant contributory factor here. College dropouts certainly have more debt than they used to, and although indebtedness doesn’t directly lead to higher unemployment rates, it does at the margin act as a constraint on the massive life option that everybody has when they leave college. If high debts force you into some crappy job when you drop out of college, your chances of getting a good long-term career diminish.

And more generally, college is slowly moving from the “things which are bought” column into the “things which are sold” column — for-profit colleges, in particular, recruit aggressively in ways that would have been unthinkable to an earlier generation of tertiary educators. As a result, people drop out of college not just because it’s statistically certain that in any college class there will be some students who drop out, but increasingly because a lot of students, especially in courses offered by for-profit colleges, really can’t and shouldn’t be in those classes in the first place.

Besides, it makes conceptual sense that if you’re going to drop out of college, you’d be better off not going to college at all. Say you drop out after two years: you could have been working hard at the beginnings of a career during those two years, earning money to get yourself started on some well-defined course. Instead, people who drop out of college (Bill Gates, Mark Zuckerberg, and a handful of other exceptions notwithstanding) generally have little idea of what they want to do next, and are well behind their high-school peers in terms of building an economically-productive life.

All of which is to say that while it’s still indubitably a good idea to go to college, the “go to college” advice has to be added to, these days, with further admonitions not to take on too much debt, and certainly not to drop out. Because as far as employability is concerned, it seems that college dropouts have never had it so bad.

4 comments

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Unless the college dropouts actually learned something during their time in college. After all, learning to correctly load a bong might serve better than a Bachelor of Arts in 17th century Tazmanian poetry (the former might not require 4 years of university to master). ;)

Posted by k9quaint | Report as abusive

Felix – if your main point is related to employment participation rates among 3 categories, then don’t post a chart about unemployment rates among 2 and then explain at length why that chart is skewed and incomplete.

Just post a chart showing employment participation rates among the 3 categories.

For fun, add a chart showing those rates by age categories (replacing another paragraph of words). BTW, where’s the link to the underlying data?

Posted by SteveHamlin | Report as abusive

I fear you are running up against the limitations of gross statistics here. As you note, the labor force participation rates are very different. The character of the employment is also likely different. And somebody who gets suckered by a for-profit school is more properly termed a “chump” than a “college dropout”. Definitely confuses the issue.

You don’t need a college degree to succeed. What you DO need is a plan. Plenty of people in the trades who never attended college and built decent lives (or apprenticed into a family business).

Posted by TFF | Report as abusive

Just for the record, Gates and Z’berg and Steve Jobs all failed to complete u/g studies, but it hardly seems fair to lump them in with a crowd that “shouldn’t be in those classes in the first place”. Those guys got what they needed from school and were ready to move on to (much) better things long before their 4-year stretches were up.

Not like they couldn’t cut it in school.

Posted by MrRFox | Report as abusive