Given the severity of the Great Recession and the lackluster recovery to date, we have seen a larger share of workers working part-time, more underemployment, lower labor force participation rates and higher numbers of discouraged, or marginally attached, workers. This is one reason a lot of people focus on the so-called U-6 unemployment rate since it includes those who have recently given up looking for work and those working part-time for economic reasons. Next week I will have a three part series on unemployment and the labor market, but for now I wanted to highlight some recent work on underemployment and share Oregon specific numbers.
Overall we have heard a lot of anecdotal stories about underemployment, be it the stereotypical barista with a college degree or college educated adults taking food service jobs after losing their office job in the recession, and the like. Up until now I have not seen good data to back up these stories, but maybe I’ve been looking in the wrong places. However, on Tuesday Arindrajit Dube, an economics professor at the University of Massachusetts – Amherst, published a post on the share of hires at fast food restaurants that have at least some college education. He uses the Census’ LEHD data and finds that since the Great Recession started the share of these hires has increased by about two percentage points. He also points out some recent research on the so-called jobs ladder and writes:
One of the consequences of a broken job ladder is that workers take—and stick around in—less than ideal jobs like fast food. But the failure of the job ladder does not impact all workers equally. Higher-credentialed workers have more opportunities to get some job—any job—than their lower-credentialed counterparts. A college graduate can get a job at McDonald’s if she wants to, but a high school grad will have a hard time getting a job in finance. So as the labor market is stuck in a low gear, an increasing share of fast food vacancies are filled with people who may not have taken such jobs in a healthy labor market, or may have climbed up the job ladder to better opportunities. This is a form of skills-mismatch, but one that is induced by demand conditions.
Professor Dube’s good idea contribution is to look at not just the educational attainment of the overall population or within sectors, but to focus on the educational attainment of the recently hired workers. I have dug into the same data, but for Oregon and find a similar pattern. For recently hired workers in both retail and accommodation and food services, the share with at least some college has risen since the Great Recession. While an overall rising educational attainment level for the country and Oregon will likely be seen in hiring patterns — and it is — these big movements in industries that generally do not require post-secondary education largely reflect a poor labor market. UPDATE: the title of the graph has been updated to better reflect what is actually being presented. The previous title was “Hires with Some College are Up” when the graph actually presents the share of recent hires with at least some college but also those with bachelor’s and graduate degrees.
If you dive even deeper into the data you see these same trends in the sub-sectors such as home improvement stores, grocery stores, gas stations and also accommodations and food services individually.
Now for a few caveats. In the data there are five educational attainment categories: less than high school, high school, some college, bachelor’s and higher, and not identified. What you see above is some college plus bachelor’s as a share of the sum of the four categories that are identified. The not identified are excluded from these calculations but whether or not you include them does not change the general story, particularly for the industries shown above. It should also be pointed out that some industries are showing a declining share of hires with some college, and these declines are generally in the highest educational attainment industries overall such as health care, finance, professional and technical services, etc. These trends are longer running and not directly tied to the timing of the Great Recession. It would be interesting to find out the reasons why. It may have to do with job polarization even within these industries, but that is unknown at this time and, again, these industries do have above average educational attainment levels overall. Finally, it has been brought to my attention by our good friends over at the Employment Department, that this LEHD data that the Census puts together, while generally good, has some sparse documentation on how they attach Census and ACS data for educational attainment and ethnicity data to the employment data. This can cause some technical issues with these numbers but I’m not going to let potentially bad data get in the way of good theory here. 🙂 So take these figures with a grain of salt but they still are the best data I’ve seen to match up with the anecdotal stories we have heard in recent years.