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Human Capital Can’t Explain The Precipitous Rise In Unemployment Across America

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"Human Capital Can’t Explain The Precipitous Rise In Unemployment Across America"

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Two things are true. One is that unemployment in the United States is currently very high. The other is that levels of unemployment have a lot to do with educational attainment. This leads David Brooks to a completely wrongheaded inference that education is a primary driver of unemployment:

Part of the problem has to do with human capital. More American men lack the emotional and professional skills they would need to contribute. According to data from the Bureau of Labor Statistics, 35 percent of those without a high school diploma are out of the labor force, compared with less than 10 percent of those with a college degree. [...] The result is this: There are probably more idle men now than at any time since the Great Depression, and this time the problem is mostly structural, not cyclical.

Jamelle Bouie says Brooks is failing to mention the Great Recession. But I’d say he is mentioning it. He’s just positing that the cause of the Great Recession is either that America’s human capital stock took a sudden negative shock in 2007 or else perhaps that the value of human capital underwent a sudden and rapid increase in 2007. But as Charlie Eisenhood showed long ago this human capital differential existed well before the recession:

Or look at the trend:

Even when there wasn’t a huge shortfall in aggregate demand, high school dropouts had a very high unemployment rate. That right there is your “structural” unemployment. But then you see this gigantic increase in the unemployment rate for dropouts that precisely coincides with an increase in the unemployment rate for folks with high school diplomas and with an increase in unemployment rate for folks with some college and with an increase in the unemployment rate for people with bachelor’s degrees. That’s right, even folks over the age of 25 with college degrees took the hit at the exact same time. And that is what a shortfall in demand looks like.

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