Once You Accept The Ugly Truth About American Unemployment, Then The Solution Is Easy

Many like to paint America’s high unemployment problem as the death of America’s economic model, or the result of foreign ‘slave labour’ whereby low-value and cheap workers are taking U.S. jobs. It’s painted as a problem whose fault lies everywhere but in the American people.

But what if highly skilled foreign workers are taking jobs from lesser skilled Americans? Maybe foreign workers are doing better work for cheaper, not just the same work for cheaper. Some might even be earning more than many Americans, but at the same time delivering far more value to their employers.

This is obviously a touchy subject, but let’s take a look at the breakdown of U.S. unemployment, even if it opens up some ugly conclusions.

As shown below, the majority of America’s soaring unemployment problem is the result of people without four-year college educations losing their jobs. Unemployment for Americans with only a high school degree went from from a rather benign 4.2% in 2007 to 10.8% in June 2010, as shown below.


Meanwhile, unemployment for Americans with Bachelor’s degrees or higher went from 2.1% to just 4.4%, which is a level that isn’t severe by itself. Problem is, despite how far the U.S. has come, only 34.79% of the American workforce has a 4-year college education or better. Thus the high rate of unemployment for less-educated Americans creates an ugly blended unemployment figure for the U.S. as a whole.

Despite how far the U.S. has come, nearly two-thirds of the workforce doesn’t have 16 years of education (12 in school, plus 4 in college). This might have worked in the past, and the U.S. population remains one of the most college-educated globally, but the world is rapidly educating itself and catching up.

A leading nation, a superpower, will need to have a far higher percentage of people with sixteen years of formal education if it wants to compete in the 21st century. Otherwise, highly educated people abroad will have every economic right to win well-paid jobs from less-educated Americans.

We realise that at the micro-level not all college educations are worthwhile and a lot of people learn skills outside of college. But before America can exasperate about high unemployment, perhaps the nation needs to max out its educational credentials first. If 80% of the workforce has 16 years of education, and still can’t compete, then we can search for other causes. Until then, it’s very likely that America just needs to become more educated going forward if it wants to have some of the highest paid workers in the world.

The good news is that the percentage of Americans with 16 years of education has increased over the last few years. Hopefully it will keep doing so and at a faster rate.

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