The headline read, “We Have Become a Nation of Hamburger Flippers: Dan Alpert Breaks Down the Jobs Report.” Seems that Alpert, the managing partner of New York investment bank Westwood Capital, LLC, was unhappy that most of the jobs created in July were for low-wage workers.
Albert wasn’t alone. Plenty of people have been complaining that most of the recently-created jobs have been for low-wage workers. These people have apparently forgotten who it was that lost jobs in the Great Recession: It was low-wage workers. College educated people were hardly impacted at all, especially those that headed households and had several years of work experience.
The recession hit less educated, and therefore low-wage, workers far more than it hit high-human-capital workers, and the discrepancy persists, even as analysts complain about hamburger-flipping jobs.
The July unemployment rate for college graduates was only 3.8 percent, down from 3.9 percent the previous month. By contrast, the unemployment rate for people with less than a high school diploma was 11 percent in July, up from 10.7 percent in June, even though more than 270,000 of these workers left the workforce.
The July unemployment rate for high school graduates without any years of college was unchanged from June at 7.6 percent, while unemployment for those with some college fell from 6.4 percent in June to 6.0 percent in July.
So, even though we are hearing some complaints about the composition of new jobs, college educated people and people with some college were apparently better off at the end of July than they were at the beginning of the month. The less educated were not better off. Indeed, it looks as if many were worse off.
The disparity is worse if you look at labor force participation rates. The rate for people with less than a high school education is only 45 percent. Over half don’t even try to find work.
The labor force participation rate climbs as education increases. It’s 59 percent for high school graduates, 67.3 percent for people with some college, and 75.5 percent for college graduates.
We need more hamburger-flipper jobs.
With an unemployment rate of only 3.8 percent for college graduates, it seems that it would be difficult to fill many more of these jobs. Given the relative unemployment rates, it’s unavoidable that hamburger-flipper jobs will continue to dominate new job numbers.
I calculated how many jobs it would take to create a three percent unemployment rate for everybody. We’d need 870,000 jobs for people with less than a high school education, 1,689,000 high-school-graduate jobs, 1,116,000 for people with some college, and only 417,000 college-graduate jobs.
That’s assuming no change in labor force participation rates. The numbers gets a lot larger if you want to improve labor force participation rates.
Suppose the target was a three percent unemployment rate, and labor force participation for everyone was at the 75.5 percent rate that it is for college graduates. In that scenario, we’d need to create 7,783,000 jobs for people without a high school diploma, 15,421,000 jobs for people with a high school diploma, 8,165,000 jobs for people with some college, and still only 417,000 jobs for college graduates.
A lot has been made of the increasing income inequality in America. Part of it is due to higher wages for higher education. Another major reason is that the percentage of those who are working is smaller among lower-educated people, and bigger among those with more education. We could go a long ways toward reducing American’s inequality by putting more of our least advantaged people to work.
I’d say we need a lot more hamburger flipping jobs, and I’m not about to complain because we are creating lots of them.
Flickr photo by Jeremy Brooks
Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org. A slightly different version of this article ran in the Orange County Register.