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Snapshot for April 21, 2004.

Large increase in unemployment of college-educated people since early 2001

As has been widely noted, one reason unemployment remains relatively low in the midst of the current weak job market is because many potential job seekers have left the labor force and are not counted among the unemployed. Some have argued that this “missing labor force” largely reflects voluntary withdrawals, such as women staying home to take care of young children, rather than any labor market distress.

This argument, however, fails to reflect the experience of college-educated persons, as the labor force participation rates of college-educated workers of both genders are down by the same amount: 1.0 percentage point since the first quarter of 2001. Men and women with college degrees have left the labor force in similar rates, indicating that labor force withdrawal among college-educated workers is not specific to women.

If the labor force had grown at the same pace as the college-educated population over the last three years, it would be 0.6 million higher than the actual labor force for March 2004. Adding the missing labor force—those who would be expected to be working in a stronger labor market—to the unemployed brings the unemployment rate for college graduates from the official 1.7% rate to the constructed rate (i.e., after adding the missing labor force) of 4.4%.  

Breaking down unemployment rates by gender shows that the current constructed unemployment rates are almost equal for men and for women (4.4% compared to 4.3%, respectively).  The unemployment rate for men at the onset of the 2001 recession was lower than that of women (1.6% for men versus 1.8% for women), and the “missing labor force” component is about the same for both genders (1.4% versus 1.5%).

Contrary to arguments that women are leaving the labor market voluntarily to provide child care, the similar unemployment rates for men and women suggest that women are no more likely to have left the job market than men. The reason for high constructed unemployment rates is more likely to be a lack of job opportunities than voluntary withdrawals.

Today’s snapshot was written by EPI Research Director Lee Price and research assistant Yulia Fungard.