David Leonhardt observes that the nonemployment rate among 25- to 34-year-olds was as of 2011 substantially higher (at 26.6 percent) than it was in France (22 percent), Britain (21.6), Japan (21), Germany (20.5), and Canada (20.2), a reversal from 2000, when the U.S. had the lowest nonemployment rate for this cohort (18.5) and Japan had the highest (23.9). One of the most striking aspects of these numbers is that the nonemployment rate in the U.S. has increased so dramatically, to a level higher than the highest nonemployment rate at the turn of the century. Leonhardt offers some thoughts as to what exactly happened over the intervening years, but he misses some of the more obvious possibilities. For example, he writes the following on higher education:
The United States, for example, has lost its once-large lead in producing college graduates, and education remains the most successful jobs strategy in a globalized, technology-heavy economy. It is no accident that the most educated places in the country, like Boston, Minneapolis, Washington and Austin, Tex., have high employment rates while the least educated, including many in the South and inland California, have low ones. The official unemployment rate for 25- to 34-year-old college graduates remains just 3.3 percent.
Leonhardt is correct: college completion rates in the U.S. are lackluster. But the nonemployment rate includes students enrolled in higher education, whether or not they are likely to complete a terminal degree. Consider the following from the National Center for Education Statistics:
Enrollment in degree-granting institutions increased by 11 percent between 1990 and 2000. Between 2000 and 2010, enrollment increased 37 percent, from 15.3 million to 21.0 million. Much of the growth between 2000 and 2010 was in full-time enrollment; the number of full-time students rose 45 percent, while the number of part-time students rose 26 percent. During the same time period, the number of females rose 39 percent, while the number of males rose 35 percent. Enrollment increases can be affected both by population growth and by rising rates of enrollment.
Between 2000 and 2010, the number of 18- to 24-year-olds increased from 27.3 million to 30.7 million, an increase of 12 percent, and the percentage of 18- to 24-year-olds enrolled in college rose from 35 percent in 2000 to 41 percent in 2010. In addition to enrollment in accredited 2-year colleges, 4-year colleges, and universities, about 539,000 students attended non-degree-granting, Title IV eligible, postsecondary institutions in fall 2009. These institutions are postsecondary institutions that do not award associate’s or higher degrees; they include, for example, institutions that offer only career and technical programs of less than 2 years’ duration.
In recent years, the percentage increase in the number of students age 25 and over has been larger than the percentage increase in the number of younger students, and this pattern is expected to continue. Between 2000 and 2010, the enrollment of students under age 25 increased by 34 percent. Enrollment of students 25 and over rose 42 percent during the same period. From 2010 to 2020, NCES projects a rise of 11 percent in enrollments of students under 25, and a rise of 20 percent in enrollments of students 25 and over. [Emphasis added]
One assumes that this increase in higher education enrollment only accounts for a fraction of the larger increase in nonemployment, particularly since we are talking about 25- to 34-year-olds. And more recently, there has been a dip in higher education enrollment, as Richard Vedder has observed. But it is curious that Leonhardt failed to mention this substantial increase in higher education enrollment between 2000 and 2011, as there is at least some reason to believe that it is a contributing factor. Moreover, while Leonhardt touts the virtues of higher education, Vedder notes a recent estimate which found that as many as 53 percent of recent college graduates are either unemployed or employed in low-wage, low-skilled jobs. This suggests that the marginal college student graduate isn’t necessarily benefiting from time spent in full-time higher education, let alone large numbers of college attendees. Yet the availability of higher education subsidies might make college enrollment a more attractive option than low-end employment, at least in the short-term. In this regard, we may well be seeing a parallel to rising disability rates, which in part reflect the deterioration of the labor market position of older less-skilled workers, among younger workers.