Job Losses Hit Workers Without College Degrees The Hardest

To call the most recent employment report dismal is an understatement. The unemployment rate in April 2020 shot up to 14.7%, up from 3.5% in February, reaching the highest rate since modern recordkeeping began in 1948. Nonfarm payroll employment dropped by over 20 million as the coronavirus pandemic forced the closure of businesses nationwide.

Workers without college degrees were hit particularly hard. The unemployment rate for people with only a high school degree reached 17.3%, exceeding its peak during the Great Recession by 6 percentage points. People with at least a bachelor’s degree also saw heavy job losses, but their unemployment rate mercifully remained in single digits, at 8.4%.

As bad as these unemployment numbers are, even they don’t capture the full picture of labor-market devastation. To be counted as unemployed, a person must be actively looking for work. Some people who have lost their jobs are not currently searching for a new one, and so are considered to have dropped out of the labor force. A broader measure of labor market slack that takes these people into account pegs the unemployment rate at 22.8%. The same metric stood at 7% in February.

People who drop out of the labor force after losing their jobs are also far less likely to have college degrees. For people with bachelor’s degrees, the labor force participation rate dropped less than two percentage points between February and April, from 73.1% to 71.6%. But for high school graduates, the labor force participation rate dropped by nearly twice that amount, from 58.3% to 54.6%.

There is a silver lining to all this. Among the 23 million people who are counted as unemployed, 18 million (78%) are on temporary layoff, while only 2 million (9%) lost their jobs permanently. In theory, many of those people should go back to their old jobs once stay-at-home restrictions are lifted and businesses are allowed to open their doors again. In practice, though, many of those businesses will close and leave workers without a job to go back to.

In order to minimize the number of people staying on the unemployment rolls long-term, states should allow businesses to reopen when it is reasonably safe to do so. The Foundation for Research on Equal Opportunity (where I am a visiting fellow) has published guidelines for a partial reopening of the economy. Businesses at which physical distancing is possible and practical should be allowed to reopen, and governments can support them by subsidizing testing and contact-tracing apps in the workplace.

But even with some stay-at-home restrictions lifted, not all businesses will be able to reopen. Eventually, other businesses will take their place, but they may have different labor-market needs than the businesses which came before. Though we can make educated guesses about how labor-market needs will change, it is impossible to fully predict how the pandemic will reshape the economy.

There will undoubtedly be a need for people to acquire new skills in the post-pandemic economy, especially given that most of the people who have lost their jobs do not have a college degree. But this doesn’t necessarily mean sending everyone back to college. We don’t know whether the jobs created post-pandemic will require college-level skills or not, so policymakers should ensure that the infrastructure is in place to support a wide variety of ways for workers to acquire new skills.

That may include traditional college, but could also encompass apprenticeships, internships, on-the-job training, private skills certifications, coding bootcamps, and more. Policymakers should admit that we don’t know exactly which of these pathways will work best, and so should avoid putting their thumbs on the scale by subsidizing one pathway over another. There may be a temptation to expand Pell Grants for traditional college, but those dollars would arguably be better spent on a pathway-neutral program to support lifelong learners.

Workers without college degrees are being hit hardest by the pandemic, and we should hope that most of them can go back to their jobs once the economy reopens. But those who cannot should have as many options as possible going forward.