The New Economics of Jobs Is Bad News for Working Class Americans — and Maybe for Trump
posted by Robert Shapiro on January 22, 2018 - 10:57am
Many political observers still seem flummoxed by the fact that millions of working-class Americans voted for Donald Trump after supporting Barack Obama not once but twice. One important reason may lie in certain large-scale changes in America’s job market over the last decade. The growing role of a college degree in landing a job is well documented. Now, new household employment data reported by the Bureau of Labor Statistics (BLS) show that over the last decade, Americans with college degrees can account for all of the net new jobs created over the last decade. In stark contrast, the number of Americans with high school degrees or less who are employed, in this ninth year of economic expansion, has fallen by 2,995,000.
We use the household employment survey here instead of the business establishment survey, because it tracks the education of everyone who gains or loses a job, month by month. In the latest survey covering December 2017, the number of college graduates with jobs jumped by 305,000 – while the numbers of employed Americans with no high school degree fell by 132,000. High school graduates with jobs dropped by 38,000, and employees with some college but no degree declined by 45,000. That’s a window into what’s happened across the U.S. economy throughout this business cycle – and the fact that GOP rule hasn’t helped working class Americans with jobs could create problems for them in 2018 and 2020.
The near decade from January 2008 to December 2017 covers every facet of the current business cycle, except its very end. The first five years from January 2008 to January 2013 included the recession and financial crisis followed by a modest recovery, and the second five years from January 2013 to December 2017 have seen a reasonably steady expansion. In a normal cycle from recession to recovery, economists expect to see substantial job losses followed by offsetting job gains. In the aggregate, that is just what happened in the first five years of this cycle: millions of jobs were lost from January 2008 to December 2010; but by January 2013, the number of employed Americans had recovered to nearly the same level as in January 2008.
But the composition of that workforce – who lost their jobs compared to who landed new jobs – changed in decisive ways. From January 2008 to January 2013, millions of people without college degrees lost jobs and never regained them, while all of the job gains went to the one-third of the labor force (as of January 2008) with at least a B.A. degree. (See the Table below.) So, while total employment in January 2013 was just 341,000 less than in January 2008, the number of Americans without a high school diploma who were employed fell by more than 1.6 million. The number of high school graduates with jobs fell by more than 2.8 million, and the number of working people with some college training but no BA degree fell by 227,000. Over those same five years, the number of college-educated Americans with jobs increased more than 4.3 million.
In the following five years of economic expansion, employment rose rapidly. From January 2013 to December 2017, the BLS household data show that the number of Americans with jobs increased by 10,997,000, for net job growth of 10,656,000 (10,997,000 – 341,000). Every educational group saw net job gains – but the distribution of those gains very badly short-changed Americans without college degrees.
Consider, to start, the country’s high school graduates. In January 2013, they comprised 27.3 percent of the labor force – but their job gains of 720,000 from that time to last month account for only 6.8 percent of all employment growth. Similarly, Americans who attended college but didn’t earn a B.A. degree accounted for 27.9 percent of the U.S. labor force in January 2013, and they claimed only 15.3 percent of the subsequent job gains. Strikingly, people without high school diplomas found jobs in this period at a rate that more nearly reflected their share of the labor market: They comprised 8.2 percent of the workforce in January 2013 and claimed 7.0 percent of net new jobs created from that time to the present. The only big winners were college graduates. They accounted for 36.5 percent of the U.S. labor force in January 2013; yet, they claimed 71.0 percent of the net new jobs created since then. To sum up these figures: of the 10,656,000 net new jobs created from January 2013 to the December 2017, 7,564,000 went to college graduates.
As job opportunities have increased for college-educated Americans, their share of the U.S. labor force climbed from 33.6 percent in January 2008 to 36.5 percent in 2013 to 39.9 percent in December 2017. Similarly, as job opportunities narrowed for non-college educated people, more became discouraged and bailed out of the labor force. Over the last decade, the share of the U.S. labor force comprised of people without high school diplomas fell from 9.3 percent to 7.3 percent, the share with no more than a high school degree fell from 28.9 percent to 25.7 percent, and the share with some college training but no B.A. fell from 28.2 percent to 27.1 percent. Too often, the downward spiral has not ended with joblessness. Researchers have found that nearly half of working-age men who have left the labor force use pain killers on a daily basis. Moreover, new research shows that on a county by county basis, each percentage-point increase in unemployment is now accompanied by a 7.0 percent increase in hospitalizations for opioid overdoses and a 3.6 percent increase in opioid-related deaths.
Americans without college degrees, who continue to comprise 60 percent of the labor force, are now effectively penalized in every phase of the business cycle. From the first month of the last recession in January 2008 to December 2017, well into year nine of this expansion, the number of employed Americans with high school diplomas contracted by 2,095,000, and the number of people working without a high school diploma fell by 900,000. Further, the share of all job gains claimed by Americans with some college but no B.A. degree was just over half their share of the labor force. Through it all, the number of college-educated Americans with jobs jumped by 11,909,000. That’s 1,253,000 more than the total 10,656,000 net new jobs created across the economy, suggesting that college grads are also now claiming new jobs that used to go to people without a B.A. degree.
If the disappointment of millions of working-age Americans without college degrees helped drive Trump’s 2016 victory, the Republicans’ political prospects may be even worse than voter surveys suggest. The booming stock market and great top-line employment numbers have not touched these labor market dynamics. Nor will the GOP’s vaunted tax changes make a difference: The success of those changes rests on their spurring a capital investment boom, but the technologies that dominate capital investment today are typically used and operated by college-educated workers. And when the current business cycle finally ends next year or the year after, workers without college degrees will dominate the jobs losses By 2020 and perhaps this coming November, Trump and his GOP colleagues could well face a political revolt from the same voters who took a chance on them in 2016.