Education, Job Openings, and Unemployment in Metropolitan America

This paper aims to provide metro, state, and national policy makers with a better sense of the specific problems facing metropolitan labor markets. First, the analysis examines trends in the demand for educated labor and how a gap between education supply and demand is related to unemployment. Next, it attempts to distinguish between cyclical and structural effects before turning to an explanation of how an education gap might affect both by limiting job creation. It concludes with a discussion of the implications of these findings for public policy.

Highlights

  • Advertised job openings in large metropolitan areas require more education than all existing jobs, and more education than the average adult has attained.
  • Metro areas vary considerably in the level of education required by job openings posted online.
  • Metro areas with higher education gaps have experienced lower rates of job creation and job openings over the past two years.

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Use our interactive application below for metro-level data on supply of educated labor, employer demand for skilled workers, and other economic trends affecting unemployment rates.

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Unemployment rate

Current unemployment rates result from long-term "structural" factors interacting with short-term "cyclical" dynamics. Change during the recession is used here to illustrate the short-run, while the current level reflects the long-run condition.


May 2012

Rank: /100

Change: pre-recession
through May 2012

Rank: /100

Job openings per unemployed worker >>

How many job openings could the average unemployed worker apply for in 2011?

All education levels: job openings

Bachelor's degree or higher:

Associate's degree or some college:

High school diploma or less:

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Rankings on factors that affect unemployment

Short-run "cyclical" unemployment rate changes are due primarily to demand for industry products, house price changes, and to a lesser extent, the gap in the supply of and demand for educated workers. This education gap index largely explains long-run unemployment.

Demand for
industry products

Housing price
growth

Education gap
index

Rankings are out of the 100 largest metro areas (1st=top performance,
contributing to lower unemployment)

Scatter plot >>

How does unemployment relate to the education gap?

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Occupations with the most job openings

January/February, 2012

Title of occupation Openings

Rate of job openings in 2011 per existing job: (rank: /100)

Educated worker supply and demand

Share of workers by educational attainment vs. share of job openings by education required

Definitions and sources

The education gap index is calculated as the years of education required by the average job vacancy in a metro area divided by the years of education attained by the average working-age person in that area.

Demand for industry products refers to predicted job growth during the recovery, based on the metro area’s industry mix and national industry growth.

Job openings data are from the Conference Board’s Help Wanted Online Series.

Other sources include the Census Bureau’s American Community Survey, the Bureau of Labor Statistics, Moody’s Analytics, and the Federal Housing Finance Agency. For more, download the report above.