The uneven U.S. recovery isn't lifting all boats. For those with college degrees, jobs are plentiful, while for those with high school education or less, they're nearly nonexistent. This is America's real inequality problem.
Recent data show continuing modest gains in job creation and declines in unemployment, part of a slowly improving overall economy.
One very good sign came in early April, when the four-week average of jobless claims — a gauge of job-market strength — fell to 282,500, its lowest since May 2000.
Today, the unemployment rate stands at 5.5%, its lowest since before the financial crisis. Payroll jobs have grown on average 197,000 a month this year, not a barn-burner number but still growth. And wages, which had refused to budge, are edging up.
The media have played up this good news on the jobs front. Unfortunately, one group of workers — those with less than a college degree and no special training or skills — have been left out.
This can be seen in a slew of other data. Over the last year, the U.S. economy added 2.2 million jobs for those over 25 years of age, according to Bureau of Labor Statistics data.
But of those jobs, 1.8 million, or about 80%, went to those who had bachelor's degrees or higher — a group that collectively has a mere 2.5% unemployment rate. And at 51.3 million, the college-educated workers make up just 38% of the U.S. workforce.
As for the other 400,000 jobs, they went almost entirely to those with "some college."
That means essentially all the job growth in recent months and years has gone to those with higher education. This has led to a kind of jobs anxiety among the undereducated, as our IBD/TIPP Poll shows (see chart above). By far the group most concerned about keeping their jobs are those with only a high-school diploma.
Even so, the Job Openings and Labor Turnover survey, a data series popular on Wall Street, shows businesses in the most recent month had 5 million jobs in the U.S. that they couldn't fill. With official data showing just 8.6 million people unemployed, this suggests a very tight labor market.
Not so. Our own IBD/TIPP Poll and even some alternative data produced by the Labor Department suggest that tens of millions of Americans want jobs but can't get them. In May, for instance, 23% of households surveyed by IBD/TIPP reported at least one member of the household looking for a job but unable to find one.
Based on the total number of households in the U.S., the IBD/TIPP data suggest real unemployment of at least 28 million people — not 8.6 million.
And many of those lack education and training.
"The real problem with the U.S. labor market may well be that job growth is largely limited to jobs that require a college degree and we are running short of viable candidates," wrote Nicholas Colas, chief market strategist at Convergex, a global brokerage company based in New York, in a recent client newsletter.
He's right. A high-tech, digitally driven global economy seems to have little use for those with few skills or just high-school credentials — or less. And with a flood of new uneducated, low-skill immigrants hitting U.S. job markets, the competition even for low-end, low-wage jobs will only stiffen.
The real source of inequality in America isn't race or gender, it's education and training — a problem neither tax hikes on the rich nor spending on welfare can fix.