Prepared by: Andrew Sum Ishwar Khatiwada With Walter McHugh. Center for Labor Market Studies Northeastern University

Transcription

1 The College Educated Population and Labor Force of Massachusetts and the U.S., Their Employment Behavior and Labor Market Problems, The Numbers and Occupational Characteristics of College Labor Market Jobs, and the Success of College Graduates in Obtaining Access to Such Jobs Prepared by: Andrew Sum Ishwar Khatiwada With Walter McHugh Center for Labor Market Studies Northeastern University Prepared for: Massachusetts Department of Higher Education Research, Planning, and Information Systems Boston, Massachusetts November 2013 CENTER FOR LABOR MARKET STUDIES Northeastern University

2 Table of Contents Introduction... 2 An Overview of the Report s Findings... 3 Trends in the Educational Attainment of the Adult Population (25+) in Massachusetts and Their Rankings Among the 50 States, / The College Degree Attainment Rates of Massachusetts Adults (25+) in The Civilian Labor Force Participation Behavior and Employment Rates of Massachusetts and U.S. Adults Years Old by Educational Attainment Group Variations in Unemployment, Underemployment, Hidden Unemployment, and Other Labor Market Problems Among Massachusetts Workers by Educational Attainment Group, The College Educated Share of the Civilian Labor Force in Massachusetts and the U.S. in The Share of the Resident Civilian Labor Force in Massachusetts and the U.S. With a Bachelor s or Higher Degree in Defining College Labor Market Occupations for Use in Estimating The Number of College Labor Market Jobs and Mal-Employment Problems Among College Graduates in Massachusetts and the U.S Comparisons of the CLMS and O*NET System s Definitions of College Labor Market Occupations Payroll Employment Trends in Massachusetts and the U.S. Over the Time College Labor Market Jobs as a Share of All Jobs by Major Industry in Massachusetts and the U.S., The Numbers and Occupational Characteristics of College Labor Market Jobs in Massachusetts and the U.S., and Trends in the College Labor Market Share of All Jobs Held by Employed Persons in Massachusetts from College Labor Market Jobs Held by College Graduates (22+) in Massachusetts and the U.S., The Recent Employment and College Labor Market Job Holding Rates of Young Bachelor Degree Holders in Massachusetts and the U.S.,

3 Introduction Over the past few decades, the labor market fate of U.S. workers from their ability to obtain jobs, to avoid unemployment, underemployment, and other labor market problems, and to achieve higher annual earnings has become increasingly linked to their educational attainment. 1 Workers with bachelor s or higher level college degrees (Master s, Ph. D., professional degree) have achieved substantially higher lifetime earnings than their peers with no post-secondary education. College educated individuals also are more likely to form independent households, to marry and stay married, to be more civically engaged, and to avoid criminal justice problems and incarceration in jails/prisons. 2 The educational attainment of a state s workforce also has been found to have a number of positive consequences for its annual real output performance. 3 College educated workers are more likely to be actively engaged in the labor force, to work more weeks and hours per year, and to produce more per hour than their less educated peers, thus generating higher levels of real output for the state economy. 4 Unfortunately, recent evidence for the decade of (the so-called Lost Decade) has shown very little positive correlation between the educational attainment of a state s population and its growth in payroll jobs, output per hour, or aggregate real output over the decade. This paper will address some of this evidence on recent links between the college educated share of a state s population and its economic performance. Given the importance of a college education for individual economic well-being and for a state s labor market and real output performance, a number of recent reports in Massachusetts have emphasized the case for strengthening the capabilities of community colleges and four year colleges to prepare students better for the future workforce and to align their curriculums and 1 See: (i) Sandy Baum, Jennifer Ma, and Bathleen Payea, Education Pays 2013: The Benefits of Higher Education for Individuals and Society, College Board, Washington D.C., 2013; (ii) Lawrence Katz and Claudia Goldin, The Race Between Technology and Economic Growth, Harvard University Press, Cambridge, See: (i) Kay S. Hymowitz, Marriage and Caste in America: Separate and Unequal Families in a Post-Marital Age, New York City, (ii) Richard Coley and Andrew, Sum, Fault Lines in Our Democracy: Civic Knowledge, Voting Behavior, and Civic Engagement in the U.S., Policy Information Center, Educational Testing Service, Princeton, Andrew Sum, Neeta Fogg, Paul Harrington, et al., The State of the American Dream in Massachusetts in 2002, Massachusetts Institute for a New Commonwealth, Boston, Andrew Sum, Ishwar Khatiwada, Joseph McLaughlin et al., Recapturing the American Dream in Massachusetts: Meeting the Challenges of the Bay State s Lost Decade, Massachusetts Institute for a New Commonwealth, Boston,

4 programs with the workforce needs of employers. 5 To encourage such practices, especially at the community college level, efforts have been made to develop funding formulas that would reward colleges for achieving such desired outcomes. 6 An Overview of the Report s Findings Our report will begin with a review of changes in the educational attainment of the state s adult population over the past two decades ( ), with an emphasis on changes in the numbers of state residents possessing some type of college degree. Estimates of the share of Massachusetts adults (25 and older) holding an Associate s or higher degree and a bachelor s or higher degree in will be made, and findings for Massachusetts will be compared to those of the U.S. as a whole and each of the other 49 states. Massachusetts rankings among the 50 states on these college degree attainment rates will be provided for all adults and for gender and race-ethnic groups. The analysis of the educational attainment of adult residents will be followed by a description and assessment of their labor force behavior and employment experiences in recent years. Findings will be presented for the labor force participation rates and the employment / population ratios of the state s adults overall and by gender and age groups. The labor force and employment analysis will then be followed by an examination of the simple statistical links between the educational attainment of Massachusetts adults and the incidence of an array of labor market problems, including open unemployment, hidden unemployment 7, and underemployment. The analysis will examine the degree to which the attainment of a college degree in Massachusetts helps workers avoid various types of labor market problems, thereby raising their employability, their annual earnings, and their families incomes. 5 See: (i) Julian L. Alssid, Melissa Goldberg, et al., The Case for Community Colleges: Aligning Higher Education and Workforce Needs in Massachusetts, The Boston Foundation, Boston, 2011; (ii) Massachusetts Department of Higher Education, Within Our Sights, The Vision Project, Boston, October For comparisons of Massachusetts current efforts to develop performance-based formulas for funding community colleges with those of other states, see: Liz Farmer, Massachusetts Big Bet on Performance-Based College Funding, Governing, November 1, The role of job placements in occupations related to the major field of study in these formulas is not quite clear. 7 The hidden unemployed are those jobless persons who have not actively looked for a job in the past four weeks but express a desire for immediate employment. Other analysts have referred to this group as the labor force reserve. See: Eli Ginzberg, Good Jobs, Bad Jobs, and No Jobs, Harvard University Press, Cambridge,

5 The labor market behaviors and problems of Massachusetts adults in various educational groups will be followed by a detailed examination of the numbers and occupational characteristics of college labor market jobs in both our state and the nation. The methodology and data sources used by the authors to estimate the numbers of college labor market jobs in our state in recent years ( ) and to track changes in the number of such jobs will be described. The role of payroll job growth and decline by major industry and the occupational staffing patterns of these industries in generating college labor market jobs in our state will be carefully reviewed. 8 Differences between the intensity of use of college labor market occupations by Massachusetts employers and those of the nation and the other ten best educated states in the country will be highlighted. The actual numbers of college labor market jobs by major occupational group in Massachusetts and the U.S. in will be identified, and changes in the numbers of college labor market jobs in the state and the nation over the and periods will be estimated. The growth rates for college labor market jobs in Massachusetts also will be compared to those for the other nine best educated states in the country over the same time period. The final sections of the paper are devoted to an analysis of the experiences of Massachusetts adults, 22 and older with a bachelor s or higher degree, in finding employment and in securing college labor market jobs in These employment and college labor market job holding rates will be calculated for gender, race-ethnic, and age subgroups of the college educated population in Massachusetts, and results will be compared to those of both the nation and all other states. Massachusetts rankings among the 50 states in its college labor market job holding rates for its residents holding a bachelor s or higher degree in will be presented for all such residents and those in each gender, race-ethnic, and age group. The final section of the paper will focus on the recent experiences of younger bachelor degree holders (under 25 and those 25-34) in Massachusetts and the U.S. in obtaining college labor market jobs in This analysis will also present comparisons with findings on such college enrollment rates for bachelor degree holders over the prior decade Payroll jobs are those wage and salary jobs that appear on the official payrolls of private sector firms including non-profits and government agencies. They are a count of such jobs by place of residence of the firm not of the workers. 4

6 Rising mal-employment problems among the younger members of the college educated labor force should be of concern to nation and state policymakers. Trends in the Educational Attainment of the Adult Population (25+) in Massachusetts and Their Rankings Among the 50 States, /11 To identify trends in the college degree attainment rates of Massachusetts residents (25 and older) over the past few decades, to compare progress over time in securing such degrees among both men and women and across race-ethnic groups, and to compare our state s performance with that of the U.S. over the past few decades, we analyzed the findings of the 1990 and 2000 national Censuses and the American Community Surveys. Key findings are displayed in Table 1. In 1990, slightly more than 27% of Massachusetts residents held a bachelor s or higher degree. On this specific measure of educational attainment, Massachusetts ranked first among the 50 states, tied with residents of Connecticut. Men were more likely than women in 1990 to hold a bachelor s or higher degree (31% versus 25%). Men ranked 3 rd highest while women ranked first among the 50 states on this measure. Over the 1990 s, the educational attainment of the state s adults increased markedly. The share of the resident population (25 and older) with a bachelor s or higher degree rose from 27 to 33 percent, outpacing the gain of only four percentage points in the U.S. By 2000, Massachusetts enjoyed a 9 percentage point advantage over the U.S., and we again ranked first among the 50 states. Both men and women achieved substantive gains in their shares of college educated adults over the decade, with women reducing the gap between them and their male peers to 4 percentage points (35% versus 31%). In 2000, both Massachusetts men and women ranked first among the 50 states on this educational attainment measure. In 2010/2011, Massachusetts residents continued to have the highest Bachelor s or higher degree attainment rate among the 50 states. Nearly 4 out of 10 (39 percent) of the state s residents (25 and over) held a Bachelor s or higher degree, which was nearly 11 percentage points higher than the U.S. average rate (28.4%). (Table 1). Massachusetts again ranked first among the states on this measure. By 2010/2011, both men and women in Massachusetts had obtained nearly identical college degree attainment rates (38-39%) and exceeded their respective 5

7 national average rates by 11 percentage points. For both men and women, the four year college degree attainment rate in Massachusetts ranked first among the 50 states in that year. Table 1: Share of Population (25 and Over) in Massachusetts and the U.S. with a Bachelor s or Higher Degree and Massachusetts Ranking Among the 50 States, 1990, 2000, and MA Ranking Among 50 Year/Gender MA U.S. MA - U.S. States 1990 All st tied Men rd Women st 2000 All st Men st Women st All st Men st Women st Source: (i) 1990 and 2000 decennial Censuses of population and housing, 5% public use files (PUMS); (ii) and 2011 American Community Surveys (ACS), public use files, U.S. Census Bureau, author s tabulations. The College Degree Attainment Rates of Massachusetts Adults (25+) in During the decade of , the educational characteristics of the state s workingage population (16 and older) changed quite sharply. 9 6 As a consequence of the entry of better educated young adults into this age group, the loss of older adults with less schooling, and higher net out-migration of the less educated (those with no post-secondary degrees), the state experienced double digit declines in its population of adults with no post-secondary schooling while the number of adults with a bachelor s or more advanced degree grew by double digits. To identify the share of the state s adult residents (25 and older) with some type of college degree and to compare our outcomes on this key educational measure with those of the nation and the other 49 states, we analyzed the findings of the large scale American Community 9 For evidence on these issues based on the CPS public use surveys, see: Andrew Sum, Ishwar Khatiwada, Joseph McLaughlin, Recapturing the American Dream in Massachusetts, Chapter 3.

8 Surveys for 2010 and On average, over this two year period, just under 47% of state residents reported holding an Associate s or higher degree. Our share of adults with a college degree was nearly 11 percentage points above the U.S. average, and we ranked first among the 50 states on this measure (see Table 2). Women in Massachusetts were modestly more likely than men to possess a college degree (47.5% vs. 46.1%), but both gender groups were well above the U.S. average, and they both ranked first among the 50 states. Table 2: Share of Population (25 and Over) in Massachusetts and the U.S. with An Associate s or Higher Degree and Massachusetts Ranking Among the 50 States, Total and by Gender and Major Race- Ethnic Group, Averages MA Ranking Among the 50 States Group MA U.S. MA Less U.S All st Male st Female st White rd Black th Asian th Hispanic th Other Race-Ethnic Group th Source: 2010 and 2011 American Community Surveys (ACS), public use files, U.S. Census Bureau, author s tabulations. There were much wider variations in college degree attainment rates across race-ethnic groups in both Massachusetts and the U.S. Here in Massachusetts the share of adults with an Associate s or higher degree ranged from a low of 21% among Hispanics to 31% among Blacks and to highs of nearly 50% for White non-hispanics and just under 61% for Asians (see Table 2 and Chart 1). Asian adults were three times as likely as Hispanics to possess a college degree. Each of the five race-ethnic groups in Massachusetts were more likely to hold a college degree than their U.S. counterparts, with the size of these gaps ranging from two to ten percentage points, being largest for White, non-hispanic adults. The college degree attainment rate of White, non-hispanics was third highest in the nation; however, none of the other four race-ethnic groups made the top ten. Black adults performed second best, ranking 12 th highest among the Nearly 2 million households completed the ACS questionnaire in each of these two years. The survey is conducted throughout the entire calendar year. 7

9 states and other non-hispanics (American Indians, Pacific Islanders, mixed race) ranked 15 th highest. The low college degree attainment rate of the state s Hispanic adults should be of concern to state educational and economic policymakers and program administrators given their growing share of the state population. Young, Hispanic males are characterized by high dropout rates from high school and low college attendance rates relative to white and Asian males and Hispanic females. Chart 1: Percent of Massachusetts Adults 25 and Older with an Associate s or Higher Degree by Race-Ethnic Group, (in %) % Hispanic Black Other, not Hispanic White, not Hispanic Asian As noted earlier, the share of Massachusetts adults 25 and older with a bachelor s or higher degree in exceeded that of the U.S. by a 10 full percentage points and the state ranked first on this educational measure. (Table 3). Both men and women also achieved a first place ranking. In each of the five major race-ethnic groups, the share of Massachusetts adults (25+) with a bachelor s or higher degree in 2010/2011 exceeded the U.S. share by 3 to 10 percentage points. However, Massachusetts ranking among all 50 states on this measure for the five major race-ethnic groups varied quite widely. For White adults, the state ranked 2 nd highest. Massachusetts ranking was 9 th highest for Black adults, 10 th highest for adults of Other raceethnic groups, 14 th highest for Asian adults, and 15 th highest for Hispanic adults. There were very 8

10 large gaps in four-year college degree attainment rates among Massachusetts adults in the five major race-ethnic groups, with these degree holding rates ranging from lows of under 17 percent among Hispanics and 23 percent among Blacks to highs of 41 percent among White, non- Hispanics and 56 percent among Asians. Future efforts in our state should aim to raise the fouryear college degree attainment rates of adults from Black, Hispanic, and Other race-ethnic groups. (Chart 2). The evidence reveals that the gaps in college enrollment and graduation across race-ethnic groups are even bigger for adults in the state s central cities as are gender disparities in these degree attainment rates in favor of women. Table 3: Share of Population (25 and Over) in Massachusetts and the U.S. with Bachelor s or Higher Degree and Massachusetts Ranking Among 50 States, Total and by Gender and Major Race- Ethnic Group, Averages (In %) MA Ranking Demographic Group MA U.S. MA Less U.S Among the 50 States All st Male st Female st White, non-hispanic nd Black th Asian th Hispanic th Other Race th Source: 2010 and 2011 American Community Surveys (ACS), public use files, U.S. Census Bureau, author s tabulations. 9

11 Chart 2: The Share of Massachusetts Adults 25 and Older With a Bachelor s or Higher Degree in by Major Race-Ethnic Group (In %) Hispanic Black Other, non- Hispanic White, non- Hispanic Asian There were substantial variations in the share of adults (25+) with a bachelor s or higher degree across the 50 states in 2010/2011. The three Charts below display the states with the five highest and the five lowest share of their population (25+) with a bachelor s or higher degree for all adults and for men and women separately. The five states with the highest share of their population with a bachelor s or higher degree were Massachusetts (39.1%), Colorado (36.7%), Maryland (36.5%), Connecticut (35.8%), and Vermont (35.5%). (Chart 3). Three of these five states were New England states. At the other end, states with a higher incidence of poverty were also characterized by the lowest shares of their adult population with a bachelor s or higher degree. The five states with the lowest share of their adult population with a bachelor s or higher degree were all southern states: Louisiana (21.3%), Kentucky (20.7%), Arkansas (20.0%), Mississippi (19.9%), and West Virginia (17.9%). 10

12 Chart 3: Ten States with the Highest and the Lowest Share of Their Population (25 and Over) with a Bachelor s or Higher Degree, Averages (in %) Similar patterns of variation prevailed in the shares of adult men and women with a bachelor s or higher degree by state. (Charts 4 and 5). Among men, 4 of the 5 states with the highest share of adults with a bachelor s or higher degree were also found among the top five performers for all adults. The bottom five performers for men were the same as those for all adults. Among women, the top five states included Massachusetts and two other New England states (Vermont and Connecticut). The bottom five states included 4 of the 5 low performers for all adults and males. 11

13 Chart 4: Ten States with the Highest and the Lowest Share of their Male Population (25 and Over) with a Bachelor s or Higher Degree, Averages (in %) Chart 5: Ten States with the Highest and the Lowest Share of their Female Population (25 and Over) with a Bachelor s or Higher Degree, Averages (in %)

14 The Civilian Labor Force Participation Behavior and Employment Rates of Massachusetts and U.S. Adults Years Old by Educational Attainment Group Educational attainment in our state and the nation has become an important determinant of one s labor force participation behavior, success in finding jobs once actively looking, and their earnings. 11 To identify the association between one s educational attainment and their labor force participation behavior, unemployment problems, and employment rates, we analyzed the findings of the monthly CPS household surveys for the January 2012-September 2013 time period for year old adults in both Massachusetts and the nation. Each adult was assigned to one of six educational attainment groups, including those with an Associate s degree, a Bachelor s degree, or a Master s. Ph.D., or professional degree (Medicine, Law). In both Massachusetts and the U.S., the percent of adults who were active participants in the civilian labor force (either working or actively looking for work) rose steadily with their level of schooling. Overall 80% of the state s adults in the age group were active labor force participants. Here in Massachusetts, only half of the adults lacking a high school diploma or GED were actively engaged in the civilian labor force. The labor force participation rate rose to 74% for high school graduates/ged holders, to 85% for those with an Associate s degree, and to a high of just under 90% for those with a Master s or higher degree. The gap in labor force participation rates between the highest educated and least educated adults in our state was 40 percentage points, a far greater difference than that of earlier decades. (Table 4). 11 Changes in the numbers of employed persons by educational attainment in the state over the decade were published and assessed in the following publication: Andrew Sum, Ishwar Khatiwada, Joseph McLaughlin, Recapturing the American Dream in Massachusetts, Chapter 3. 13

15 Table 4: The Civilian Labor Force Participation Rates, Unemployment Rates, and Employment Rates of Massachusetts Adults Years Old by Educational Attainment in January 2012-September 2013 (in %) (A) L.F. Participation Rate (B) Unemployment Rate (C) E/P Ratio Educational Attainment No High School Diploma or GED H.S. Diploma/GED, No College Years, No Degree Associate's Degree Bachelor's Degree Master's or Higher Degree All (22-64) Source: Monthly CPS surveys, public use file, tabulations by authors. Overall, Massachusetts adults (22-64 years old) were modestly more likely than their national counterparts to be active members of the civilian labor force (80.2% versus 77.2%). (Table 5). The advantages of Massachusetts adults over their U.S. counterparts, however, varied quite widely in several cases across educational subgroups. Among those adults lacking a high school diploma/ged, the participation rates of Massachusetts adults lagged considerably behind their national peers (49% versus 61%). Among high school graduates and those with 1-3 years of post-secondary schooling but no college degree, the labor force participation rates of adults in Massachusetts and the U.S. were nearly identical. For those adults with some type of postsecondary degree (Associate s through Ph.D. s and professional degrees), Massachusetts adults were more likely than their national peers to be active labor force participants. (Table 5). 14

16 Table 5: Comparisons of the Civilian Labor Force Participation Rates and Employment Rates of Year Old Residents of Massachusetts and the U.S. by Educational Attainment, January September 2013 (in %) LF Participation Rate E/P Ratio Educational Attainment MA U.S. MA- U.S. MA U.S. MA- U.S. No High School Diploma or GED H.S. Diploma/GED, No College Years, No Degree Associate's Degree Bachelor's Degree Master's or Higher Degree All (22-64) Source: Monthly CPS surveys, public use file, tabulations by authors. The open unemployment rates of Massachusetts adults also were strongly linked to their educational attainment. 12 Adults lacking a high school diploma faced an unemployment rate of nearly 15%. The unemployment rate fell to 9.0%-9.5% for high school graduates and those with some post-secondary schooling but no college degree. College degree holders experienced far better outcomes, with unemployment rates ranging from 5% for Associate s degree holders to slightly under 3% for those with a Master s or higher degree. High school dropouts were five times as likely to be unemployed as those residents with advanced college degrees. As will be shown in a following section, similar large gaps between the most and least well educated residents also prevailed for underemployment and hidden unemployment problems. As a consequence of their higher labor force participation rates and their lower unemployment rates, the employment rates (E/P ratios) of adult residents in Massachusetts rose steadily and strongly with their educational attainment in (Table 5 and Chart 6). 13 These E/P ratios varied from a low of only 42% for those adults lacking a high school diploma or GED certificate to percent for those with a high school diploma/ged or some postsecondary schooling but no degree to highs of percent for those adults with some type of college degree, peaking at 87 percent for those with a Master s or advanced degree. (Chart 6). 12 We use the term open unemployment to represent the official BLS definition of unemployment. The concept of the hidden unemployed will be discussed later in this chapter. 13 The employment rate or employment/population ratio is calculated by dividing the number of employed in a given group by the number of persons in the civilian non-institutional population. 15

17 Chart 6: Employment/Population Ratios of Year Old Massachusetts Adults by Educational Attainment, January 2012-September 2013 (in %) % No High School Diploma or GED H.S. Diploma/GED, No College Years, No Degree Associate's Degree Bachelor's Degree Master's or Higher Degree Educational Attainment Within Massachusetts, the links between educational attainment and employment rates were quite positive and strong for both gender groups and the three age groups. (Table 6). For each gender and age group, the gaps between the employment rates of bachelor degree holders and high school dropouts were very substantial, ranging from 36 to 46 percentage points. Bachelor degree recipients also were employed at rates that were anywhere from 15 to 19 percentage points higher than those of high school graduates with the employment gaps being larger for women and the youngest age group (22-34 years old). (Table 6). 16

18 Table 6: Employment/Population Ratios of Year Old Massachusetts Adults by Educational Attainment by Gender and Age Group, January 2012-September 2013 (in %) Educational Attainment (A) Men (B) Women ( C) (D) (E) No High School Diploma or GED H.S. Diploma/GED, No College Years, No Degree Associate's Degree Bachelor's Degree Master's or Higher Degree All (22-64) Bachelor's- No H.S. Diploma Bachelor's- H.S. Diploma Source: Monthly CPS surveys, public use file, tabulations by authors. Massachusetts adults were modestly more likely than their U.S. peers to be employed in ; however, the differences in employment rates varied across educational groups. (Table 6). High school dropouts in Massachusetts did considerably less well in obtaining employment than their U.S. counterparts (42% versus 53%) while high school graduates and those with some college fared about the same in both geographic areas. Those adults in our state with some type of college degree were modestly more likely to obtain some type of employment than their peers nationwide, with these employment rate differences ranging from 3.0 to 3.5 percentage points. Massachusetts overall employment rates for year olds and for the three highest educational groups tended to rank in the upper portion of the state distribution. For all adults, the state ranked 14 th highest among the 50 states. For high school dropouts, we were 5 th lowest, but for bachelor s and advanced degree holders, the state ranked 10 th, 11 th, and 12 th highest among the 50 states. (Chart 7). We were above average performers for the best educated but laggards for those without any college degree. 17

19 MA Ranking Chart 7: Massachusetts Ranking Among the 50 States on Its E/P Ratio for Year Old Adults, All and Selected Educational Attainment Groups, All HS Dropouts/no GED HS Diploma/GED Associate's Degree Bachelor's Degree Master's or Higher Degree Variations in Unemployment, Underemployment, Hidden Unemployment, and Other Labor Market Problems Among Massachusetts Workers by Educational Attainment Group, While college educated state residents are more likely to participate in the civilian labor force and are more successful in finding employment when they do seek work, the ability of Massachusetts workers to avoid unemployment, hidden unemployment, underemployment, and other labor market problems also has become highly associated with their educational attainment. 14 To illustrate the strength of these relationships over the time period, we estimated unemployment rates, underemployment rates, hidden unemployment rates, and 14 For a recent report on the relationships between the educational attainment and household incomes of Massachusetts workers and the incidence of such labor market problems, see: Andrew Sum, Ishwar Khatiwada, and Walter McHugh, The Labor Market Problems of Massachusetts Workers During the Recovery from the Great Recession of : The Great Socioeconomic Divergence, Center for Labor Market Studies, Northeastern University, Boston, October

20 combined labor underutilization rates for Massachusetts workers (16 and older) in the six following educational attainment groups: Less than 12 or 12 years of schooling, no high school diploma or GED credential High school diploma / GED, no completed years of college years, no degree Associate s degree Bachelor s degree only Master s, PhD, or professional degree (medicine, law) Estimates of the average official unemployment rates of Massachusetts adults by educational attainment over the January 2012-August 2013 time period are displayed in Chart 8. These unemployment rates were highest by far for those persons lacking a high school diploma (19%), then fell steadily and steeply with their levels of educational attainment. Approximately 9% to 10% of workers with a high school diploma or some years of college but no degree were unemployed. This unemployment rate was only 5.5% for those labor force participants with an associate degree, fell to 4.5% for those with a bachelor s degree, and was slightly under 3% for those workers with a Master s or higher degree. Massachusetts adults with a bachelor s or higher degree were experiencing the close equivalent to what would be called full employment in U.S. labor markets today while high school dropouts were in a Great Depression. 19

21 Chart 8: Unemployment Rates of Massachusetts Workers (16+) by Educational Attainment in (in %) % <12 or 12, no GED or diploma H.S. Diploma / GED Years Associate's Degree Bachelor's Degree Master's or Higher Degree Educational Attainment Underemployment is used to refer to those workers who are employed part time (under 35 hours per week) but desire full time jobs and are available to work full time. These problems rose strongly in both the nation and our state during the Great Recession and the early stages of the economic recovery. Underemployment has serious consequences for workers experiencing such labor market problems and for society at large. 15 They typically work only hours per week versus a mean of 42 hours for the full-time employed, they earn less per hour than their fellow full-time workers with similar demographic and human capital characteristics, and are considerably less likely to receive key employee benefits, such as employer financed health insurance and pension benefits, and are less likely to receive any type of training from their employers. Their lower weekly and annual earnings reduce their ability to pay Social Security payroll taxes, any federal and state income taxes, and state sales taxes. They also become more dependent on various forms of cash and in-kind benefits, including food stamps, Medicaid insurance, and various forms of housing subsidies to support themselves, including rental 15 See: Andrew Sum and Ishwar Khatiwada, The Nation s Underemployed in the Great Recession of , Monthly Labor Review, November 2009, pp

22 assistance payments. Underemployment, thus, contributes in an important way to federal and state government budget deficits. Underemployment rates of Massachusetts workers also varied widely across educational attainment groups in Nearly 11% of those employed persons who lacked a regular high school diploma or GED were underemployed versus only 8% of those with a high school diploma or GED and 7% of those with one or more years of college but no formal degree. (Chart 9). Among those employed persons with some type of college degree, the underemployment rates declined steadily with the level of their degree, dropping from 5% for those with an Associate s degree to only 2% among those with a Master s or higher degree. Chart 9: Underemployment Rates of Employed Massachusetts Workers by Educational Attainment, (in %) % <12 or 12, no diploma H.S. diploma or GED years no degree Associate's degree Bachelor's degree Master's or higher Educational Attainment A third labor market problem faced by the state s workers is that of hidden unemployment. The hidden unemployed consist of those persons who have not been actively looking for work in the past four weeks but report to the CPS interviewer that they wish to be employed. 16 We have estimated hidden unemployment rates for each educational group of potential workers by dividing the number of hidden unemployed by the number of persons in the 16 Those persons not actively looking for work are asked by the CPS interviewer if they want a job now? Those individuals who reply yes or maybe are considered as part of the labor force reserve or hidden unemployed. 21

23 adjusted civilian labor force, which consists of the sum of the official civilian labor force plus the hidden unemployed. These hidden unemployment rates also varied widely by educational attainment in (Chart 10). Those persons who failed to graduate from high school or obtain a GED experienced a hidden unemployment rate of close to 11%. High school graduates and those with one or more years of college but no degree faced hidden unemployment rates of approximately 4 to 5 percent. At the upper end of the educational distribution, those workers with a bachelor s or higher degree encountered hidden unemployment rates of only 1.1 to 1.5 percent. The least educated members of the adjusted labor force were nearly ten times as likely to be hidden unemployed as the best educated members, i.e. those with a master s or higher degree. % Chart 10: Hidden Unemployment Rates of Massachusetts Workers in the Adjusted Labor Force by Educational Attainment, (in %) <12 or 12, no diploma or GED H.S. diploma or GED years no degree Associate's degree Bachelor's degree Master's or higher degree Educational Attainment Our last labor market problem is that of the labor underutilization rate. The underutilized consist of the sum of the unemployed, the underemployed, and the hidden unemployed. The value of the labor underutilization rate is obtained by dividing the pool of the underutilized by the adjusted labor force. 22

24 The underutilization rate for the total adjusted labor force in was 15% or nearly three times its value in (Chart 11). These underutilization rates ranged to a considerable degree across the six educational attainment groups, varying from highs of just under 35% among high school dropouts and 20% among high school graduates and those with one to three years of college but no degree. The underutilization rate for bachelor s degree holders was only 9% and fell to a low of 6% among those with a Master s or higher degree. The least educated members of the state s labor force were 6 times as likely to be underutilized as the best educated labor force participants (36% versus 6%). Chart 11: Labor Underutilization Rates of Massachusetts Workers (16+) by Educational Attainment in (in %) % While the state s college educated labor force, on average, has fared quite well in avoiding most labor market problems over the past two years, there has been a growing number of college graduates, especially those under 30, experiencing malemployment problems in recent years <12 or 12, no diploma H.S. diplomasome college or GED no degree 12.3 Associate degree The malemployed or over-educated are those college graduates who end up in jobs that 9.0 Bachelor's degree 6.0 Master's or higher degree Educational Attainment 17 For earlier discussions of malemployment and overeducation concepts, measures, and problems and empirical findings on their impacts on worker earnings, see: (i) Andrew Sum, Ishwar Khatiwada, Mykhaylo Trubskyy, Recapturing the American Dream: Meeting the Challenge of the Bay State s Lost Decade, Massachusetts Institute for a New Commonwealth, Boston, 2011; (ii) Andrew Sum, Ishwar Khatiwada, Joseph Mclaughlin, et al., The Status of Teens and Young Adults (16-24) in the Commonwealth of Massachusetts: Implications for the State and 23

25 do not typically require a college degree for entry in the field. 18 Being malemployed tends to sharply reduce the average weekly and annual earnings of college educated workers relative to those of their counterparts who held college labor market jobs. These earnings differences, thus, tend to lower the private and social economic return that one can obtain from investment in a college education. Failure to apply one s occupational/technical skills or one s literacy/numeracy skills on the job also diminishes the economic return from such investments. 19 In a following section of this paper, we will review findings on the ability of employed college graduates to obtain jobs related to the college labor market, both for all college graduates and for those in selected gender and age groups. Annual earnings differences between those college graduates with college labor market jobs and those who were malemployed also will be reviewed and assessed. The College Educated Share of the Civilian Labor Force in Massachusetts and the U.S. in The above findings on the educational attainment of the adult population in Massachusetts and the labor force participation rates of non-elderly adults (22-64) years old) by educational attainment have revealed that the state ranked above average on both measures and at or near the top of the state distribution. In this section, we provide estimates of the share of the entire resident civilian labor force (16 and older) in Massachusetts and the U.S. during that was comprised of college degree holders. 20 Two sets of estimates are produced: the share of the civilian labor force that was comprised of individuals with an Associate s or higher degree and the share that was attributable to persons with a Bachelor s or higher degree. Local Youth Development Systems, Report Prepared for the Commonwealth Corporation, Boston, Massachusetts, April The concept of malemployment was used to describe this problem in developing countries in the early 1970s by Frederick Harbison. See: Frederick Harbison, Human Resources as the Wealth of Nations, Oxford University Press, New York, Richard Freeman referred to this problem among young U.S. college graduates in the mid- 1970s as overeducation. See: Richard Freeman, The Over-Educated American, Academic Press, New York, See: (i) Robert E. Taylor and Howard Rosen, Job Training for Youth, The National Center for Research in Vocational Education, Columbus, Ohio, 1982; (ii) Andrew Sum, Literacy in the Labor Force: Results from the National Adult Literacy Survey, National Center for Education Statistics, Washington, D.C The much larger size of the household sample in Massachusetts from the American Community Surveys allows us to estimate these ratios with a higher level of statistical accuracy. However, the most recent ACS survey that was released to the public research community is that for calendar year

26 Table 7: The Percent of the Civilian Labor Force (16 and Older) in Massachusetts and the U.S. with an Associate s of Higher College Degree, All and by Gender and Race-Ethnic Group, Averages Group (A) Mass. (B) U.S. (C) Mass. U.S. (D) Mass Rank Among 50 States All st Men st Women st Asian th (tied) Black th (tied) Hispanic th (tied) Other, non-hispanic th (tied) White, not Hispanic st (tied) Source: American Community Surveys, 2010 and 2011, public use files, tabulations by authors. Chart 12: Ten States with the Highest and the Lowest Share of Its Labor Force Participants(16 and Older) with an Associate s or Higher Degree, Averages (in%)

27 In , 49% of the members of the resident civilian labor force in Massachusetts held an Associate s or higher academic degree (Table 7). This ratio was nearly 11 percentage points above the U.S. average, and Massachusetts ranked first among the 50 states during that year. The top five ranked states achieved ratios in the 44 to 49 percent range while three of the bottom five states (Arkansas, Louisiana, and Nevada) only had 29 percent of their resident labor force holding an Associate s or higher degree. (Chart 12) Chart 13: Ten States with the Highest and the Lowest Share of Its Female Labor Force Participants (16 and Older) with a Associate s or Higher Degree, Averages (in%) Among both men and women, Massachusetts enjoyed a large advantage in the share of its work force with an Associate s or higher degree. A slight majority (52%) of Massachusetts women in the resident labor force held an Associate s or higher degree versus only 41% of national women. Massachusetts women ranked first among the 50 states on this measure, scoring percentage points higher than the bottom three states (Chart 14). Nearly 47 of every 100 male labor force participants in Massachusetts in held an Associate s degree or higher versus only 36 of every 100 in the United States during the same time period, a near 11 percentage point advantage for the state. Massachusetts also ranked first 26

28 highest on this measure among the 50 states, exceeding the performance of the bottom five states by anywhere from 19 to 21 percentage points, a truly substantial set of differences. Chart 14: Ten States with the Highest and the Lowest Share of Its Male Labor Force Participants 16 and Older with an Associate s or Higher Degree (in%) The college degree attainment rates of the state s resident labor force (16 and older) varied quite widely across the five major race-ethnic groups. The incidence of degree holding ranged from lows of 22% among Hispanics and 32% among Blacks to highs of nearly 53% among White, non-hispanics and 62% among Asians. Asian labor force members were nearly three times as likely as Hispanics to possess a college degree, with similar differences prevailing nationwide. Each race-ethnic group of labor force participants in Massachusetts outpaced their national counterparts in obtaining some type of college degree, but the gaps did vary widely across these groups. White, non-hispanic adults in Massachusetts enjoyed the largest advantage over their national peers, outpacing them by nearly 10 full percentage points and ranking first among the 50 states. The Asian advantage was slightly above two percentage points, and Asians ranked only 9 th highest. Blacks and Hispanics were characterized by three to four percentage point advantages over their national peers, and they ranked near the margin of the top quartile of state performance in 14 th and 12 th place. 27

29 The Share of the Resident Civilian Labor Force in Massachusetts and the U.S. With a Bachelor s or Higher Degree in The preceding section identified the share of the Massachusetts resident civilian labor force that was comprised of individuals holding an Associate s or higher degree. In this section, we focus on the share of the state s and the nation s civilian labor force that held a bachelor s or higher degree in During that year, slightly over 41 percent of the state s labor force participants possessed a bachelor s or higher degree. (Table 8). This ratio was more than 11 percentage points above the U.S. average, and the state ranked first on this measure among the 50 states. Table 8: The Percent of Civilian Labor Force Participants (16 and Older) in Massachusetts With a Bachelor s or Higher Degree, All and by Gender and Race-Ethnic Group, Averages Group MA U.S. MA - U.S. MA Ranking Among 50 States All st Men st Women st Asian th Black th Hispanic th Other, Non-Hispanic th White, Non-Hispanic st Source: 2010 and 2011 American Community Surveys (ACS), public use files, U.S. Census Bureau, tabulations by authors. Both male and female labor force participants in Massachusetts achieved bachelor degree attainment rates well above the national average. Over 42 percent of female labor force participants held a bachelor s or more advanced degree, exceeding the U.S. average by 11 percentage points, and ranking first among the 50 states. (Table 8 and Chart 15). Forty percent of Massachusetts male labor force members held a bachelor s or higher degree, again 11 percentage points above the U.S. average and ranking first among the 50 states. 21 The resident civilian labor force consists of the employed and the unemployed. Since the college educated have lower unemployment rates than their less educated peers, they will account for an even higher share of the employed pool of residents in our state. 28