Tag Archives: employment

The costs of an undergraduate education in the U.S.

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In last Wednesday’s post, we discussed the recent introduction in the House of Representatives of the Student Loan Forgiveness Act of 2012 by Hansen Clarke (D-MI); a bill that, if enacted, would provide student loan forgiveness, caps on interest rates on Federal student loans, and refinancing opportunities for private borrowers. To provide some background on where this bill came from and why student loan forgiveness should be considered despite the current fiscal environment, we wanted to use today’s post to look at the historical data showing the growing cost of an undergraduate education in the United States.

According to the U.S. Department of Education’s Digest of Education Statistics, the annual cost in 2008-2009 (including tuition, room and board) was $12,804 at public institutions and $32,184 at private institutions. In comparison, in 1980-81, a full-time undergraduate student paid on average (and adjusted to current dollars) $2,372 at public institutions and $5,470 at private institutions. And as the following chart makes clear, the cost of an undergraduate education has increased in every year in between, with no sign of letting up:

This significant rise in the costs of education wouldn’t be such a big problem if median incomes were also rising. But as we showed in a previous post, income levels have been remarkably stable since 1967, with the exception of the richest quintile of the population (see the charts below). For many college grads (e.g., the majority who do not end up in this richest quintile), this means that they exit college facing significant student loan debt and, for those lucky enough to find a job (let alone one in their field or requiring an advanced degree), a low median starting salary that makes it challenging to pay this debt back. (According to a 2011 study by the John J. Heldrich Center for Workforce Development at Rutgers University, median starting salaries for students graduating from four year universities fell from $30,000 in the period 2006-2008 to $27,000 in 2009-2010).

In short, it is this interplay between growing annual costs for college education and stagnant income growth that has led to the numerous proposals in Congress for some form of student loan forgiveness. And for the growing number of recent grads who are behind in debt and unable to do much about it as a result of on low starting salaries, it is certainly an idea that should be given serious consideration.

Rising Unemployment among Youth (Ages 16-24) in the OECD

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In last week’s post on the December 2011 unemployment numbers in the OECD, we showed how the total unemployment rate across the OECD has remained relatively stable in recent months, ending December 2010 at 8.2%; the same rate as in November 2010. While some countries—i.e., Germany and the United States—have seen a consistent decrease in unemployment since September 2011, the majority of states have not been so lucky: Spain, for example, ended 2010 with a shocking 22.8% unemployment rate, more than 8% higher than the country with the second highest unemployment rate (Ireland, with 14.5%).

What we did not discuss at the time, however, was the disproportionate impact the economic crisis has had on certain age groups. Today, we look at unemployment trends among the youth (ages 16-24); trends that are much more alarming than the overall unemployment trends.

The first chart, below, displays youth unemployment rates from January 2000 through December 2011 for the EA-17 (e.g., the 17 European Union member states that have adopted the Euro as their currency) and the EU-27 (e.g., all 27 European Union member states). From a low of around 15% unemployment at the start of the economic crisis in 2008, youth unemployment has grown to over 21% in 2011 with no sign of abating.

Source: Eurostat

The following chart uses the same Eurostat data, but looks at within-country trends over the past 4 years. We’ve also included the United States in this sample.

Note: The data labels represent the unemployment rates in Q3-2011.

 

Viewing the data in this way shows just how dire the situation is for younger job seekers in many countries. In Spain, the youth unemployment rate rose from an already high 24.6% in 2008 to 47.8% by the third quarter of 2011, more than twice as high as the total unemployment rate of 22.8%. A similar trend is seen in the other Southern European countries, including Italy (from 21.3% in 2008 to 28.2% in 2011), Greece (from 22.1% in 2008 to 45.8% in 2011), and Portugal (from 20.2% in 2008 to 29.9% in 2011).

As for the United States, the youth unemployment rate increased from 12.8% in 2008 to 17.5% in 2011; well below the EU-27 average of 21.6% in 2011, but close to double that of Germany (8.6%), Austria (7.3%), and the Netherlands (7.6%).

In short, it is important to keep different demographic age groups in mind as we evaluate economic trends. From this data, it is clear that the youth have been particularly affected by the Great Recession, and the recent economic gains (at least in the case of the United States) have done little to improve the situation of this group.

 

Job Openings Nearly Double Since the Peak of the Great Recession

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Current Events 2012

Earlier this week, the Bureau of Labor Statistics released their December job openings report covering the period through the last business day of December 2011. Generally speaking, the news was good but mixed. There were a total of 3.4 million job openings on the last business day of December 2011, up from 3.1 million in November 2011. Much of this increase came from nonfarm jobs, where the number of openings increased from 2.3 million in November 2011 to 2.5 million in December 2011.

As the graph below shows, the number of total openings (nonfarm) is still down significantly from the period before the Great Recession began in December 2007 (when there were 3.1 million nonfarm openings). However, the jobs opening rate has clearly been trending upwards, with the number of openings in December 2011 being almost double the 1.6 million openings in July 2009 (the month following the official end of the recession).

Employment in the US: January 2012 BLS Figures

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Current Events 2012

This morning, the Bureau of Labor Statistics released its report on the U.S. employment situation for January 2012, showing once again positive signs of improvement in the U.S. labor force. As the chart above shows, the unemployment rate has fallen for the fifth month in a row: dropping from 8.5% in December to 8.3% in January; the lowest it has been since President Obama’s first month in the presidency (February 2009). (The chart is color coded red for months that President Bush was in office, and blue for President Obama).

In January, total nonfarm payroll increased by 243,000 jobs. Job growth was widespread throughout the entire private sector, with large increases in professional and business services (+70,000 jobs), leisure and hospitality (+44,000 jobs), and manufacturing (+50,000 jobs). Government employment, however, continues to stagnate: in the past 12 months, the sector has lost 276,000 jobs.

On the less positive front, the number of long-term unemployed (e.g., those who are unemployed for 27 weeks or longer) remained high in January at 5.5 million, accounting for 42.9% of the unemployed.

In short, as with the recent numbers on GDP growth for the 4th quarter of 2010, the economy continues to trend in the right direction.

 

The Size of the Federal Workforce: Rapid Growth for Some, Stagnation for Others

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Since the 2010 elections, the federal workforce has frequently found itself at the center of the debate over government spending. The argument is often made that the number of federal workers has been growing unabated since President Obama came to office, resulting in a serious strain on the federal budget. As a result, members of both the House and Senate have recently introduced bills that call for a reduction in the federal workforce by 10% over 10 years through attrition (e.g., by allowing agencies to hire only one new employee for every three that retire).

Given the tremendous amount of attention directed to this issue, we wanted to look at what the data have to say. Specifically, this article addresses the following questions: (1) has the federal workforce expanded in the past 10+ years; (2) if so, has this expansion been equally distributed among all government agencies; and (3) moving away from a look at only the sheer numbers of federal workers, has the federal workforce grown as a percentage of the total civilian workforce?

In order to answer the first question, we turned to data from the Office of Personnel Management on the number of federal employees from 1998 to 2011. As the chart below shows, the number of federal employees has clearly been trending upward in recent years: from September 2007 to September 2011, the number of federal employees increased by 267,885, or 14.4%. While much of this expansion has taken place under President Obama, it began in the final year of the Bush presidency, with an increase from September 2007 to September 2008 of 4.1%.

 

Source: FedScope, Office of Personnel Management (http://www.fedscope.opm.gov/employment.asp)

 

But has this growth in staffing been equally distributed among all federal agencies? The following chart looks at the trends in cabinet-level staffing from September 1998 to September 2011, separated by agency:

Source: FedScope, Office of Personnel Management (http://www.fedscope.opm.gov/employment.asp)

 

By looking closer at the data, a number of things jump out. First, the Department of Defense is by far the largest employer among cabinet-level agencies, making up 40% of all federal employees. Second, the growth in the size of the federal workforce is concentrated in just a few agencies, with Defense, Veterans Affairs, and Homeland Security seeing the largest increases in staffing. Other agencies, such as the departments of Agriculture, Housing and Urban Development, and Treasury, have seen much slower growth in staffing levels; the Agriculture staff, for example, has seen a growth in staff of just 0.96% since 2007.

Finally, the last issue we wanted to address was how the size of the federal workforce compares to the entire civilian labor force. The next two charts use data from the Bureau of Labor Statistics to look at federal employees as a percentage of the total civilian labor force. (To be consistent with the OPM data on the number of federal employees, we’ve taken the figures as of September of each year). The only difference between the two charts is the scale of the axes.

Sources: FedScope, Office of Personnel Management (http://www.fedscope.opm.gov/employment.asp); Bureau of Labor Statistics (http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=LN_cpsbref1)

 

Sources: FedScope, Office of Personnel Management (http://www.fedscope.opm.gov/employment.asp); Bureau of Labor Statistics (http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=LN_cpsbref1)

 

Viewed from this perspective, the federal workforce has remained remarkably stagnant over the past decade: both in September 2001 and in September 2011, federal workers represented 1.26% of the total civilian labor force.

In sum, the data on recent trends in federal employment show that while the size of the federal workforce is growing, its proportion of the total civilian labor force is not. Federal employees have remained at or around 1.2% of the total labor force for at least a decade and, given the hiring freeze that has been in place in many agencies, are unlikely to grow much higher. Furthermore, the increases in staffing that we have seen are largely concentrated in just a few agencies. At the very least, this suggests that a one-size-fits-all approach to reducing the federal workforce could have disproportionate effects on some agencies more so than others.