Chart of the Day 02/07/2011 - Unemployment Rate by Educational Attainment

Today's chart of the day is based on historical unemployment rates as compared with educational levels attained.

We've all heard that college graduates usually earn better incomes throughout their career's, but here's another example of the importance of education during tough economic times in which unemployment levels soar.

Of course, no college preparation will help if you happen to be in an industry hit hard by the economy, such as homebuilding or finance possibly, but in general, I think the chart data is correct.

If you think about it, if a company has an opening for a position and you are going to an interview along with other college graduates, and you dropped out of high school, who do you think has a better chance of landing the job? In most cases, not you.

During tough economic times, companies usually drop the amount they offer for starting salaries and can hire someone they necessarily wouldn't have been able to during good economic times. In other words, the employer can pick and choose from the best of the best out there.

In contrast, during booming economic times, education may not play as important of a role because the pool of potential employees is slim.

Today (Friday February 4, 2011), the Labor Department reported that the unemployment fell to 9.0% in January. For some perspective on the current state of the labor market, today's chart illustrates the unemployment rate by educational attainment.

As today's chart illustrates, higher educational attainment has correlated with a lower unemployment rate.

For example, the unemployment rate for those that have obtained a bachelor's degree or greater (blue line) currently stands at 4.2%.

While this is much higher than the sub 2% unemployment rate seen as little as a few years ago, it is dramatically lower than the unemployment rate for those with less formal education. For example, the unemployment rate for those who have not completed high school (red line) currently stands at an extremely high 14.2% -- more than triple the unemployment rate for those with a bachelor's degree (or greater).

On a positive note, the unemployment rate for each level of educational attainment has moved significantly lower over the past couple months.

Chart courtesy of Chart of the Day
Chart of the Day 02/07/2011 - Unemployment Rate By Educational Attainment

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