US Unemployment: Uneducated Workforce Adds to Problems AAPL, GOOG, CSCO, HPQ, INTC
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Mismatches in supply and demand for educated workers boost US unemployment and add as much as 2% to the jobless rates for some cities, according to the data.
Cities with larger gaps in education levels between workers and available positions have lower rates of job creation and new openings. San Francisco, Washington and San Jose, California, have the most demand for college graduates.
It is harder for employers to fill open positions if they are in metro areas with a low-educated workforce, There are very few job openings available for workers with less education.
Jobs in the 100 largest US metro areas require more education than the workforce can provide, according to the analysis of online employment postings, occupations and educational attainment from January 2006 to February 2012.
A bachelor’s degree or more is required for 43% of jobs, while 32% of adults ages 25 and older have attained that education level.
Metro areas with the most highly educated workers relative to demand also have the lowest unemployment rates for both less educated and less experienced workers. Opportunities for those with the least education are often in the metro area labor markets with the most education.
Pittsburgh PA. has the most recession-resilient labor market, based on education gap, house price trends and industry growth, according to the study. Its greatest strength is in housing prices, which rose 7.3% since Y 2006, even as prices dropped by 15% in the average large metro area.
The California metro areas of Sacramento, Riverside, Bakersfield, Stockton, Fresno and Modesto accounted for 6 of the 10 least resilient metro areas in the nation. The Miami-Fort Lauderdale-Pompano Beach region was least resilient.
Education gaps pose a “longer-run challenge for many regional labor markets” because they account for about 67% of the variation in the level of unemployment across metro areas.
San Jose, located in Silicon Valley, where many of the world’s largest technology companies are based, had the highest level of demand for highly educated workers, according to the study. Some 56% of openings required at least a bachelor’s degree in the area, while only 36% of existing positions required such credentials, the study showed.
Apple Inc. (NASDAQ:AAPL), based in San Jose’s neighboring city of Cupertino, became the most valuable company in history this year, topping $633-B as the shares rose 67% on demand for iPhones and iPads.
The Valley also is home to Google Inc. (ANSDAQ:GOOG), Intel Corp. (NASDAQ:INTC), Cisco Systems Inc. (NASDAQ:CSCO) and Hewlett-Packard Co. (NYSE:HPQ)
Fewer than 33% of openings in cities such as Cape Coral, Florida and Youngstown, Ohio required a bachelor’s degree, highlighting the variation among the largest cities.
Occupations that had high demand for workers were also the ones that sought employees with more education. Computer jobs, in which 63% of workers have at least a bachelor’s degree, were the most heavily advertised online, followed by health practitioners, a profession in which 71% have that level of education.
Higher educational attainment also benefits cities by making workers more employable and entrepreneurial, leading to more job openings for less-educated workers as new businesses hire, the report said.
Given that more than 50% of new jobs typically come from establishments started within 5 yrs, the lack of openings implies a need for more entrepreneurship.
A recent study shed light on a debate among US Federal Reserve policy makers over the causes of unemployment stuck above 8% for more than 3 ys. The debate centers on whether the jobless rate is high because of a lagging economic recovery, which can be influenced by monetary policy, or because of a mismatch between worker skills and the needs of employers, a structural problem that the Fed cannot solve.
Fed Vice Chairman Janet Yellen, in a June speech, said she viewed the “bulk of the increase in unemployment since Y 2007” as cyclical and went on to say that “a highly accommodative monetary policy will remain appropriate for some time to come.”
While unemployment rates are elevated mostly because of the declines in home prices and consumer spending caused by the longest and deepest recession since the Great Depression, education gaps explain most of the unemployment in cities that is considered structural.
Unemployment rates are unlikely to come down to their pre-recession levels without improvement in housing and consumer spending. High educational attainment is essential for the health of metropolitan labor markets before, during, and after recessions.
Educational attainment makes workers more employable, creates demand for complementary less-educated workers, and facilitates entrepreneurship.
Pittsburgh’s economy got a boost because it is home to a concentration of jobs in health care and education, which were the only major industries with consistent growth throughout the recession and recovery, the report said.
The Pennsylvania city, once the US steel industry’s capital, has a 7.3% unemployment rate, 1% below the US rate, according to US Labor Department data.
Job growth in Oklahoma City, which has the lowest unemployment rate of any large US city, got a boost from hiring by Mining, Crude Oil, and Nat Gas companies as energy was one of the few sectors to fully recover to pre-recession employment levels.
Oklahoma’s capital had a 5% jobless rate in June, according to the US Labor Department. About 67% of the nation’s population lives in the 100 largest metro areas.
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