Economic Perspective: Hiring Over the Business Cycle
“Today’s program looks at hiring over the business cycle. Mike, when recessions hit the economy many workers lose their jobs. Then when the economy rebounds, hiring increases. Does this pattern affect all workers in the same way, particularly for workers with different levels of education?”
“Well we can now answer this question in a more informed way because we have a number of years since the Great Recession. We can compare, for example, what happened in the labor force during the recession now in the aftermath. And remember, there’s an old adage out there, ‘last hired, first fired.’ That sort of applies, but with a twist here in looking at the data in recent years.”
“The people who are first fired tend to be those with the lowest educational levels. In fact we can clearly see that in the data during the Great Recession. Folks without a high school degree, their unemployment rate went way up. Also they have also tended to be the last hired in the economic recovery, and so those folks who benefited are college graduates. They tended to be the last fired and the first hired, and I think the reason for this is that businesses are going to assume that if you have a college degree you have extra skills. They can use you in just about any type of job.”
“So what we’ve seen happen during economic recovery is the first folks to go back to work were those college grads. Now though, since we are 10 years past the worst of the Recession, we’re beginning to see, and have seen, those high school grads and high school dropouts get back into the labor force. And so that’s very, very good. But I think the bottom line here is that the lower your educational level, the more you have suffered through the last business cycle.”
Mike Walden is a William Neal Reynolds Distinguished Professor in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook and public policy.