Monday, June 4, 2012

The Diploma Divide

Over the weekend I was reading up on May’s dismal job report.  The Labor Department reported Friday that only 69,000 jobs were added.  Then I thought about the recent influx of college graduates.  That is when I learned about a more serious development in our country’s economy – The Diploma Divide.

Read On:
The Brooking Institution reported that 32 percent of U.S. metropolitan areas have adult residents with a four-year college degree.  Earlier this year, unemployment was 7.5 percent in cities where more than one in three adults were college educated; 10.5 percent for cities where one in six adults had a college degree.  Their research also revealed that we are beginning to witness a new trend: “The Diploma Divide.” 

In geographic areas where manufacturing prospered before the recession like Ohio’s Rust Belt, jobs that did not require a college degree were plentiful.  Now that the Rust Belt’s job market has evaporated, those residents that attained a four-year degree since the recession need to follow the job market.  Consequently they tend to migrate to geographic areas where other college graduates succeed.  The Metropolitan areas that have benefited the most are San Francisco, Austin, New York City, Stamford, and Raleigh.  These cities are experiencing growth sectors in technology, finance, as well on being the home to research universities.

How big has the Diploma Divide gotten?  According to the Brooking Institution, the difference historically between the most educated (residents with four-year degrees) and least educated cities was 16 percentage points.  Today the spread has doubled.  What is the by-product of the Diploma Divide?  College graduates have higher household incomes, lower divorce rates, fewer single parent households and longer life expectancies.  In the words of a senior fellow at Brookings that raised the red flag, “knowledge breeds knowledge.”  To me it sounds that this vicious cycle does not bode well for an overall, balanced economic recovery.

What are your thoughts?


  1. I suspect you saw the feature article in the NYT last week on this subject, as well as a Terry Gross interview on Fresh Air with the author. It was eye-opening, tho not surprising once you thought it thru. Without "trades" jobs that provide decent income, this divide will continue to expand, and push income inequality even more broadly. We can't all live in cities, there needs to be some growth in "fly-over zones" as well. Outside of natural gas exploration, there aren't many jobs that pay a living wage for unskilled labor to do in these areas. Its a structural and fundamental problem that government policy will need to help address. But that will likely not happen in our current political environment. We are nearing a tipping point...

  2. Jimmy,

    I don't have the numbers at my fingertips, but I think the unemployment level of 18-25 year olds is relatively high, including college grads. (the boomerang generation).

    I know it is much higher in Europe. That there are a large number of educated unemployed people who are frustrated that they won't be able to live as well as their parents is a social problem that the world is going to have to address, sooner rather than later.


  3. Doesn't bode well for a balanced economic recovery? That's kind of funny...and sad. The divisiveness in Congress doesn't bode well for both a balanced economic recovery and, IMO, this nation's future. In addition, cuts to public education have been going on for years, if not decades and more than a few pundits and average Americans would testify to the dumbing down of America which was occurring long before the economy tanked. There are reasons for this which are inappropriate to mention in a blog related to marketing. Still, for some, having an educated population is not desirable as college grads tend to be less manipulate-able.

  4. Robert's point above is the other part of this puzzle that will become a problem in the years ahead. As much as non-university graduates will struggle to find employment as governments continue to invest and lure 'high-end' industries to their countries, there's an unspoken challenge facing new university graduates - that of actually being able to put that knowledge to work instead of settling for jobs that they can find.

    Again, like Robert, I've read of reports that state how future generations might not even be able to afford to own homes. Unfortunately, the picture is not as rosy regardless of which side of the Diploma Divide you fall on.

  5. Thank you all for weighing in. Interesting comments. We have a Diploma Divide, but what about our ability for future generations to participate on a Global basis. Takes more than one semester abroad. Also Junior Colleges provide a viable option for those areas that are struggling economically.

  6. I am in the same camp as Robert and Tanveer. I worry about creating a highly educated unemployed class of people who have no future job prospects. And by the way, come out of college with student loans and credit card debt. What's in it for a college grad if he or she ends up at Starbucks as a highly educated Barista because there are no jobs. Education is the acquisition of book knowledge. A job is the application of knowledge and the aquisition of new knowledge and skills to create marketable results. I suspect there will be negative consequences for people who are highly educated and can't get jobs, just as there are with the less educated who have been underemployed and under paid for almost two generations. The highly educated are headed down the same path. Will be interesting to see what the stats show about the divide 10 years from now.