Education Level, Unemployment And Income

These graphs (via Manan Shukla) confirm what we already know.  That is, we are more likely to be employed, and earn higher incomes, if we are better educated.  That has been true for a long time.  Consequently, it does not help to explain why unemployment was high during the recovery from the 2000 recession, and during our current recovery from the financial crisis.  Some argue that education level has become even more important because there is less demand for unskilled labor and more demand for skilled labor.  According to this hypothesis, we can remedy the unemployment problem by reforming our education system.  Its hard to argue against improving the education system, or for increasing access to higher education.  That would certainly, over the long haul, be good for social mobility and equality of opportunity.  However, it may not remedy the problem of high unemployment, and it does not address the decline in median household income, and rising income inequality, that have been endemic in the global economy.  The relationship between education, falling wages, and rising income inequality is not obvious.  They are probably better explained by changes in the political economy that have been underway for the last 40 years.