Education Gaps Don’t Fully Explain Why Black Unemployment Is So High

The economy is improving: Nationally, unemployment is about 5 percent, down from 10 percent in 2009. But for black Americans, the unemployment rate is much higher—for them, the economy is still a disaster. Unemployment among blacks was 9.5 percent during the third quarter of 2015 compared to only 4.5 percent for whites. While the discrepancy in unemployment has been volatile, the current gap is actually slightly larger than the one that existed 15 years ago or in the years directly preceding the recession.

The Next Economy

Why is this? Many people point to education as a major cause of this disparity. A higher percentage of white Americans obtain college degrees: 41 percent, compared to the black population’s 22 percent. But data from the Economic Policy Institute (EPI) show that differences in education can’t explain fully the entirety of the unemployment gap. According to research from Valerie Wilson, an economist at EPI, for black Americans with the same level of education level as white Americans, the unemployment rate is consistently nearly twice as high.  

Education Gaps Don’t Fully Explain Why Black Unemployment Is So High

Wilson looks at census data and finds, unsurprisingly, unemployment is highest for those who didn’t attend college at all. Among those who hadn’t completed high school, whites had an unemployment rate of 6.9 percent. But for black Americans, the situation was much more extreme: Their unemployment rate was almost two-and-a-half times higher, at 16.6 percent. And a gap persists even among those who have completed a bachelor’s degree or higher, with an unemployment rate of 4.1 percent for black Americans compared to 2.4 percent for white Americans with the same degree.

For every level of educational attainment, black Americans have unemployment rates that are similar to or higher than those of less educated white Americans. For instance, white Americans who only obtained a high-school diploma have a very similar unemployment rate to black Americans who completed at least a college education: 4.6 percent vs 4.1 percent. “This disparity suggests a race penalty whereby blacks at each level of education have unemployment rates that are the same as or higher than less educated whites,” writes Wilson.

Unemployment by Education and Race


Part of the problem starts before the job hunt. Despite rising college attendance, black students are still less likely than their white counterparts to attend prestigious schools that may give them connections or a leg up in the career world. And once at college, blacks are less likely to graduate in six years than their white peers. But the numbers show that even when blacks are successful in attending and completing college, they’re still less likely to be gainfully employed than their white peers, hinting that less education isn’t the entire problem, and that attempts to boost educational attainment figures among blacks won’t be the entire solution.

What the Economy Gets When Colleges Invest in Mental Health

In response to rising rates of depression among students and increased demand for therapy, many American universities have been ramping up their mental-health services. These colleges surely want to take care of their students, but it has other benefits too: Mental-health disorders can hinder educational outcomes, lowering grades, delaying students’ graduations, and causing students to drop out.

So, as with a lot of other things involving higher education, some colleges are finding that investing in mental-health services isn’t just a caring thing to do, but something that brings society-wide benefits. A new report from the RAND Corporation suggests that these investments can pay dividends long after graduation by limiting mental-health disorders’ negative effects while students are still in college, which increases their average lifetime earnings.

The study looked at a mental-health initiative in California called the California Mental Health Services Authority, or CalMHSA, which was launched in 2011. CalMHSA currently allots public funding for mental-disorder intervention programs to 10 University of California campuses, 23 California State University schools, and 112 state community colleges. CalMHSA’s annual investments total about $8.7 million (not a huge amount on the scale of campus-wide health service budgets) and according to RAND’s analysis of CalMHSA’s survey data, they led to a 13.2 percent increase in the number of students receiving treatment at California’s public colleges—which by RAND’s estimates led to an additional 329 students graduating.

One study by the Federal Reserve of San Francisco found that over the course of a lifetime, people a four-year college degree earn about $830,000 more than those without one. Using that estimate, the RAND study predicts that the gains from these additional 329 graduates work out to $56 million of “societal benefit,” in the form of the lifetime earnings of those graduates.

The RAND researchers hope that a cost-benefit analysis like this can help put mental-health investments into perspective. “[I]t is important that we understand that investing in student mental health not only can get more students into care, but that society benefits financially through increased wages and tax revenues,” said Scott Ashwood, the study’s lead author and an associate policy researcher at RAND, in a press release.

The President of Maine Maritime Weighs In

MMA logo

Two days ago I mentioned the welcome news that the Maine Maritime Academy, which John Tierney had written about extensively as part of our ongoing American Futures coverage, had been recognized yet again for providing very high career-earnings value to its students, at a low cost.

The context for this was our also-ongoing discussion of the importance of “career technical education,” once sneered-at under the title of “trade schools” or “vocational ed,” as one of the promising steps we’ve seen around the country with potential to offset at least some of the relentless pressure toward a polarized rich-and-poor society.

Now, a reader who once taught at another maritime academy writes in to say, “Hey, wait a minute.”  His point, as you’ll see, is not that there is anything wrong with Maine Maritime itself but rather that the “value added” in higher salaries comes from legislatively protected earnings for merchant seamen.

There are some obvious comebacks to this case, most of which I’ll save for later installments. One I’ll mention now is: this is a demanding and potentially perilous field, as demonstrated long ago by John McPhee in “Looking for a Ship” and very recently by the El Faro tragedy, in which 5 MMA alumni were among the 33 mariners who were lost. And again, the reader’s complaint is not with the school but regulatory regimes more broadly. It is sort of like saying that medical training doesn’t “add value” to graduates’ earnings, since under different payment systems doctors would make less money.

More on these fronts later. For now, the reader’s response on Maine Maritime. He begins by noting that the 15 schools that got perfect 100 scores in a recent “value added” study included several maritime academies:

Looking over the list, all the maritime academies are represented. Since they all seem to get the top score of 100, there is nothing special about the Maine academy. [JF note: actually, at least two state-run maritime academies did not get a top score. Still, the reader’s point is that this type of school seems over-represented.]

I used to teach at the US Merchant Marine Academy in King’s Point, NY. It is true that students who graduated did get good jobs. But I think this is really an exceptional industry, one in which the Federal Government has acted in several ways to improve the earnings of it’s graduates.

Housing Boom, Schooling Bust

Education is often prescribed as the antidote for a host of job issues: low wages, unemployment, and career stagnation. So it’s no surprise that when the housing market burst and the economy started to fall apart, more Americans turned to college to help them weather the storm. That’s not just a broad trend. There’s actually a correlation specifically between the performance of the housing market and college attendance for some groups. Why is that?

A new paper from the National Bureau of Economic Research investigates.

Though college attendance grew during the past several decades, that growth saw a significant slowing between the late 1990s (when the housing sector started to pick up) and 2006, when it started to stall. According to the study, written by Kerwin Kofi Charles and Erik Hurst of the University of Chicago; and Matthew J. Notowidigdo of Northwestern University, the housing boom accounts for about 30 percent of the slowdown in college attendance of young adults aged 18 to 25 during that time period.

Why does a booming market dampen college attendance? It’s not because everyone thinks they can make it big in real estate. Instead it’s because growing home values are correlated with many other economic improvements—particularly growing household wealth. And since housing has long been the largest asset of American families, increasing home equity can be felt in many other aspects of American life, such as increased demand in the labor market for a bevy of jobs including nannies, waitresses, construction workers, gardeners, hairdressers, and retail workers, according to the research.

Plentiful jobs are a huge reason that people skip school.That’s because a booming job market increases the opportunity cost of higher education. Each week, month, or year that an individual is in school rather than working is time and money sacrificed. This trade-off is economically worth it if a college degree will almost certainly provide a higher salary at the end of the road, but there are some industries where a college degree isn’t a necessity. And during boom years, that trade-off can be much less appealing.  

That’s probably why researchers saw the greatest impact on college attendance among two-year programs. For many, an Associate’s degree provides only a marginal improvement in earnings and job opportunities compared to a high-school degree. In times of economic plenty, that can make heading to a community college feel like an unnecessary step. For those pursuing four-year degrees, the booming housing market had less effect on college enrollment.

When the economy collapsed, enrollment in college increased for two-year schools. But the researchers found something else interest too. When enrollment at two-year colleges rebounded, those who had forgone school in favor of working weren’t among the enrollees. In fact, a large portion of the group that skipped out on school during the boom years never went back to school at all. For this group, college wasn’t just delayed by the choice to work, it was taken off the table entirely.

What If the Answer Isn’t College, but Longer High School?

Few 18-year-olds can say that they earn more than $50,000 a year work­ing at a For­tune 500 com­pany in New York City. Rad­cliffe Sad­dler can.

The Brook­lyn teen­ager gradu­ated in June from the pub­lic school known as P-Tech, short for Path­ways in Tech­no­logy Early Col­lege High School. He en­rolled in the fall of 2011, as part of the school’s in­aug­ur­al class of 103 stu­dents. The strong em­phas­is on math, sci­ence, and writ­ing sur­prised him as a fresh­man, though he’d al­ways been a good stu­dent.

“I did not un­der­stand the level of work it would re­quire,” he re­calls, “and that, some­times, it would re­quire me to give up hanging out with my friends.”

But the sac­ri­fice was worth it. Sad­dler fol­lowed the tra­ject­ory laid out for P-Tech stu­dents and en­rolled in his first col­lege class—in­tro­duct­ory en­gin­eer­ing—after he com­pleted the ninth grade. By the time he gradu­ated, he earned both a high-school dip­loma and an as­so­ci­ate’s de­gree in com­puter sci­ence—not to men­tion a job of­fer from IBM. He fin­ished the six-year pro­gram in just four in­cred­ibly busy years.

P-Tech star­ted in 2011 as a pub­lic-private part­ner­ship between IBM, the New York City De­part­ment of Edu­ca­tion, the City Uni­versity of New York, and New York City Col­lege of Tech­no­logy. At the depth of the eco­nom­ic re­ces­sion, city edu­cat­ors were look­ing for a way to con­nect high schools with po­ten­tial employers. They found a will­ing part­ner in IBM for an ex­per­i­ment to give students a bet­ter handle on the skills they’d need in the work­place. They took over an old build­ing of a fail­ing school in the Brook­lyn neigh­bor­hood of Crown Heights, which has a his­tory of high crime and ra­cial ten­sion.

P-Tech re­vo­lu­tion­izes the struc­ture of high school by en­cour­aging stu­dents to attend the school for grades 9 through 14. This es­sen­tially ex­tends high school in­to the early years of col­lege. Over those six years, the goal is for stu­dents to com­plete both a high-school dip­loma and an as­so­ci­ate’s de­gree. Gradu­ates can either enter the work­force equipped with a post­sec­ond­ary de­gree—no tu­ition, so no stu­dent debt—or con­tin­ue on to a tra­di­tion­al col­lege with a bevy of class credits in hand.

Stan Litow is IBM’s vice pres­id­ent of cor­por­ate cit­izen­ship and cor­por­ate af­fairs—and a former deputy chan­cel­lor of New York City pub­lic schools—who was intimately in­volved with the found­ing of P-Tech. “The idea of get­ting in­to the work­force with just a high-school dip­loma is an idea from the past,” he says now. “We needed to come up with a new mod­el.”

The one in Brook­lyn in­volves an in­tens­ive part­ner­ship with a big busi­ness. IBM helped design the school and con­tin­ues to provide P-Tech stu­dents with ment­ors, in­tern­ships, a ded­ic­ated staff per­son, and count­less hours of pro bono work—an in­vest­ment that Litow fig­ures is worth $1 mil­lion to $2 mil­lion a year. All P-Tech gradu­ates are first in line for avail­able jobs at IBM that fit their skill level.

The most in­triguing part of the P-Tech ex­per­i­ment is its fo­cus on dis­ad­vant­aged teen­agers who don’t usu­ally get col­lege-level train­ing in sci­ence and math. No en­trance ex­am is re­quired, as it is for the Bronx High School of Sci­ence and New York’s oth­er elite pub­lic schools. Fully 95 per­cent of the stu­dents are Afric­an-Amer­ic­ans or His­pan­ics, and 80 per­cent are poor enough to qual­i­fy for sub­sid­ized school lunches; nearly three-quar­ters are male. The ma­jor­ity of them would be the first in their fam­il­ies to at­tend col­lege.

“If you look at who is get­ting the 21st-cen­tury jobs, they are not chil­dren of col­or from low-in­come neigh­bor­hoods,” Litow says. In 1970, only 6 per­cent of the poor held a col­lege de­gree, a fig­ure that has barely budged—it’s now at 9 per­cent—in the dec­ades since. “If you don’t get at the core is­sue of edu­ca­tion and skills,” he warns, “then you will not solve this prob­lem.”

The ac­claim P-Tech has drawn as a mod­el of in­nov­a­tion for high schools in poor neigh­bor­hoods, as well as a way to make col­lege easi­er to af­ford, earned a vis­it from Pres­id­ent Obama in 2013. The P-Tech mod­el has ex­pan­ded to 40 oth­er schools in New York, Con­necti­c­ut, and Illinois, with nu­mer­ous busi­ness part­ners, in­clud­ing Cisco Sys­tems, Mo­torola, and Ve­r­i­zon.

The Next Economy

P-Tech’s strategy is to over­haul the tra­di­tion­al pub­lic-high school ex­per­i­ence, in everything from the cal­en­dar to the role of ment­ors in stu­dents’ lives. The flow of the school day—and year—looks dif­fer­ent. Groggy teen­agers start the day (when, re­search shows, their brains are still wak­ing up) with phys­ic­al edu­ca­tion classes, and they wait un­til 9:20 or so for aca­dem­ics. The school day lasts un­til 4:06 p.m. Sum­mer va­ca­tion is lim­ited to two weeks in Au­gust. Dur­ing stu­dents’ first year, in ninth grade, they take no courses in sci­ence or his­tory, giv­ing them more time to work on read­ing and math—to “bring them to a high­er level,” says Rashid Dav­is, P-Tech’s prin­cip­al.

The ment­ors, culled from all corners of IBM, are im­port­ant. They com­mit to check­ing in with their stu­dent for 30 minutes every week, either on­line or in per­son, and they of­fer ad­vice on everything from course­work to how to be­have as an in­tern. Sad­dler had an in­tern­ship at IBM Glob­al In­sur­ance, re­search­ing the in­sur­ance in­dustry.

By far, the biggest be­ne­fit to at­tend­ing P-Tech is the as­so­ci­ate’s de­gree that every gradu­ate earns, either in com­puter sci­ence or in en­gin­eer­ing. This em­phas­is on at­tend­ing col­legelevel classes, some­times on a com­munity-col­lege cam­pus, begins in ninth grade. “The de­cision to enter P-Tech is the de­cision to choose college,” says an IBM guide to de­vel­op­ing tech­no­logy-cent­ric schools such as P-Tech.

Earn­ing an as­so­ci­ate’s de­gree along with a high school dip­loma makes col­lege more af­ford­able. P-Tech stu­dents pay noth­ing, not even for books, for “the opportun­ity to com­plete a post­sec­ond­ary cre­den­tial,” Dav­is says. “I see stu­dents try­ing as hard as they can in spite of all of their cir­cum­stances.”

Many of the stu­dents from its in­aug­ur­al class are ex­pec­ted to gradu­ate by June 2017, six years after the pro­gram star­ted. Six of them, in­clud­ing Sad­dler, have fin­ished two years early. Three of those have taken jobs at IBM; the oth­ers at­tend col­lege.

Sad­dler chose a job as an as­so­ci­ate ana­lyst in mar­ket re­search at IBM be­cause “I want to own my own com­pany,” he ex­plains. His fath­er is a man­ager at a construc­tion com­pany, and his moth­er is work­ing to­ward a nurs­ing de­gree; the fam­ily moved from Ja­maica when Rad­cliffe, the eld­est of three sons, was 6 years old. “Hav­ing this busi­ness ex­per­i­ence is amaz­ing,” he adds. “What oth­er 18-year-old could say, ‘I worked at a For­tune 500 com­pany right out of high school’?”

But Sad­dler hasn’t giv­en up on fur­ther edu­ca­tion. With an as­so­ci­ate’s de­gree in hand, he plans to at­tend col­lege on a part-time basis start­ing next spring.