Over the last 25 years, labor force participation has dropped pretty consistently. Post-crisis, there was a thesis that less participation meant some workers didn’t have the skills required by employers to be productively employed. That doesn’t seem consistent with the first chart below. As shown, the best-educated workers have seen their participation in the labor force fall by the largest amount. While it’s a mistake to assume “education level” and “skill” are synonymous, they should be reasonably correlated. As shown in the chart, the least educated workers have the highest LFPR relatively to their own history. It’s still much lower than among better-educated workers, but hasn’t been falling, unlike for those with more education. Over the last couple of years, as LFPRs have bottomed for workers with a high school education and some college, college graduates have seen their LFPRs making a new low for the history of their series.
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We should also note that while workers with at least a high school education have unemployment rates well above pre-crisis lows, those with less than a high school diploma have an unemployment rate below its minimums from the late 1990s and the prior economic expansion. Again, if there was a skills gap, we wouldn’t expect the unemployment rate for those with the least formal education to be at historically low levels.