Alicia Sasser Modestino in Forbes: Beware Degree Inflation In The Coming Recession
by Preston Cooper
The Bureau of Economic Analysis announced on Wednesday that GDP in the first quarter of 2020 had fallen at an annualized rate of 4.8%, the largest drop since the 2008 financial crisis. Due to the coming recession, the Congressional Budget Office expects that the unemployment rate will remain above 10% through 2021. All this implies that for the next couple years, there will be several jobseekers chasing a limited number of job openings.
Historically, this mismatch in labor supply and demand has resulted in employers ratcheting up education requirements for posted jobs. At the height of the Great Recession, there were more than six jobseekers for every job opening (see chart). A study by Alicia Sasser Modestino, Daniel Shoag, and Joshua Ballance found that over the same period, the share of job postings requiring at least a college degree rose by more than 10 percentage points.