Both Baton Rouge and New Orleans have an insufficient supply of educated workers in the regional market, relative to the demands of business and industry, according to a new study by the Brookings Institution.
“For both New Orleans and Baton Rouge, there was an education gap, in that the average worker had less education than required by the average job in the metropolitan area,” said Jonathan Rothwell, a senior research analyst at the Brookings Institution Metropolitan Policy Program and one of the authors of the new report “Education, Demand, and Unemployment in Metropolitan America.”
The report examined the education gap — shortages of educated workers relative to employer demand — and industry resiliency during the Great Recession in the 100 largest U.S. metro areas.
In terms of overall ranking, Baton Rouge placed No. 74 and New Orleans fared slightly better at No. 64.
“And between those two metros the educational distribution was remarkably similar,” Rothwell added. “The main difference is that New Orleans — at least in 2009 when we had data — has a higher percentage of adults living in the area who had some college or associate’s degrees. So in the middle of the educational distribution, New Orleans had somewhat of an advantage. And that seems to help its labor market.”
Washington, D.C., with its highly educated workforce and resilient industry ranked No. 1 in the Brookings study. The nation’s capital was followed by Madison, Wis.; Boston; Albany, N.Y.; and Honolulu.
The study found metro areas with larger education gaps experienced unemployment rates an average of 1.4 percentage points above metro areas with smaller gaps. The difference widened to 1.7 percentage points by May 2011, suggesting better-educated metro areas had a slightly larger advantage in the wake of the recession than before.
By all measures, educated workers experience unemployment at lower rates than those with low educational attainment. The national unemployment rate among workers with less than a high school diploma in 2010 was 14.9 percent, according the U.S. Bureau of Labor Statistics. The unemployment rate for workers holding a bachelor’s degree was at 5.4 percent in 2010.
The study also found that the mix of industry in an area mattered as well when it came to softening the unemployment blow. Unemployment rates in metro areas with more jobs in industries resilient to the recession rose an average of 1.4 percentage points less than rates in metro areas with more jobs in economically vulnerable industries.
Job sectors like oil and gas extraction; professional, scientific and technical services, along with education and health care added jobs during the recession. While jobs in textiles, manufacturing, construction and wood products proved to be more vulnerable.
Baton Rouge and New Orleans rode out the recession in part on the coattails of the state’s oil and gas industry along with petrochemicals, say researchers.
“What hurt Baton Rouge in particular — but metros all around the country — was large losses in the construction industry,” Rothwell noted. “Although, with that said, heavy and civil engineering construction — one subcomponent — tended to do well in Baton Rouge during the worst of the recession, perhaps because it was related to the oil and gas industry.”
Economic forecaster Moody’s Analytics suggests some of the fastest-growing future industries will be in health-care services, social assistance and professional services, particularly in view of an aging baby-boom generation.
“And so this will continue to provide a source of demand for those areas,” Rothwell said. “And that is a field that requires more educated workers.”
Those sectors are also predicted to grow in Louisiana, say labor officials. Health care and social assistance is expected to grow 21.9 percent by 2018, according to the Louisiana Workforce Commission. Accommodation and food services is expected to grow 18.6 percent in Louisiana. Professional, scientific and technical services is projected to grow 13.3 percent in the state.
To prepare for this growth, the state is making a more pronounced effort to align the state’s community and technical colleges with job needs, said Curt Eysink, executive director of the Louisiana Workforce Commission.
“Are we there yet? I think we have some work to do still. But we are clearly making progress,” Eysink said.
Still, labor indicators like the education gap are only part of the unemployment picture, said Rothwell.
“It certainly doesn’t account for everything,” he noted, as the national unemployment rate remains stubbornly high at 9.1 percent.
“It’s kind of a lingering factor that was there before the recession,” Rothwell said of the education gap. “It became maybe more obvious as the crisis took hold. But the main problem was related to the housing market, the toxic mortgages that polluted the banking system and ended up bringing down a number of industries other than construction, including manufacturing.”