WASHINGTON - The nation's high school graduation rate is the highest since 1976, but more than a fifth of students are still failing to get their diploma in four years, the Education Department said in a study released today.

Officials said the steady rise of students completing their education is a reflection of the struggling economy and a greater competition for new jobs.

"If you drop out of high school, how many good jobs are there out there for you? None. That wasn't true 10 or 15 years ago," Education Secretary Arne Duncan said in an interview with The Associated Press.

The national dropout rate was about 3 percent overall, down from the year before. Many students who don't receive their diplomas in four years stay in school, taking five years or more to finish their coursework.

Some 3.1 million students nationwide earned their high school diplomas in the spring of 2010, with 78 percent of students finishing on time. That's the best since a 75 percent on-time graduation rate during the 1975-76 academic year.

The only better rate was 79 percent in 1969-70, a figure the department wouldn't vouch for.

There were tremendous differences among the states in 2010. Fifty-eight percent of students in Nevada and 60 percent in Washington, D.C., completed their high school education in four years. By comparison, 91 percent of students in Wisconsin and Vermont did, according to the report.

Graduation rates increased by more than a percentage point in 38 states between 2009 and 2010, the study found. Only the District of Columbia saw its graduation rates decline between by greater than a percentage point during those years.

Among the most significant factors of the increase was the dire U.S. economy after the 2008 Wall Street meltdown. During the 2009-10 academic year, unemployment ranged from 9.4 percent to 10 percent.

"When I grew up on the South Side of Chicago it wasn't great, but I had lots of friends who dropped out and they could go work in the stockyards or steel mills and they could buy a home, support a family, do OK," Duncan said.

But those jobs are gone and won't come back, he said.

California, the nation's largest public school system by enrollment, led the nation in new graduates in 2010, turning out almost 405,000. It also produced the most dropouts: almost 93,000. That translated to a rate of about 5 percent, above the national average.

During the 2009-10 academic year, some 514,000 students dropped out of high school nationwide. Still, the rate declined from 4 percent during the seven previous academic years, when data was sometimes incomplete or represented averages of states that reported figures.

Nationally, students were most likely to drop out of high school during their senior year, with roughly one in 20 quitting before graduation day. In every state, males were more likely to drop out.

Arizona had the highest dropout rate, at 8 percent, followed by Mississippi at 7 percent. Washington, D.C., schools also posted a 7 percent dropout rate, the Education Department projected based on previous years' reporting.

Mississippi, New Mexico and Wyoming had dropout rates rise more than one percentage point, while Delaware, Illinois and Louisiana saw noticeable decreases. Delaware dropped from about 5 percent to 4 percent. Illinois dropped from roughly 12 percent to 3 percent. And Louisiana dropped from 7 percent to 5 percent.

"The trends are hopeful but our high school dropout rate is still unsustainably high and it's untenable in many of our African-American and Latino communities. We have a long way to go here," Duncan said.

Nationally, white and Asian and Pacific Islander students were among the least likely to leave school without a degree, with only 2 percent dropout rates. Hispanic students posted a 5 percent dropout rate, followed by blacks at 6 percent and American Indians and Alaska Natives at 7 percent.

"There's no young person who aspires to be a high school dropout," Duncan said. "When someone drops out, it's a symptom of a problem. It's not the problem itself. Something has gone radically wrong."