With the unemployment rate hovering above 9 percent, today’s job market is bad for everyone. One group does seem to fare better than the rest, however: The jobless rate for workers with a bachelor’s degree or better is just 4.3 percent, compared with 14.3 percent for high school dropouts.
But among college grads, the outlook is gloomier for one critical segment: recent graduates. A study this year put their unemployment rate at 10 percent among men and 8 percent for women. In addition, a study late last year for the Center for American Progress estimated that one in five recent male college graduates is underemployed and earning less than workers of the same age who have only a high school diploma.
That pattern will not improve much in the near future. A long-term economic outlook issued by the Macroeconomic Advisers consulting group says that we will not see a complete recovery in the job market until 2017 — five graduating classes from now. And President Obama’s jobs package wouldn’t do much to fix this problem. It may help blue-collar men in construction jobs, and it may put some laid-off teachers back to work, but it contains little that would help new college grads, especially women.
So what happens to the Class of 2015 — the students who have just moved into their dorm rooms and are settling into introductory lectures this fall? What should they do?
They should stay put. Their best bet, by far, is to go to college and wait out as much of the economic storm as they can. If they can afford it, the smartest move may be to stay in school or in some sort of training program until the economy recovers in 2017. That’s because entering the formal job market during a recession and settling for low-skill, low-pay work can permanently derail career prospects. Desperate finance majors who take a job in retail, for example, may never get back on track. If graduates get stuck in a role that doesn’t use the full extent of their abilities, it is less likely that they will find a job later on that will. Employers tend to be biased against both the long-term unemployed and the long-term underemployed. Underemployment can, in other words, become permanent.
Skipping college and settling for a lower-paying career simply is not a smart trade-off, despite hype to the contrary from pundits such as Richard Vedder of the American Enterprise Institute, and Paul Harrington and Andrew Sum of Northeastern University. They are just handing out bad advice to other people’s children. Sure, college is expensive — stories of students racking up tens of thousands of dollars in loan debt are common. Federal student loan default rates jumped from 7 percent in 2008 to 8.8 percent in 2009, so it’s clear that not everyone is handling that debt responsibly.
But consider this: The bachelor’s degree that a graduate gets in 2015 will, on average, be worth $1 millionmore in lifetime earnings than a high school diploma. Even the most expensive colleges cost only a fraction of their ultimate payoff. The only thing more expensive than going to college is not going to college.
And the dim job market will actually increase the demand for college-educated workers. One of the root causes of stalled job creation is an economic trend that picked up steam during the recent recession: Technological advances — combined with relentless global competition and cost-cutting pressures — have accelerated the automation of routine and programmable tasks in every occupation. The jobs that are disappearing are those in manufacturing and similar industries that used to provide good paychecks to workers with high school diplomas or less. They required little in the way of education or formal training. The jobs that are left are those that involve more sophisticated, non-routine tasks, which demand deeper knowledge as well as problem-solving and interpersonal skills.
This means that employers are looking increasingly for workers with post-secondary credentials over those with only a high school diploma. Consider the historical trends. In 1973, more than 70 percent of jobs required only a high school diploma or less, but that number had fallen to 43 percent by 2010. The future promises more of the same. Over the next decade, our research shows, there will be 31 million job openings that will require at least some education or training beyond high school — 9 million newly created jobs and 22 million openings to replace retiring baby boomers.
Our research suggests that, to successfully navigate this treacherous economy, students coming out of high school should keep a few key realities in mind.
What you study matters more than the level of degree you get. Some subjects, quite simply, are more in demand in the economy.
Among workers with bachelor’s degrees, for instance, petroleum engineers will earn $120,000 a year, compared with guidance counselors, who will average $40,000 a year. The degrees and jobs that will pay best and grow fastest will be in STEM (science, technology, engineering and mathematics)fields and in health care. There are many majors on the middle rungs, such as business and public administration, for which job demand and degree value will be healthy, but less robust than for the technical degrees. Jobs in education and criminal justice will recover by 2017 and will grow, if only because of a wave of baby boom retirements.
Sadly, the degrees in least demand — and that pay the least — lead to jobs that help other people the most. Counseling, psychology and social work are among these.
The demand among students for liberal arts degrees will fall well below 10 percent of all majors. Earnings will be weaker, too, averaging $47,000 a year over a 40-year career. Liberal arts majors would probably be best served by going to graduate school and entering the job market with a more applied credential in 2017. A liberal arts major with such a graduate degree, on average, would add more than $400,000 to his or her lifetime earnings.
Hot skills will trump education level. This means that a person with a certificate in engineering, for example, can earn more than a third of workers with bachelor’s degrees in subjects that are less in demand. Almost a third of associates’ degree holders — mostly in health care and technical programs — earn more than the median worker with a BA.
Within the same occupation, however, education levels do affect earnings. And many graduate degrees will be worth staying in college through 2017 to earn. In engineering, for example, getting a graduate degree rather than stopping with a certificate can add $1 million in lifetime wages. Much the same is true for all other STEM degrees and jobs. In business, the difference between an associate’s degree in management and a master’s degree is more than $1.5 million over a career, on average.
But degrees above and beneath the BA level will be less valuable in a variety of occupations including teaching, counseling, the arts and humanities, and journalism.
Go where the guys are. This advice, clearly, is aimed at women, and applies both to college and the labor market. Women tend to be concentrated in the lowest-paying majors and jobs, especially in the teaching, helping and caring professions. Even in the higher-demand majors, women tend not to use their degrees to maximize their opportunities. For example, women earn 40 percent of math degrees but often use them to become teachers rather than to enter more highly paid STEM and business fields. An exception is health care, where women have found their way into high-demand majors and well-paid jobs through the life sciences, especially pharmacy.
It is true that college is not just about jobs or training foot soldiers for American capitalism — it also is a time for personal exploration and to learn what it means to be a good citizen. But in times of economic crisis, such as ours, there is no denying the economic role of college. Self-discovery and democratic ideals are important, but they are no substitute for putting food on the table or supporting a family. For some students, this harsh reality will mean carefully weighing the choice of a major and, perhaps, setting aside passion for realism.
Regardless, though, no one should reject the idea of higher education out of hand. One thing is true of our democracy: No one will make you vote, but you will have to work. And the best way to make that happen is to go to college.
Anthony P. Carnevale is the director of Georgetown University’s Center on Education and the Workforce.
Average earnings of someone
with an Associates degree over a 40-year career
Average earnings of someone with a Bachelor’s degree