The college grad unemployment or underemployment rate is currently at 53%, but is a poor economy to blame or useless college degrees?
Before we get into that question, let’s step back and take a look a closer look at the unemployment problem for recent grads.
College grad unemployment/underemployment is bad, real bad.
The news has been awash in horror stories about recent college graduates not finding work. Many more are able to find work, but not in their chosen field.
“More than half of America’s recent college graduates are either unemployed or working in a job that doesn’t require a bachelor’s degree”.
The Atlantic (as most other sources I’ve seen) doesn’t break the number down, so it’s difficult to tell how many college grads are actually unemployed, vs. how many are considered underemployed.
This is an important question because I think it highlights a big problem in education in America today. It’s easy to point to grads who seem unwilling to take low level jobs that are available and say they’re lazy or have a sense of entitlement, and in some cases that’s certainly true, but there’s also a very real financial reason at play – namely, student loan debt.
College degrees are more expensive than ever, and students have piled on the debt. There was a time when this was a smart move because the higher level of education would help you find a good paying job, and the debt was affordable over time. But things are different now, and it’s a lot harder to pay off $30,000 in student loans when your working the line at a fast food restaurant.
This doesn’t just lead to higher college grad unemployment rates though. This also causes systemic problems in the economy since those highly educated grads are taking low skill jobs that could go to others. Those jobs would traditionally go to less educated workers.
Economy and the job market to blame for college grad unemployment, or is it useless degrees?
All of this sounds bad, hopelessly bad. But not all doors lead down College Grad Unemployment Row.
“…students who graduated out of the sciences or other technical fields, such as accounting, were much less likely to be jobless or underemployed than humanities and arts graduates.”
It sounds like going to school for math and science based degrees does still pay off in the end, so this begs the big question:
Is the college grad unemployment problem because the job market stinks and the economy has fundamentally changed? or is it simply due to useless degrees?
It used to be said that going to college was simply paying your dues and doing your time for a fancy piece of paper. Cynics would say that the paper didn’t mean much, but it opened doors because so many jobs were only available to those with a college degree -any college degree.
Times have changed.
It appears that you not only need that fancy piece of paper, but you also need the skills to do the job.
Here’s another quote from that AP article:
“I don’t even know what I’m looking for,” says Michael Bledsoe, who described months of fruitless job searches as he served customers at a Seattle coffeehouse. The 23-year-old graduated in 2010 with a creative writing degree.
They don’t go into how much student loan debt Michael has, but I’d bet it’s a lot – more than he’ll be able to manage on his coffeehouse job. But what was he expecting?
What good is a creative writing degree?
Don’t get me wrong, I admire writers and creative writing is not something many people can do well. It takes a certain innate ability and creativity that can be cultivated but cannot be taught. Not everyone gets to be Stephen King.
I’d say that Michael, and others like him, would be extremely fortunate to get a job somewhere making $30,000 a year with his degree, but what do you want to bet he has that or more in student loan debt?
A simple truth that no one seems to want to discuss is that for some degrees, debt doesn’t make sense.
I ask you, what would full employment be for a graduate with a degree in creative writing and do enough such jobs exist for the number of graduates seeking employment?
“Just what job does someone majoring in Political Science, English, History, Social Studies, Creative Writing, Art, etc., etc., etc., expect to get?
Arguably, graduates in those majors (and many more) should be thankful to get any job. … those who do land a job should therefore be considered fully employed, not underemployed.”
Is college education simply less valuable than in the past
I think the college grad unemployment issue raises the bigger question of whether college education is simply less valuable now than in the past.
A few years ago, I asked the question Who Are the Unemployed? The answer I found was largely those without a college degree.
But now it seems that we are seeing the effect of a bubble in college degrees.
When there were fewer graduates, a generic college degree used to be a valuable credential. Now that the market is flooded with applicants holding Bachelors degrees, those degrees count less, and specific skills count more. The result? – High college grad unemployment.
“the number of Americans under the age of 25 with at least a bachelor’s degree has grown 38 percent since 2000. “
The job market has not been able to keep up with this glut in the highly educated workforce, and this has led to falling wages and college grad unemployment we see today.
Lower student loan rates are not the solution – that only encourages even more debt.
The message here is clear: parents should encourage useful college degrees, or none at all for their children.
It doesn’t take a degree to be an entrepreneur, or the next Stephen King or Picasso. Either follow your passion and make it work, or get a useful degree to fall back on. The free ride is over for college grads.
It’s no secret that the cost of college rises faster year-over-year than any other cost. I was reading an article about inflation yesterday and the gist of it was that who inflation affects depends on the type of consumer you’re talking about. For instance, inflation in the cost of tobacco affects smokers more than non-smokers.
The items in the typical budget that rise the fastest are: Gas/fuel, food, health care and education.
This got me thinking about why those items experience inflation. Gas and food are pretty obvious. They’re essentially affected by supply and demand, with uncertainty and fear contributing to major spikes. The global economy as a whole is experiencing increased demand for food and fuel (oil) due to a increase in the number of previously undeveloped and communist countries opening the doors to capitalism, with riots and unrest in the middle east causes spikes in the price due to fear and uncertainty.
A lack of domestic oil production also serves to curb supply and drive up costs. Likewise with using food for fuel with such initiatives as ethanol (crops that would otherwise be used to produce food are used instead to produce fuel-grade corn to be converted into ethanol).
But what causes the cost of healthcare and education to rise faster than anything else? Is the underlying supply of required goods in those fields insufficient to meet the demand? Are there not enough teachers or schools, or doctors or nurses? In some areas, that is the case. But I don’t think the shortage is so bad as to explain the exponential growth is costs.
I think the root causes in both cases is essentially the same – the middle man.
The end consumer is shielded from the real cost of the service, so the costs get distorted beyond all sense. If you or a relative has ever spent time in a hospital and you ask to see a detailed breakdown of the bill you’ll see what I mean. Hospital beds costs $1,000′s per night, and Advil or Tylenol goes for 100′s dollarsper pill.
How does this continue? Because patients never see the cost, and if they do they don’t have to pay it. We all pay for it. Patients pay their health insurance provider, or in
most cases the money is taken out of their paycheck before they ever see it (unless they work for a public sector union). This 3rd party insurance provider insulates the patient for the true cost, leaving hospitals to charge whatever they can, usually to make up for some other budgetary shortfall.
Education is the same way. Students get student loans, grants and scholarships that all go to offset and defer the cost while the universities continue to hike the tuition because students (and parents) have accepted the premise that they’ll be paying for decades to come anyway, what’s another year or two. Besides, they never see where the money goes.
But how many schools waste money on things like this: Thousands turn out for Bill Clinton appearance ? The University at Albany hosted former president, Bill Clinton, last week. He spoke to nearly 5,000 students for an undisclosed amount.
“UAlbany’s Student Association still hasn’t disclosed how much it paid Clinton for the event but the former president reportedly earns $100,000 for a single speaking engagement.”
The money was taken out of the student’s $85 “activity fee” for the semester, and possibly elsewhere in their fees and tuition.
Maybe if schools didn’t spend 6 figures for speakers like this, tuition wouldn’t grow at double digits every year. I don’t know. But it does seem like a waste and unfair use of student money. Why don’t they sell tickets and charge admission for those who truly want to see the speaker?
The last thing you want to be worrying about after receiving your diploma is paying off the mountain of debt you accumulated over four years, so why not minimize or eliminate that debt altogether? It’s not easy, but it doesn’t have to be backbreaking, either, and it most certainly can be done.
If you’re still in high school, look for college credit resources like taking AP classes and tests, CLEP exams, and others. Some will cost you money (like the CLEP exam, which costs $65), but I can guarantee that these fees will be much cheaper than that of a class at the average college.
Accelerate your degree. While your workload will be more intensive, you can get out of college a semester or even a year early, saving you literally thousands of dollars.
Choose a tuition-free school. Sounds ridiculous, I know, but there’s a catch: some schools will require you to work up to 15 hours a week on campus and in jobs related to your major. Still, if you don’t have to worry about tuition. . . . If you’re interested, look up The Cooper Union in New York, N.Y.; Webb Institute in Glen Cove, N.Y.; Berea College in Berea, Ky.; College of the Ozarks in Point Lookout, Mo.; and Alice Lloyd College in Pippa Passes, Ky.
If you’re beginning with a particular school in mind, remember that nobody said you had to spend all four (or three) years there; you can transfer. By starting your college career at a community or tech college (which generally have lower tuitions), you can save as well as make a little money by having a part-time job. Moreover, if the school is close to home, you can (gulp) live in your parents’ basement for a year or two. No sweat, it’s only for a year or two, and afterward, you’ll have more money and half a college degree by the time you transfer to your dream college. The diploma from there won’t say a thing about your history as a transfer student. Just make sure before you begin your education that the credits you’ll earn at community college will transfer to your dream school; some don’t, depending on both campuses.
Don’t bring your car to school. You’ll use it rather than the communal bus that goes through campus and rack up gas money and mileage. Instead, bring your bicycle or skateboard, anything to keep you from spending money on gas.
Mind your cell phone bill. Call when it’s free, and watch your number of text messages. Use free apps rather than paid ones. You get the picture.
Get discount textbooks; sell them back at the end of the semester. Check around campus if anyone already has a copy of the book that you can share (I wouldn’t recommend this except for a low-key class) or if they’re looking to give it away or sell it for cheaper than the campus store. Amazon.com often has the cheapest, used, hardcover books. If you’re selling, go online and make yourself some much-needed cash. Your campus bookstore will try to mark the value of your books down, so avoid them like the plague.
Get your hands on a cheap laptop—from a friend, a neighbor, eBay, Amazon. . . . You can also try a refurbished laptop directly from major manufacturers, or snag a coupons or rebates (just don’t forget to actually use them).
While we’re tech-talking, don’t dish out your month’s pay on software—there are plenty of freewares online if you know where to look. You can get antivirus, firewall, and spyware removal programs for free from places like www.cnet.com. Linux is a good alternative to over-priced Windows software, and Apple’s Education store offers discounted rates for students. Just make sure to get your stuff from legitimate sources, or you’ll have a nasty virus on your hands.
What you do need, however, is most definitely food. Use your cafeteria since you’ll already have paid for it, and even try getting extra food to go for evening snacks. Some places won’t let you do that, so it’s a good idea to invest in staple food products for when you get hungry so you don’t get peer pressured into making a midnight McDonalds run and continually waste pocket cash. Oatmeal, bread, peanut butter and jelly, trail mix, a Brita filter and reusable bottle, cheese, and yogurt are basics that you’ll be glad you have.
Don’t be ashamed to use coupons. When everyone else is working to pay off their loans, you’ll be working on your savings account.
Avoid restaurants, especially in large groups. Splitting the bill usually means the salad-eater gets screwed, and restaurant meals are overpriced, anyway. If you’re looking to impress a date, try candles and movie or TV via your laptop in the dorm room—just be sure to tell your roommate to take a few extra hours at the library.
Sell your talents as a writer, a musician, whatever—be a tutor.
After you’ve graduated and you still find yourself paying off loans, think about doing what a lot of graduates are doing these days: canceling all or part of their federal-education debt by working in public-service jobs or through a volunteer organization. Check out loan-forgiveness programs and volunteer organizations, even the Peace Corps, which will take out 30% of a Perkins loan and defer student loan payments. Americorps and Volunteers in Service to America members receive educational awards of almost $5,000 for a year of service; you can apply that to existing loans or to financing future education. If you’re a teacher, consider working in low-income elementary or secondary schools, which may cancel up to $5,000 off your federal Stafford loan debt. Similar programs exist for lawyers, physicians, nurse practitioners, dentists, therapists, and more.
If in doubt, there are innumerable resources online that can help you—in big ways and small—further minimize college debt.
It’s a well worn refrain by now that the cost of a college education has risen far more than the general rate of inflation for decades, but no one really talks about why.
In fact, the majority of discussion about the cost of college tuition usually focuses on increased funding, or changing student loan programs, usually under the guise of “making college more affordable” while really only driving the cost up more.
The root reason college tuition outpaces inflation year after year is because people keep paying it.
It’s largely driven by supply and demand, but it’s real cost is masked by grants, scholarships and loan programs – it’s the same reason health care costs keep rising so much faster than inflation. When the consumer is shielded from paying the direct cost, then costs rise much more quickly. It almost becomes a victimless crime.
Couple that with the fact that so many people see a college degree as essential to having a high paying job, and you see why the demand keeps increase despite the meteoric rise in costs. It’s easy to see why a college degree is viewed as essential when you look at data like this. As of August, 2010, the unemployment rate of those with a Bachelor’s degree was 4.6%, while those with less than a high school diploma had a 14% rate of unemployment!
I just put my daughter on the bus for kindergarten for the first time this week, and I can’t imagine what the cost of college is going to be when she graduates high school. Couple that with the fact that so many people will likely be entering the workforce with bachelor’s degrees by that time that she’ll likely have to get a master’s degree just to remain comparable to what her old man got with his bachelor’s and it’s not a happy thought.
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