Weve established that college can cost a lot, and that a recent graduate is
generally going to have a fair bit of debt when they head out into the world.
Weve also debunked the wage comparisons often used to sell the idea to
prospective students. But the reality is even worse, because to this point weve
largely granted the premise that a degree will secure the holder with a better
job. How often is this actually true?
A lots been written about the comparative unemployment rates between
graduates and non-graduates. Most of the numbers do a poor (read:
nonexistent) job of isolating whether or not the lack of a degree is to blame for
the lack of a job among non-graduates. But either way, reducing employment
to a binary setting isnt consistent with one of the primary reason degrees are
supposed to be valuable: the quality of employment. Jobs can be better or
worse, and people can hold jobs where their level of education is superfluous.
Theres a word for someone who has a job that does not require the degree
they hold: underemployed. In 2008, over 35% of college graduates were
underemployed; by June of last year, the Federal Reserve Bank of New York
reported that a whopping 44% of graduates were underemployed. And its not
just because of the recession: the numbers been rising since 2001.
And more education doesnt exactly help; in fact going to graduate school can
make things worse. In 2008 22% of people with PhDs or professional degrees
and jobs were underemployed. That number rises all the way to 59% for
people with masters degrees.
When you think about the financial situation most students are in, its not
hard to see why this happens. Higher levels of education do not merely add to
your job prospectsit forces you to shift them upward. This means some
higher-paid positions become feasible, but some lower-paid ones suddenly
arent, either because the graduate refuses to take a job below their education
level, or (more commonly) because the extra student loans make it financially
difficult to do so. And over qualification (and with it, turnover) is a real
concern for employers filling low-level jobs.
This is one of the ripple effects of student loan debt: you might have to take a
job below your education level to keep up with the payments. A heartbreaking
20% of college graduates with student loans eventually give up on their
preferred line of work to get a better paying job to help pay off their debt.
What causes this? A simple misreading of the labor market. Supply outstrips
demand. The Center for College Affordability and Productivity (CCAP) sums it
up pretty well:
Basically, college graduates were supplied at a higher rate than the labor market
demanded, with the predictable result that they were forced to find employment in lower-
skilled occupations.
Its been the unofficial policy of many leaders, political and otherwise, to
champion higher education as a universal good. Not because theyd studied
the demand for certain types of educated workers, but simply as a catch-all
solution. The market has long since adjusted to this, but the advice hasnt: its
still selling people indiscriminately on a level of education that employers
dont seem to be asking for.
This situation illustrates a major logical flaw in the college argument: if a
degree confers advantages over people who dont have one, what happens
when more people get one? The benefit is relativethe more people who take
the advice, the less it makes sense. If this is part of the intelligentsias case,
they need not have spent so much time in school: eighth grade dropout Yogi
Berra proved himself perfectly capable of the same error when he said that
nobody goes there any moreits too crowded.
Degrees, of course, are not worthless. Part of the argument in their favor is
that even the underemployed are getting better jobs than those without
degrees. But the advantage is smaller than graduates expect, and shrinking, to
boot. The average college student overestimates how much theyll earn after
they graduate by a massive 45%. And from 2000 to 2007which is measuring
a period of significant economic growth before the recession, mind youthe
earnings for college graduates between the ages of 25 and 54 dropped 8.5%.
And these were jobs that werent especially high-paying to begin with.
The most sobering numbers, however, arent about salaries, but about how
debt can put peoples lives on hold. Almost 45% of recent college graduates
put off buying a house because of their debt, and 55% delayed saving for
retirement because of it. 14% of recent graduates put off marriage on account
of their debt, and 28% put off having children.
The effects of a graduates debt ripple throughout every aspect of their lives,
both personal and professional.
In the next installment, were take a look at dropout rates and post-graduation
dependency.
http://www.forbes.com/sites/thecollegebubble/2014/08/15/overqualified-and-underemployed-the-
job-market-waiting-for-graduates/
