Over the past few years, there has been a growing concern that high education costs combined with uncertain employment prospects for recent graduates have created a situation where a college degree is no longer worth the cost. The Research Bunker Blog addressed this topic in a post last year about fiscal challenges in higher education. Our main observation at the time was while the ROI for a degree might not be what it once was, there was still undeniably a need for a college educated workforce. Findings from a recent study by the Pew Research Center have reinforced that idea, and suggest that although the cost of going to college is considerable, the cost of not going is increasingly severe.
The study examined the differences between “Millennial” (age 25 to 32) college graduates and their peers with less educational attainment. It also incorporated an analysis that tracked the results of how past generations — “Silents” (born 1928 to 1945), “Early Boomers” (born 1945 to 1954) “Late Boomers” (born 1955 to 1964) and “Gen X” (born 1965 to 1980) — were faring at comparable points in their career cycles.
A summary of the research states, “On virtually every measure of economic well-being and career attainment—from personal earnings to job satisfaction to the share employed full time—young college graduates are outperforming their peers with less education.” While that isn’t particularly surprising, one eye-opening finding was that the income gap between graduates and non-graduates has widened considerably over the past several decades. A graph contained in Pew’s report tells the story: While adjusted incomes (in 2012 dollars) for college graduates have risen modestly since 1986, they have actually declined for those with less educational attainment.
Income is only one of several metrics where the economic gap between college graduates and non-graduates is increasing. Some other examples from the summary:
- Twenty-two percent of Millennials with only a high school diploma are living in poverty, compared with 6% of college-educated Millennials. In 1979, only 7% of comparably aged Early Boomer high school graduates lived in poverty, compared to 3% of college graduates.
- The unemployment rate for Millennials with only a high school diploma is 12.2% compared to only 3.8% for college graduates in the same age group, and almost three times the unemployment rate of comparably aged high school graduates in 1965.
- It takes longer for Millennial high school graduates to find a job compared to Millennial college grads (31 weeks vs. 27 weeks). By contrast, in 1979, high school educated Early Boomers only needed 12 weeks.
The data paints a fairly stark picture of the future prospects for American workers with lower levels of educational attainment. While that is a public policy concern in its own right, the obvious takeaway of this study from a higher education perspective is that colleges and universities have a very compelling story to tell when they counter the critics who question the value of a degree. Institutions of higher learning can and should reinforce to prospective students that, now more than ever, they are key to accessing economic opportunity in the United States.
Vance do you think there is any self-selection bias in the college education stats? Meaning the type of person who earns a degree is much different that the person that doesn’t earn a degree or doesn’t go to college at all? So the key differentiation is the actual type of person versus the actual college education?
George, I think the phenomenon you describe is a factor, but not necessarily the key factor. It’s true that some (but certainly not all) of the people who don’t go to college don’t have the aptitude to do college-level work. Those people would have a hard time with a lot of higher paying white collar jobs. Similarly, there is a segment (but again, not all) of people who start college and never finish because they lack the work ethic or drive to complete it. Obviously someone who is challenged in terms of work ethic or motivation will have trouble getting ahead in the workforce.
That said, I think the single biggest factor driving this data is the fact that a large number of employers simply won’t hire non-graduates for the most lucrative jobs anymore. Several decades ago, many did. But now, rightly or wrongly, a person without a degree is not even considered for many positions – even if they are otherwise qualified. In a lot of ways, bachelor’s degrees viewed by many employers now like high school diplomas were in the 1950s or ’60s – sort of a minimal level of qualification and indicator of a base level of desired skills.
Reblogged this on The Marketing Smart Aleck and commented:
This is a post I wrote for the RMS Research Bunker Blog about a recent study that quantified the economic differences between graduates and non-graduates. Even as someone who has been involved in higher education market research for more than a decade, and as someone employed at a university, I was a little surprised at the level of disparity. The situation faced by much of the American workforce is, frankly, worrying and in my personal opinion, calls for a solution beyond simply “college for everyone.” That said, this research serves as a powerful counter-argument against those who believe that the payoff of a college education no longer exists.
Nice post, thanks for sharing. I also think the shear amount of debt that many individuals take on and how that debt drastically alters the course of their life and the decisions that they make is a factor that can’t be left out.