Economic downside to college education
President Obama touted higher education as “imperative” during his re-election campaign.
But record unemployment rates among recent graduates beg the question as to whether a college education is essential and worth the high and rising cost. How should parents, mentors and students approach this vital life decision not faced by previous generations?
In the past, a college degree was pretty much a passport to a relatively respected, secure and high-paying job worth an extra $1 million over a lifetime. That is no longer true.
The Current Population Survey conducted by the U.S. Census for the federal Bureau of Labor Statistics report makes for somber reading. In July, unemployment among American youth rose to a record 50.1 percent. More detailed by October, the data reflected that about 25.8 percent of young Americans ages 16-19 were unemployed. Of those age 20 to 24, the figure was a staggering 63 percent.
Even more concerning, Investors Business Daily reported that “for the first time in history, the majority (57 percent) of jobless (American) workers have attended college.”
Finally, the Department of Labor reports that 52 percent of those who attended college (but did not necessarily graduate) are unemployed. Allowing for the fact that colleges experience a dropout rate of about 50 percent, this indicates that about 26 percent of college graduates are unemployed.
With the ending of the Cold War, globalization spread. Under President Reagan's and British Prime Minister Margaret Thatcher's economic policies, free enterprise capitalism was embraced. A vast flood of new, highly motivated but lowly paid workers entered the global labor pool.
Jobs were exported from Europe and the United States, where unemployment rose. As labor pay rates increased in Asia, many jobs were tempted back to Europe and America. However, they have tended to be technology-oriented and highly skilled positions.
The stark lesson for European and American youth is that future employment still favors those with education and skill. However, the college education and skills must meet the needs of industry and commerce.
For example, skilled welders are highly paid. The job is tough and demands ability with math. Yet it does not require a college degree with the potential liability of a large student loan that may take years to repay.
Nevertheless, a college degree remains an accolade and is a must in certain occupations. Students who may be tempted by degrees in poetry, American studies, social sciences or literature will find that business will offer them few opportunities and little reward. Even architecture graduates face 14 percent unemployment.
To increase productivity, many companies invest heavily in technology, so students with computer-related degrees should continue to find jobs with relative ease. Because business decisions are based on economic data, companies offer high salaries to graduates with degrees in economics, finance, math and accounting. Economics degrees can command average starting salaries of $78 per hour.
Those kinds of earnings may support the repayment of student loans — without threatening a graduate's credit score.
John Browne, a former member of Britain's Parliament, is a financial and economics columnist for Total Trib Media. Email firstname.lastname@example.org.