Good news for college students
I've been thinking about the best way to kick things off tomorrow, the first day of school.
One hitch is that the students get younger every year. The ones tomorrow were sitting at their fourth-grade desks, basically unschooled in religious extremism and shoe bombers, when Mohamed Atta and his loony gang of suicidal sycophants crashed jetliners into the World Trade Center, the Pentagon and a field in Somerset County near Shanksville.
That day in fourth grade, peacefully being taught fractions and reading, they had no idea that people like Umar Farouk Abdulmutallab, popularly known as the Underwear Bomber, were being taught how to allegedly please God while simultaneously delivering a blow to the Great Satan and the Little Satan, the U.S. and Israel, respectively, by detonating explosives in their shorts.
Students in my classes tomorrow weren't even born when President Reagan completed his two terms in the White House, so it's unlikely that they know much about how Reagan turned around an economy in crisis by cutting the top federal tax rate on income from 70 percent to 28 percent, thereby creating 19 million jobs from 1981 through 1989 and cutting the unemployment rate from 7.4 percent to 5.3 percent.
From 1980 to 1988, additionally, inflation dropped from 13.5 percent to 4.1 percent, the prime interest rate dropped from 21.5 percent to 10 percent, and the real (adjusted for inflation) gross domestic product grew by 26 percent.
In any case, I think I'll start on a positive note and tell the students they're in the right place, that a college graduate will earn a million more, on average, than someone with a high school diploma — specifically, $2.3 million versus $1.3 million.
On top of earning more, college graduates “enjoy far more job security than workers with only high school or even associate's degrees,” reported Boston Globe correspondent Jay Fitzgerald, while demand for more educated workers “is only expected to grow in coming years” as companies “increasingly demand brains over brawn.”
In “College Graduates Fare Well in Jobs Market, Even Through Recession,” New York Times economics columnist Catherine Rampell reported that the unemployment rate for college graduates in April 2013 was “a mere 3.9 percent, compared with 7.5 percent for the workforce as a whole, according to the Labor Department.”
Even when the jobless rate for college graduates peaked in this business cycle, in November 2010, “it was still just 5.1 percent,” an unemployment rate “close to the jobless rate the rest of the workforce experiences when the economy is good,” Rampell explained.
Regarding the cost of college as an investment, Rampell pointed to a Brookings Institution study that “estimated that the benefits of a four-year college degree were equivalent to an investment that returns 15.2 percent a year, even after factoring in the earnings students forgo while in school.”
That 15.2 percent return is “more than double the average return to stock market investments since 1950,” stated Brookings, “and more than five times the returns to corporate bonds, gold, long-term government bonds or homeownership.”
Regarding the dismal news, like the $17 trillion federal debt they're inheriting, plus the $2 billion in additional federal red ink per day, I think I'll hold off and stay positive the first day.
Ralph R. Reiland is an associate professor of economics at Robert Morris University and a local restaurateur (firstname.lastname@example.org).