Monday, April 16, 2012

The Diminishing Returns of a College Degree

Not all that long ago, a college education in America ensured not only a job, but elevated socio-economic status. In fact, just as recently as 2007, according to the National Association of Colleges and Employers, more than half of all  college graduates who had applied for a job received an offer by graduation day, albeit, without the elevated socio-economic status. In 2008, that percentage fell to 26%, and in 2009, less than 20%.  Moreover, not all that long ago, one person - usually, the father, even without a college degree - could provide for a family of six, eight, and even ten. Today, it takes two people, sometimes working two jobs, to support a family of four.

Meanwhile, student debt is the only sector growing at an ever-increasing rate since the 2008 financial crisis. The average annual tuition at a private nonprofit four-year college is about $35-40,000! So, now that student debt has reached the $1 trillion mark - the second biggest debt sector for US households - leaving college grads with unprecedented levels of college debt, not to mention, the youth unemployment rate in the US is rivaling many third-world countries, is a college education really worth it? Could it be that those who choose not to attend college may actually end up earning more than their college-degreed counterparts?

Over 17 million Americans with college degrees are doing jobs that require less than the skill levels associated with a bachelor’s degree according to the Bureau of Labor and Statistics. For instance, over 317,000 waiters and waitresses have college degrees (8,000 of those, doctoral or professional degrees), 80,000 bartenders, and over 18,000 parking lot attendants.

It should be more than obvious that public policy designed to create more college graduates isn't really concerned with sustainable jobs for future graduates. The purpose of the policies is to prop up the education bubble and the lending industry that supports it.

So, maybe it's time to reexamine our assumptions about the necessity of a college education, those ideological templates we use to understand the world, especially when, according to the Organization of Economic Cooperation and Development, the US has one of the highest number of employees working in low wage jobs of high paying industrialized nations. One out of every four Americans employed work in jobs that pay less than $10 per hour.

Between NAFTA, tougher bankruptcy laws, the repeal of Glass Steagall, bubbles galore, and and a financial system that might as well be a roulette wheel, the best we can hope for is a low-wage recovery. Newly added jobs are coming from lower paying sectors while productivity increases and profits filter to the top of the economic class. 3,500,000 high-wage jobs lost during recession and only 179,000 have been added so far. Therefore, a college degree that's risen anywhere from 500-1000% since 1970,  in inflation adjusted dollars, is sure to sap  future earnings with few exceptions.

Older Americans are 47 times richer than younger Americans.

In 1984, households headed by people age 65 and older were worth just 10 times the median net worth of households headed by people 35 and younger.

But now that gap has widened to 47-to-one, marking the largest wealth gap ever recorded between the two age groups.”

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