College Grads: In Debt and Flipping Burgers
Life + Money

College Grads: In Debt and Flipping Burgers

Alex Rader / The Fiscal Times

What could be more jarring to our nation’s sensibilities than questioning the value of a college degree? Generations of parents have scrimped and sacrificed to fund their children’s tuitions, priming their progeny’s social and economic ascent. The nation has rewarded our troops with access to higher education; we have provided taxpayer-supported loans to college students; our finest schools have raised billions to provide scholarships for the gifted. A college degree sits aside motherhood and baseball in America’s iconography.

Which is why a new piece published by The Chronicle of Higher Education – “The Great College Degree Scam” — is alarming. According to a report by the Center for College Affordability and Productivity (CCAP), “approximately 6o percent of the increase in the number of college graduates over the last 16 years, from 1992 to 2008, worked in jobs that the Bureau of Labor Statistics considers relatively low skilled – occupations where many participants have only high school diplomas and often even less.” Researchers looked at these figures: In 1992, total college graduate employment was 28.9 million, with 5.1 million (17.5 percent) working in low-skill jobs. In 2008, the number of college grads employed increased to 49.35 million, of which 17.4 million (35 percent) were in fields not normally requiring a college degree.”

“In 1992, there were 119,000 waiters and waitresses that held
college degrees; by 2008, that number had soared to 318,000.”

They cite two examples. In 1992, there were 119,000 waiters and waitresses that held college degrees; by 2008, that number had soared to 318,000. The total number of such workers had expanded by more than 1 million over the same time frame; 20 percent of those new openings were filled by college grads. The same pattern emerges for cashiers; 20 percent of new cashier jobs have been taken by four-year graduates.

From this data, the authors conclude that pushing to increase our college graduate pool is misguided. Also, they say the results show that the productivity of our education system has declined precipitously. That is, what used to require 12 to 13 years of schooling now takes 18 years. Next, they say that we need more young people in the workforce to support our aging boomers; young people should not, in effect, waste their time going to college. Finally, they conclude that employers use a college education as a screen for hiring; the cost is minimal to them, but it’s large to society as a whole. Finally, they conclude that underemployment for college-educated youngsters is not a new and merely temporary problem.

This argument is interesting but seems incomplete. Missing from the report is an indication of whether the increase in highly trained workers taking menial jobs has accelerated during the recent recession, or whether the trend has held steady over a longer period of years. The fact remains that the value of a college degree to the individual is very real, and indeed increasing.

A recent report from the College Board notes that the median earnings of full-time workers with a four-year degree were $55,700 in 2008, or $21,900 more than those without such an education. For those between the ages of 25 to 34, women with a college degree earned 79 percent more than those with just a high school diploma. The premium for men was 74 percent. Ten years earlier, those differences were 60 percent and 54 percent. Moreover, the report concludes that after about 11 years working, college grads had earned back the cost of four years’ study – both in terms of time not working and monies spent on tuitions at a public university.

“While the value of the push for more college
graduates to society as a whole may be debated,
the value to the individual is not in dispute.”

It is also true that unemployment during the recent recession has been much worse for those with only a high school degree. In 2009, 9.7 percent of high school grads were out of work; only 5.2 percent of those with bachelors’ degrees were jobless. Thus, while the value of the push for more college graduates to society as a whole may be debated, the value to the individual is not in dispute.

What, then, to make of the data presented? As mentioned, since we have only beginning and ending period data, it is hard to know what role the economic downturn has played. It seems likely that the recession, and consequent rise in unemployment, has allowed employers to upgrade their workforces. For example, the retail trade industry got absolutely clobbered in 2008 (down 5.2 percent compared to GDP growth of 0.4 percent) and in 2009 (off 4.5 percent compared to a drop of 2.4 percent for the economy as a whole). Layoffs were widespread, after 10 years of fairly steady growth. Most employers would choose to keep on their most productive and capable employees, which they no doubt did, skewing the numbers toward a higher percentage of college graduates.

At the same time, career opportunities in their chosen fields for those graduating from college may have been few and far between over the past three or four years; many doubtless took jobs below their skill level as a temporary necessity.

Let us hope that this is not a long-term trend.  The expectation is that over time the U.S. will have a comparative advantage over other nations in industries dependent on intellectual capital – films and software, for instance. Our future depends on such value-added industries, according to the general wisdom. It follows that we need an increased number of highly educated workers ready to assume these “intellectual” jobs.

It may be, however, that with the acceleration in the growth of college enrollment (up 14 percent between 1987 and 1997 and 26 percent between 1997 and 2007), our graduate population has for the moment outgrown job expansion.

It also may be that further analysis will reveal some divide in the value of a college degree based on field of study. For example, how many of those waitresses studied acting, or philosophy – rather than computer science? Or perhaps we will discover that more youngsters are taking on part-time jobs in retail or in food service to make ends meet while they pursue other opportunities. For sure, the report encourages more study.