By Watson Scott Swail, President & Senior Research Scholar, Educational Policy Institute
An article posted yesterday in MarketWatch trumpeted that 9 out of 10 new jobs are going to those with a college degree. The article uses data from Georgetown’s Center on Education and the Workforce.
It is important to note that these data—while accurate—are also cherry picked from a very specific time period that overemphasizes the importance of a college degree in today’s economy. The article also notes that employers will “demand” that replacements for those leaving the workforce (e.g., Baby Boomers) will be better trained rather than “let them learn on the job.” But the reality is that there is enough of a glut of BA earners that employers simply filter out everyone else.
We can all safely assume that someone with a four-year degree has more knowledge and expertise than someone with a two-year degree, and that those individuals have more knowledge and expertise than those with only a high school degree. And so on. But how much of that is based on maturation rather than what they have learned? I hear often in the workforce that those with associate degrees are more employable, with respect to skills and work ready, than BAs, depending on the job. As well, how more prepared are BA grads due to age maturation rather than what they have learned? I can argue both sides of the point, but regardless, we need to hear more arguments.
Our employers have made the college degree a self-fulfilling prophecy by filtering out non-BAs for certain jobs that once went to those with less than a BA and, in some cases, high school graduates. Those who have recently looked at monster.com or indeed or any of the other job walls on the internet will understand this clearly: the bot systems are preferential to those with higher degrees. Thus, if you do not have a higher degree, your application may not get considered or even accepted for a position. In addition, these systems are also preferential to those who will accept a lower salary by asking what salary a prospective employee would accept, thus lowering the cost to employers. This economy, where the competition for decent employment is remarkably high, is forcing graduates to reduce their expected wage simply to get hired.
Building an entire economy based on the principle that the BA is a holy grail is dangerous because it increases the debt burdens of individuals and parents. Much of the price tag of college is paid for by student and PLUS loans, as well as disbursements from retirement funds for those who have them. Data illustrate that graduates are more likely to delay retirement and the purchase of a house than ever before, and, according to CNN Money, the rising cost of college will result in “weaker spending and wealth accumulation among young consumers in the years to come.”
In the end, our economy is pushing individuals and families towards debt levels that this nation has never seen before. According to the other EPI, the Economic Policy Institute, half of all workers have no retirement savings at all. In fact, those workers between the ages of 21 and 37 are more likely not to have retirement funds. It is true that those with a college degree are more likely to have retirement funds than others, but that is largely due to the fact that the employers who hire those people are more likely to have retirement plans available than other companies. It isn’t because of the BAs… it is because of the type of company. Those who hire skilled workers, for instance, are less likely to have retirement plans in place, especially if they have 50 or less workers on staff, freeing them from certain federal requirements, including participation in Obamacare.
In January of this year, I posted BLS data in The Swail Letter that accurately illustrated where the growth of US jobs will be in the next decade. Of the top occupations, by number of jobs, none of the top 10 will require a postsecondary degree or credential (see below). That stated, many of those jobs will go to those with BAs and other credentials simply because employers will filter for those people. Food prep, retail sales, cashiers—many will have an earned associates or bachelors degree. The US will have the most well-educated service workers with the highest level of debt this world has ever seen. And while the economy is humming along at record levels with respect to employment rates, there are also more people who are part time and without benefits than at any other time in history.
What does this mean for the future? It is always difficult to predict, but I foresee an economy crash in the next decade that could rival the Great Recession of 2007 once current fiscal policies come home to roost. The cost of the ill-advised tax cuts, which produced the largest deficit in US history, will hit the economy hard when our loans are called in. The reduction of fiscal protections via the weakening of Dodd Frank, as well as the increasing cost of health care, will also have severe implications on the earning and retirement, if not total welfare, of all Americans, including those with college degrees. Our elderly will need help, both physical and fiscal, beyond anything we have ever seen as this nation continues to grow grayer.
Getting a college degree is a good thing. Please do not misinterpret my critique. But it can’t be the only thing that makes our economy tick or will go upside down very quickly. Rhetoric overstating the importance of a college degree in lieu of other important credentials in the workforce isn’t extraordinarily helpful.