College Payoff Goes Missing
New York Times
One of the primary goals of the Obama administration is to increase the number of people who obtain college degrees. At the same time, one of the primary complaints of the young people at the various "Occupy Wall Street" demonstrations around the country is that they can't find jobs that demand their newly acquired credentials.
What's going on here?
There is a good bit of research coming out that tells us we have too many college educated workers — that, instead of a huge demand for people with college degrees, we have an oversupply of well educated workers and too few jobs that demand university educations.
This goes against what we’ve been hearing from newspaper columnists and the U.S. Chamber of Commerce. They tell us that the country needs more people to go to college if we expect the economy to keep growing and for America to fend off international competitors.
Certainly the averages say that nothing beats a college education. On average, people with college degrees earn more and are much more likely to be employed than those with only high school diplomas. The payoff for people who go to college is real.
Then again there’s the nephew test. What percentage of your nieces or nephews are working at jobs that demand a college degree?
If you said about half, then you’d be hitting the average that researchers Andrew Sum and Paul Harrington find among recent college graduates. The two economists find that 40 percent of recent college graduates are working at jobs that don’t require college degrees.
Among all college graduates, 25 percent are working jobs that don’t require that much education. New England is producing 35% more college degrees than are required for either current or future jobs.
Sum and Harrington describe a state of “malemployment” for many college graduates. They describe this as “the inability of a college graduate to find a job that effectively uses the knowledge, skills and abilities acquired in college and relegates them to employment in low-skill and generally low-wage occupations that don’t utilize college-level proficiencies.”
For instance, nearly six out of ten bartenders have at least some college education. More than 15% have either a bachelor’s or a master’s degree.
The New York Times found that among young college graduates (age 25 to 34), “the number of these workers employed in food service, restaurants and bars had risen 17 percent in 2009 from 2008, though the sample size was small. There were similar or bigger employment increases at gas stations and fuel dealers, food and alcohol stores, and taxi and limousine services.”
This is the nephew phenomenon. Sum and Harrington find that nearly 16 percent of young college graduates (under 25) work in retail sales. Nearly 10 percent waited tables, and another six percent were secretaries or office assistants.
This translates into earnings. Yes, college educated bartenders tend to make slightly more than barkeeps with only high school diplomas. But the real advantages of a college degree come with snagging a job that demands a college education.
Sum and Harrington find that “most of the economic gains to a college degree are strongly associated with the ability to obtain employment in the college labor market in occupations that utilize the knowledge, skills and abilities developed as part of a program of study leading to a college degree.”
And that gets us to part two of this story. MIT economist David Autor describes a “polarization” in the nation’s job market.
Since the 1970s, the job market has grown on two ends of the skills spectrum. There are growing demands for people with high skills. And there has been a large number of jobs created for people with minimal skills.
“Employment growth is polarizing,” Autor writes, “with job opportunities concentrated in relatively high-skill, high-wage jobs and low-skill, low-wage jobs.”
Autor finds the job picture “disheartening….Rising demand for highly educated workers, combined with lagging supply, is contributing to higher levels of earnings inequality. Demand for middle-skill jobs is declining, and consequently, workers that do not obtain postsecondary education face a contracting set of job opportunities.”
Autor hints that the phenomenon he describes could have a geographic component, as there is an increased “clustering together” of non-college workers. These workers with less education “increasingly compete for similar opportunities in comparatively low-skill, low-wage services.”
A report last year from Harvard's Graduate School of Education found that more money should be spent on training people for skilled occupations that don't require a college degree — electricians, constructions managers, police officers and health-care workers.
A story in the October issue of Harper's Magazine reported that this kind of training "has been a prime casualty of the Obama Administration's degree obsession: the president's proposed 2012 budget will increase overall education spending but cut funding for vocational and technical schools by 20 percent."