Shubhsri Rajendra

Ms. Lori Bedell

CAS137H

4^th December, 2015

                  

                                    Why is a College education much more important now?

In today’s world, one can definitely say that young adults have it harder than their previous two generations. This is confirmed by a survey by The Daily Mail which used 4,000 people of two different generations as its subjects. In this 2013 survey, people in their twenties believed that their parents had it easier and the older generation agreed (“Life is harder today than it was 40yrs ago”/Mail Online). The earlier generation suffered from far lesser stress and could work part time and pay to go to college or skip it altogether and work their way to the top. Today, high school graduates have no other option but to either, depend on their parents’ money or to get a large loan to finance their education. However, due to increasing cost of living, a very competitive job market, high school degrees losing value and various other factors, students today cannot afford to skip a college education.

 

College degree doesn’t always promise positive returns like definite employment and/or adequate wages. This is evident from the statistics reflecting the employment and the real wage rate. For young college graduates in 2014, the unemployment rate was 8.5%, compared with the 5.5% in 2007 and the underemployment rate was 16.8%, compared with 9.6% in 2007(“The Class of 2014”/epi.org). Also, the real wage rate, which is the wage adjusted according to inflation has seen some drastic changes. Since 2000, the real wages of young high school graduates have dropped 10.8 percent, and those of young college graduates have dropped 7.7 percent (“The Class of 2014”/epi.org). Despite being aware of such drastic fall in a college degree’s returns, more students are opting to go to college than before. This theory is reinforced by statistics showing the change of opinion over time. For example, in 1978, only 49% of Americans thought that a college degree was needed to “get ahead”. However, by 2009, the number had gone up to 73% (“College admissions”/www.growandflow.com). The increase in the value placed in college education is also reflected by the Government’s monthly news release about the college enrollment and work activity release. It shows an increase in the number of students aged 16-24 yrs old who are enrolled in college from 65.9% in 2013 to 68.4% in a span of just one year (“Enrollment and Work Activity of 2014 High School Graduates."/ Govt. news release). The question that now arises is that even if the returns have decreased, why is the importance of a college degree increasing? Why are students deciding to spend an enormous amount of money to go to college instead of getting vocational training that might be much cheaper to acquire and will provide immediate results?

 

Before 1965, American colleges’ population mainly consisted of males from middle or upper income families. This lack of diversity reflected how a college education, rather than a necessity, was more of a choice- something not extremely crucial to ensure a decent living. In fact, after the World War II, the difference between the average wages of high school and college graduates was small and shrinking (”The Changing Landscape of Higher Education”/The Future of Children). After 1950, however, the trend moved in the opposite direction and accelerated as the demand for highly skilled labor increased as information technology assumed an ever-growing role in the U.S. economy (”The Changing Landscape of Higher Education”/The Future of Children). In the later years, the civil rights movement acted as a catalyst and influenced higher education by challenging public laws and practices that excluded blacks and other minority groups from attending some colleges and universities. Finally, in 1964, Congress passed the Civil Rights Act, which outlawed discrimination based on race in schools, public places, and employment and mandated equal opportunity for women (”The Changing Landscape of Higher Education”/The Future of Children). By the late 1960s, civil rights activists broadened their perspective and helped launch various Great Society programs that funded education and job training programs to help low income Americans (”The Changing Landscape of Higher Education”/The Future of Children). The effects of these changing laws and attitude was an increase in the college enrollments, as is evident from the numbers showing that total fall enrollment increased from just over 5.9 million students in 1965 to about 17.5 million students in 2005 (”The Changing Landscape of Higher Education”/The Future of Children).  As these college students graduated, they were more skilled and competent than their peer who had just a high school degree. As a result, firms were more willing to spend money on these more competent white collar worker’s wages rather than on applicants with only a high school degree. This triggered the need for skills which could be learnt at college and thus increased the importance of a college education.(”The Changing Landscape of Higher Education”/The Future of Children). 

 

Technological advances also led to an increase in the number of white collar workers. Most of the technological improvements and the substitution of machinery for manpower proceeded much more rapidly in farming, mining, and many types of manufacturing than they did in most of the service-producing industries. As a result, more workers were demanded in the service sector than in the manufacturing sector where the workers were being replaced by machines (“White Collar, Blue Collar: Job Trends”/ James G. Maddox). Thus, there was a sharp rise in the amount of white collar workers in the economy which rose from approximately 22 million in 1950 to 35 million in 1968—a gain of almost 59 percent. In contrast, the number of blue collar workers— craftsmen, foremen and other lower-skilled nonfarm laborers—increased from 23 million to 27 million, or only 18 percent (“White Collar, Blue Collar: Job Trends”/ James G. Maddox). Even within the white collar group, the most rapid rates of increase were among professional and technical workers, whose number rose from less than 5 million in 1950 to over 10 million in 1968, and among clerical workers, whose number increased from under 8 million to almost 13 million (“White Collar, Blue Collar: Job Trends”/ James G. Maddox). These were essentially the. This upward shift reflected changes in the kinds of workers being demanded- skilled and competent ones. Additionally, as mentioned earlier, it also indicated that the educational level of the workforce was rising as was the competition in the job market- a phenomenon that has continued till date.

 

It is common knowledge that college educations have become significantly expensive from what they used to be- $15,000/year in the 1970s to almost $46,000/year in 2013, the student debt topping $1 trillion ("Is College Education Worth It? Clearly Yes."/Upshot article on www.nytimes.com).  Some graduates are not finding jobs and even more accept jobs for which they feel overqualified ("Is College Education Worth It? Clearly Yes."/Upshot article on www.nytimes.com). However, according to an article on Upshot, which also made it to the New York Times’ edition published on May 27, 2014 a college degree is still valued enough to inspire kids to go to college. According to the writer of this article, this is because “pay gap between college graduates and everyone else reached a record high last year, according to the new data, which is based on an analysis of Labor Department statistics by the Economic Policy Institute in Washington”( "Is College Education Worth It? Clearly Yes." /Upshot article on www.nytimes.com).  In 2014, Americans with a college degree were earning 98% more per hour on an average as compared to people without a degree- which was up from 89% five years ago, 85% a decade ago and 64% in the early 1980s ("Is College Education Worth It? Clearly Yes." /Upshot article on www.nytimes.com). According to Tony Carnevale, the director of Georgetown University Center on Education and Workforce Students, this is because mundane work is now being outsourced. Also, computers are taking over the repetitive work. What are left are more complex tasks that require people to solve problems and work together. In his words, “Skills that used to be reserved for senior technical people or managers are more and more required of everyone. And these skills are developed in college (“The Value of a College degree”/Emily Hanford).”  

Another rather surprising factor that contributes to the problem is the Great Recession. The recession left millions unemployed for prolonged spells, with recent young graduates entering the workforce being particularly vulnerable. Because of the slow paced recovery, seven classes of students graduated into an acutely weak labor market and had to compete with more-experienced workers for a limited number of job opportunities(“The Class of 2015”/ Elise Gould). However, even worse off than the college graduates are the high school graduates. In 2014 (since the class of 2015 hadn’t graduated when the article was published), the unemployment rate was 19.5 percent (compared with 15.9 percent in 2007), and the underemployment rate was 37.0 percent (compared with 26.8 percent in 2007)(“The Class of 2015”/ Elise Gould). It is much worse that the underemployment and unemployment rates of college graduates in 2014- 14.9 percent (compared with 9.6 percent in 2007) and 7.2 percent (compared with 5.5 percent in 2007) respectively (“The Class of 2015”/ Elise Gould). High school graduates have been worse off than college graduates because usually, the former are usually blue collar workers- non-skilled and easy to replace. On the other hand, college graduates possess sets of skills that make them more desirable to firms (“The Class of 2015”/ Elise Gould). Since there is also a very tight competition between the college graduates, the high school graduates eventually end up suffering even more as these college graduates then take up blue collar jobs, taking away their chances of getting those jobs(“The Class of 2015”/ Elise Gould). Thus, the competitions that the high school graduates are not even a part of ends up affecting their lives for worse.

 

Last, but not the least, the major factor that pushes students towards higher education is the increased competition. This is partly due to the increase in population. According to the website US News, “Between 2000 to 2010, the population of 18 to 24-year-olds surged from 27 million to well over 30 million, a 13 percent increase. By contrast, the increase in children aged 5 to 17 was 1.6 percent. The greatest increase of any age group was for the aging baby boomers -- 31.5 percent for ages 45 to 65 -- who are the parents of these college-aged students” (“Is the College Admissions Bubble about to Burst?"/www.usnews.com). There was also an increase in the number of students considering college. This is evident from the fact that between 1980 and 2012, overall college enrollment rate increased from 26% to 41%. As a result of this increased attendance, the competition to get employment has increased (“Is the College Admissions Bubble about to Burst?"/www.usnews.com). The result of this was the same as what would happen in any economic situation consisting of demand and supply. Since the late 1970s and early 1980s, the rise in U.S. education levels has not kept up with the rising demand for skilled workers (“The Polarization of Job Opportunities in the U.S. Labor Market."/ David Autor). This basically means that the supply (of labor) has been greater than the demand (of labor). Due to this situation of excess quantity supplied and shortage of quantity demanded, there is a competition among the suppliers. As a result, prices (wages) fall. Here the employers are winners and the competent applicants have to compete with each other to get the numbered jobs. This competition makes it even more essential to have the necessary skills and qualifications and thus increases the value of a college degree.

 

To make this competition worse, firms tend to outsource jobs in order to cut costs as the labor abroad is equally, if not more, competent than the domestic labor and willing to work for lower wages. Data shows that since 2001, firms in the United States of America have outsourced about 3,200,000 jobs to China with a whopping 2,383,000 jobs being outsourced in just one year-2015. Data also suggests that India, with the highest overall rating of 7.1, is the most preferred country by the firms ("Jobs Overseas Outsourcing Statistics."/Statistic Brain). The phenomenon of outsourcing intensifies the rivalry in the already competitive in the job market, increasing the desperate need for a college degree.

To conclude, even though the returns from the college degree have decreased, the importance of one remains high. College education has become more important now than it was in the nineties. This is majorly because of decreased average pay in all sectors of the economy- especially for people with only a high school degree or less also contribute to the need for a college education. Also responsible is the effects of the Great Recession that are still felt in the job market. And, at last, is the increase in the population itself and an increase in the number of students applying for colleges, which increases competition. This is also made worse because of outsourcing of jobs, and thus increasing the need of a college degree.  Thus, a college education is now a necessity unlike what it was ten years ago- an option.

 

 

Bibliography:

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Hanford, Emily. "The Value of a College Degree." The Value of a College Degree. N.p., n.d. Web. 01 Dec. 2015. <http://americanradioworks.publicradio.org/features/tomorrows-college/dropouts/value-of-college-degree.html>.

Gould, Elise. "The Class of 2015: Despite an Improving Economy, Young Grads Still Face an Uphill Climb." Economic Policy Institute. N.p., 27 May 2015. Web. 01 Dec. 2015. <http://www.epi.org/publication/the-class-of-2015/#introduction-and-key-findings>.

"Is the College Admissons Bubble about to Burst?" N.p., 22 Sept. 2014. Web. <http://www.usnews.com/news/blogs/data-mine/2014/09/22/is-the-college-admissions-bubble-about-to-burst>.

Autor, David. "The Polarization of Job Opportunities in the U.S. Labor Market." The Brookings Institution. N.p., 30 Apr. 2010. Web. 01 Dec. 2015. <http://www.brookings.edu/research/papers/2010/04/jobs-autor>.

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