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The payoff of college isn’t what it used to be.

These days, many college-educated workers are struggling to get by with stagnating and falling wages.

This is not to suggest that an “education premium” no longer exists.
But the reality of the country’s educated workforce nevertheless is looking more and more like that of blue-collar workers, who have faced an attack on their living standards for decades.

Media reports abound about how liberal arts degrees—in English, philosophy, anthropology and sociology, to name some—don’t translate into solid jobs. That’s why you can talk to a barista at Starbucks about Hegel’s “Philosophy of Right.”

And sadly, students are graduating with substantial college loan debts, which society-wide amount to more than our collective credit-card debt.

The advantage of a college degree--being able to count on a good job with a solid and growing paycheck—seems to be slipping away as our country becomes more unequal.

A report by the Center for College Affordability and Productivity in January shows that 48 percent of recent college graduates have jobs that don’t require a college degree. And 38 percent are working in jobs that don’t even require a high-school degree.

So, what’s going on?

This trend is another part of the story of the decline of our living standards—disappearing unions, soaring inequality, declining and stagnating wages, the loss of job security, and the erosion of pension and health benefits.

Since the end of Great Recession, the ultra-rich snatched up virtually the entire income gain. Just about everyone else is running in place or falling down. Even college graduates with advanced degrees can no longer be sure that they will be reasonably insulated from the falling and stagnate wages that have hit workers without college degrees for so many years.

The De-skilling of the Workforce

During the 1980s and 1990s, demand was high for college graduates with technological skills. But the demand fell off as the technological revolution evolved, according to a report, “The Great Reversal in the Demand for Skill and Cognitive Tasks,” by economists Paul Beaudry, David A. Green and Benjamin M. Sand.

“In this maturity stage having a B.A. is less about obtaining access to high paying managerial and technology jobs and more about beating out less educated workers for the barista or clerical job,” Beaudry, Green and Sand explain.
The three economists say that, “in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditional performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together.”
Globalization has, of course, also pushed down the wages of skilled information technology workers, who have seen their jobs shipped off to Bangalore, India.

So, what’s happened to wages of college graduates?

A New York Times editorial in March pointed out that the average pay of workers with bachelor’s degrees rose modesty from 1979 to 1995. Their wages went up an average of 0.46 percent each year, while the pay of workers without college degrees—the majority of workers—declined. The wages of everyone increased from 1995 to 2000. But since 2000, the pay of non-college educated workers has dropped while that of college-educated workers has stagnated.

One third of college-educated workers are working in jobs that don’t require a college degree, according to a recent study by the Federal Reserve Bank of New York.

The January report, “Are Recent College Graduates Finding Good Jobs?,” found that the percentage of recent graduates who are unemployed or underemployed (working a job that does not require a bachelor’s degree) has increased, particularly since the 2001 recession. What’s more, the quality of jobs accepted by underemployed graduates has worsened, leading many of them to accept low-wage jobs or part-time work.

Among the key findings of the report:

• the underemployment rate of recent college graduates is higher than that of college graduates as a whole

• the underemployment rate has been on the rise since 2001.

While the underemployment rate in 2012 (44 percent) is roughly the same as the rate (46 percent) during the 1990-91 recession, the quality of the available jobs has deteriorated over the past couple decades.

Rising Underemployment

Years ago, college graduates working below their educational level could at least reasonably count on finding a good “non-college” job, perhaps as a dental hygienist, mechanic or electrician, with a typical wage equivalent to $45,000 in 2012. The share of underemployed recent graduates with jobs like those has dropped from about half in the early 1990s to 36 percent in 2009 according to the Fed report.

Today, the share of underemployed recent graduates with low-wage jobs is on the rise. This group accounted for 20 percent of the underemployed new graduates in 2009 compared to 15 percent in 1990, according to the Fed report, whose authors are Jaison R. Abel, Richard Deitz and Yaqin Su. The low-wage jobs filled by the college-educated workers include bartenders, food servers and cashiers, whose wages averaged under $25,000 in 2012.

Among 22-year-old graduates, more than half, or 56 percent, were underemployed in 2009-2011, according to the Fed report. For many, it will take years to find a job that matches their educational background. But by then, the damage will have been done.

As the report notes, “recent research suggests that those who begin their careers during such a weak labor market recovery many see permanent negative effects on their wages.”

So, the prospects for the Class of 2014 look bleak. Recent graduates with degrees in business and science face a tough labor market, and the future is less bright for graduates with majors in the humanities.

Tragically, the devaluation of the humanities also means that our educated workforce increasingly lacks analytical and critical thinking skills, a trend that worries business schools, not merely those who appreciate the value of a liberal arts education. But that’s another story.

What’s clear now is—to borrow the title of the 1996 book by former AFL-CIO President John Sweeney—America needs a raise.

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Comment Preferences

  •  Which is why I struggle to understand (3+ / 0-)
    Recommended by:
    River Rover, nextstep, Sparhawk

    why people are still voluntarily burying themselves in student debt.

    If you have a specific job/field of study with a high probability to achieve an ROI on your education costs, that's one thing.

    But seriously... if you can not afford to pay for college, people really need to start thinking about NOT GOING.  ..at least for now.

    Go get a job.  Save.  Work.  Get experience.  Figure out exactly what kind of career you want to go after and then consider going back to get the specific degree you need.

    College is not 13th grade that you should show up at because you graduated high school.  You Communications and PoliSci degrees are not going to help you.  Don't take on that kind of debt at such a young age with ZERO job prospects.

    I don't get it.

    Красота спасет мир --F. Dostoevsky

    by Wisper on Fri Mar 28, 2014 at 08:10:43 AM PDT

    •  I agee, debt is the real problem (1+ / 0-)
      Recommended by:
      nextstep

      If you are debt free, you have a lot more flexibility and that remains true throughout your life.  The worst possible financial lesson for young people is debt.

      I am skeptical of some of the horror stories for very young recent graduates.  Lots of young people don't settle into a career right out of college.  That was even true back in the '70s when I graduated.  But the difference is we had little debt.

      •  The solution is to fully fund higher education (2+ / 0-)
        Recommended by:
        ricklewsive, Cassandra Waites

        Instead of requiring  students to take on massive loans.

        It's not easy to get passed, but it's easy to do.

        I am skeptical of some of the horror stories for very young recent graduates.  Lots of young people don't settle into a career right out of college.  That was even true back in the '70s when I graduated.  But the difference is we had little debt.
        The big difference is that people simply can't find jobs a lot of the time now. There are problems for college grads, but worse ones for people with less education. But even college grads fresh out of school have a very hard time of it now. I've seen a lot of talk of ageism again older people, but young people are really bearing the brunt of it because they don't have experience. It's brutal out there.

        If knowledge is power and power corrupts, does that mean that knowledge corrupts?

        by AoT on Fri Mar 28, 2014 at 08:38:47 AM PDT

        [ Parent ]

        •  I agree we need to fund higher ed (2+ / 0-)
          Recommended by:
          CFAmick, AoT

          but I also know cases like my cousin who had and very much enjoyed one of those bartending jobs after college before settling into a very lucrative career in commercial real estate.   Lot's of young singles who don't fall right into a career out of college spend a few years exploring interests, cities, options and if you have few obligations that can be a great thing, the only time in your life you may have the opportunity to do this.

        •  End Financial Support for Private Colleges (2+ / 0-)
          Recommended by:
          AoT, jbsoul

          move those funds to state colleges and universities.

          As Democrats we need to extend our objection to public funding of private K-12 education to higher education as well.  We should not have public funds supporting private education at any level.  We don't want to fund private education at the k-12 level when all states have compulsory government funding for k-12, why should the government fund private education after high school?

          Much of the rise in college education costs has been with state universities which provide the bulk of undergraduate education, public funds that go to private university should be redirected to its proper place.

          This redirection of public funds should include loans, grants work/study funding from public funds.

          The most important way to protect the environment is not to have more than one child.

          by nextstep on Fri Mar 28, 2014 at 11:33:31 AM PDT

          [ Parent ]

      •  Things were different in the 70's (1+ / 0-)
        Recommended by:
        AoT

        If you look at the statistics, it says that 48% of recent graduates are doing things that don't require a college degree. So at that point, it's not about settling for a career, it's about finding a job that allows you to pay off your loans as quickly as possible.
        Also, businesses are demanding more education for jobs that wouldn't even require a degree years ago. There is no reason an assistant manager at a Hollister should be required to have a four year degree! But with the huge influx of overqualified people applying for those jobs allows them to make those kind of things necessary.

      •  OTOH, without either education or training, (1+ / 0-)
        Recommended by:
        jbsoul

        prospects for job advancement are poorer, so it's a gamble between having poor prospects and less debt and having slightly better prospects and more debt. Which bet ends up winning is a crapshoot.

        Information is abundant, wisdom is scarce. ~The Druid.
        ~Ideals aren't goals, they're navigation aids.~

        by FarWestGirl on Fri Mar 28, 2014 at 12:09:01 PM PDT

        [ Parent ]

    •  A few reasons (6+ / 0-)

      First and foremost because as a society we have pushed the necessity of college for decades now and there's a lot of cultural inertia involved in that. People go to college because they're expected to go to college, because it is treated as a 13th grade.

      Second, because it does in fact make it easier to find a job. The unemployment rate for college grads is half the unemployment rate for non-college grads. And the average pay difference is significant, around 17k now. And you make more money and are more likely to have a job even if you have a degree like philosophy or Political Science. So yes, a degree in PoliSci or Communication will help you.

      If knowledge is power and power corrupts, does that mean that knowledge corrupts?

      by AoT on Fri Mar 28, 2014 at 08:33:40 AM PDT

      [ Parent ]

      •  Would you do that in any other area? (0+ / 0-)

        People are expected to buy a house.  Would you rush out and buy a house you know you couldn't afford with no job, experience or job prospects?  

        I mean, if you have any kind of free ride, scholarship or ample parental funding or whatever, sure... have at it!  College is great.  But if someone told you to sign away TENS OF THOUSANDS OF DOLLARS and carry that debt for years just because you should, wouldn't you pause?  Wouldn't you think, at least for a second, "You know, I'd really like to but I can't afford it."?  Wouldn't this at least cross your mind?

        It crossed mine at that age, I can tell you that.

        Id rather find a field or job where I might have opportunity then making a horrible decision to take on $40,000+ in compounding debt so I can beat out the HS-grad guy for an extra shift somewhere making a buck more then minimum wage.

        Plus the years... 4 more years of your young life spent cloisterd in school.. not working, not getting experience, not figuring out actually what you want to do and/or where you want to live.  Just an obscenely expensive 4-year extension of childhood so you can get into a diluted job market that much later, still with no appreciable skills.

        The only thing worse then that are the people that somehow wrap their mind around the notion of "Well, I cant find a job now so Im thinking about just going back to grad school."  W.T.F.?  You are worried about employment and debt so you are going to sign off another 2-5 years of your life, another few DOZEN thousand dollars of debt you have no ability to repay to get a degree that you STILL don't have any actual prospect to put to use?

        My head spins when I talk to some of these kids.  I mean, good luck with your payments I guess.  They talk excitedly about the classes they are taking to get their "Journalism" or "Theater" degree and tell me "There is more to life then just a paycheck".   okay... I guess...   Their call I guess.

        Красота спасет мир --F. Dostoevsky

        by Wisper on Fri Mar 28, 2014 at 09:17:05 AM PDT

        [ Parent ]

        •  I'd bet that if there was no way (1+ / 0-)
          Recommended by:
          jbsoul

          of taking the house away then people would sure as shit buy a house, even if they couldn't afford it. Especially if you're 18 and fresh out of high school.

          And maybe you knew better, but most people, and especially most 18 year-olds, tend to do what their parents and society tell them. Or at very least believe it when virtually everyone is telling them to go to college.

          Id rather find a field or job where I might have opportunity then making a horrible decision to take on $40,000+ in compounding debt so I can beat out the HS-grad guy for an extra shift somewhere making a buck more then minimum wage.
          This isn't the choice for most people now. For a lot people the difference between a degree and no degree is the difference between a job and no job. I certainly wouldn't have my job without a degree. And it's one of those crap degrees you keep going on about. But without that degree I'd be making minimum wage or just over. You have a skewed view of the state of the economy right now if you think that someone with just a high school education is going to beat out people with college degrees almost anywhere.

          http://www.salon.com/...

          If knowledge is power and power corrupts, does that mean that knowledge corrupts?

          by AoT on Fri Mar 28, 2014 at 09:27:20 AM PDT

          [ Parent ]

          •  Maybe your right (2+ / 0-)
            Recommended by:
            Sparhawk, Bluefin

            I am more then prepared to admit that maybe Im just too far removed.  I'm Gen X, not Millennial.  I am an interviewer almost every week; not an interviewee.

            I get that.

            But when I see my sister-in-law with her 4-year degree from a prestigious school waiting tables with a bunch of people that never went to college, I can't think that the ones that dodged the $160,000 worth of tuition/room+board/books/fees are the ones better off in this arrangement.

            When I look at the two women working on my HelpDesk and one is a 25 year old with a HS diploma that has been working shit jobs in IT since she was 18 and now has 7 years of experience, multiple certifications and is a regional team lead making $75k and the other one is a 26-year old with a Bachelors in "Information Systems" from some private school in California and only has 3 years of experience and is making less than 80% of the 25-year old AND has a student loan bill that is probably higher then my car payment... ... Well,...  I bet I have a good idea of who has an easier time making their rent every month.

            I don't know... College is an investment.  And if it doesn't pay off that makes it a bad investment for some folks.  One size doesn't fit all on this and I know how much I struggled when I was starting out... I couldn't imagine having to do it with $50,000 in debt around my neck.

            Красота спасет мир --F. Dostoevsky

            by Wisper on Fri Mar 28, 2014 at 09:48:28 AM PDT

            [ Parent ]

            •  If you go to an expensive private school (1+ / 0-)
              Recommended by:
              Bluefin

              on student loans and rack up debt then you're a fool. I went through community college and then went to a state school and still ended up with debt, but not as much as I would have had if I went to a fancy private school.

              Also, ten years ago, or even five really, it was a completely different job market coming out of school. There were jobs that you could get without a degree and work and get experience. I did that, both before and after I got my degree. But that's not really out there now, from what I can tell. All kinds of places require degrees now. My job wouldn't have hired me without one and I'm glorified data entry.

              Things substantially changed and they did so quickly and the way people, both students and people who hire, think about college hasn't changed along with that.

              If knowledge is power and power corrupts, does that mean that knowledge corrupts?

              by AoT on Fri Mar 28, 2014 at 10:02:18 AM PDT

              [ Parent ]

    •  Agree (0+ / 0-)

      With the third paragraph.

      NOTE: For some reason, about a month ago, my Firefox browser stopped allowing me to right click, copy, and paste. It's not an option. ?

      Sort of disagree with your last paragraph. Colleges sell their programs to current and prospective students, and certainly professors, as well. At the same time, for most jobs that require a BA, one is as good as another.

      I'm living in America, and in America you're on your own. America's not a country. It's just a business.

      by CFAmick on Fri Mar 28, 2014 at 09:15:45 AM PDT

      [ Parent ]

    •  From my experience (1+ / 0-)
      Recommended by:
      AoT

      in a historically black university, they lure you in with a scholarship, which you then lose, then people have to deal with either dropping out of school, and having to go back to their family as a failure, or try and stick it out with loans. Or they join the army.

    •  Combination of putting off the inevitable and (2+ / 0-)
      Recommended by:
      AoT, jbsoul

      hoping that the job market with be better in 4 years. Or four years beyond that.

      Anticipation of which degrees may be useful several years from now is the crapshoot. And the house wins an awful lot.

      Information is abundant, wisdom is scarce. ~The Druid.
      ~Ideals aren't goals, they're navigation aids.~

      by FarWestGirl on Fri Mar 28, 2014 at 12:06:11 PM PDT

      [ Parent ]

  •  Even in fields that require a college degree, (6+ / 0-)

    workers face permanent wage loss. Teachers and other public employees in many states have had their wages cut and/or frozen, potential merit increases eliminated, and benefits slashed to provide tax cuts to the richest.

    “The future depends entirely on what each of us does every day.” Gloria Steinem

    by ahumbleopinion on Fri Mar 28, 2014 at 08:26:32 AM PDT

    •  Absolutely. The investment that we should be (2+ / 0-)
      Recommended by:
      AoT, jbsoul

      making in human capital and knowledge we are throwing away, and it can't be recaptured. Anything done later is bogged down in makeup for what wasn't done timely.

      The system that the GOP, etc are/have been forcing on us has used up the interest and is blowing through the principal. The concept of investment has gone or been buried, the looting and 'raider' strategy has taken over and become entrenched.

      In undermining another whole generation, we are eating our seed corn.

      Information is abundant, wisdom is scarce. ~The Druid.
      ~Ideals aren't goals, they're navigation aids.~

      by FarWestGirl on Fri Mar 28, 2014 at 12:15:05 PM PDT

      [ Parent ]

  •  My view is a shift from education to training. (6+ / 0-)

    Because employers now consider employees interchangeable at will, there is no long term thinking that uses a person's education and experience to develop them within their workforce.  Now, there is a bias towards training rather than education and schooling is promoted as a consumer choice.

    This has led to a dumbed-down society that thinks being trained for specific tasks that may disappear in the future amounts to an education.

    Employee development and training is increasingly rare as the bean counters see this only as a cost to the bottom like.  So, somebody educated in the humanities, an education that may have taught them to investigate and balance complexities of thought, is considered useless.  Yet, growing up in the 60s and 70's corporations would recruit such people as staff in an upwardly mobile environment.

    Then MBA's happened.  

    On spreadsheets, interchangeable low-wage workers are easy to create.  I don't think that model is valuable for the long-term except in creating a society of sharecroppers.

  •  Learn to weld. It's not easy and you get burned (1+ / 0-)
    Recommended by:
    Bluefin

    a lot, but there is a lot of welding that can't be done by robots.

    Rivers are horses and kayaks are their saddles

    by River Rover on Fri Mar 28, 2014 at 10:21:31 AM PDT

  •  Higher ed is a bubble, and it has now burst. (1+ / 0-)
    Recommended by:
    jbsoul

    It used to be a great product, but we oversold it (insisting everyone had to go to college, expanding the student loan racket), and we overpriced it (especially through ridiculously luxurious physical facilities and salaries to parasite administrators). I'm not at all surprised Americans are having second thoughts now.

    Incidentally, I'm a university professor.

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