Is College Worth It? Evaluating the Opportunity Cost of An Education

is college worth it
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Economists high-fived last week when the Bureau of Labor Statistics jobs report showed that the number of jobs had finally climbed back to pre-2008 numbers. However, the report didn’t exactly show the whole picture — first, creatives, freelancers, gig-based workers, and contractors were largely missing. And second, the role of higher education was mostly ignored.

As everyone is asking themselves “is college worth it?”, the real question might be “is college helping?” Or, possibly, “is there such a thing as too many college degrees?”

First, let’s look at the raw fact that, despite increases in the number of people attending college, the relationship employment and college education haven’t changed a bit.

“The one thing that hasn’t changed in the last six years is the education gap,” writes Derek Thompson for the Atlantic. “Six years ago, college grads were 70 percent more likely to be in the labor force than high-school dropouts. Today, college grads are … 70 percent more likely to be in the labor force than high-school dropouts.”

However, during that time, college enrollment grew at a rate much faster than the increase in employment. According to the National Center for Education Statistics, “between 2001 and 2011, enrollment increased 32 percent, from 15.9 million to 21.0 million…From 2011 to 2021, NCES projects a rise of 13 percent in enrollments of students under 25.”

Meanwhile, the BLS shows that between 2008 and 2014, the number of jobs has merely rebounded. Not grown. Not kept up. Just gotten back to where it should be.

“The U.S. economy has grown at a little better than 2% pace since the recovery began in mid-2009,” reports the Wall Street Journal.

Which means that more and more people are taking on the increasingly high cost of a college education — a cost which has ballooned %1,200 in the last 30 years — and then graduating into a market where there really isn’t much for them. Because even though technically unemployment among college students has fallen, it’s fallen because graduates are taking on jobs which don’t actually require those degrees.

“Among 22-year-old degree holders who found jobs in the past three years, more than half were in roles not requiring a college diploma, said John Schmitt, a labor economist for the Center for Economic and Policy Research in Washington,” noted Bloomberg’s Janet Lorin and Jeanna Smialek.

College education also doesn’t seem to be doing much for people of color. One study from the Center for Economic and Policy Research found that African-American college grads were just less likely to be employed, degree or not.

“2.4 percent of black college graduates between the ages of 22 and 27 were unemployed. For all college graduates in the same age range, the unemployment rate stood at just 5.6 percent,” writes Janell Ross for National Journal, “The figures point to an ugly truth: Black college graduates are more than twice as likely to be unemployed.”

This landscape of the soaring cost of education and lack of jobs to pay it off has a lot of politicos, journalists, and economics professors asking themselves the question of “is college worth is?” — and most are concluding that, indeed, data shows that paying to go to college does still promise more overall income during the course of a lifetime. However, the numbers being looked at are based on the BLS report — which we know doesn’t tell the whole story.

According to an analysis of Labor Department statistics by the Economic Policy Institute, Americans with four-year college degrees made 98% more an hour, on average, in 2013 than those without a degree. But that’s only looking at the individuals who are reporting earnings to the BLS, or those who are being counted. Millions of Americans are either unemployed or underemployed, and many more are simply left out of the statistics because they are contractors, self-employed, or work for unreported wages. That number also includes a generation of older workers who are hanging onto their jobs, retiring later — and paid a lot less for college.

Additionally, according to a PBS Newshour report, those figures probably aren’t sustainable. Only 27% of U.S. jobs even require a college degree, while about 47% of the workforce has one — which means we might just be minting more college graduates than the economy can actually absorb.

“If you take these official BLS data seriously, the army of unemployed and underemployed college graduates will only grow over the next decade. According to the BLS, the demand for college degrees will grow by a paltry three-fifths of 1 percent over the next 10 years, about 800,000 people,” the report states.

Even if college graduates are getting paid more right now, as more enter the workforce than are necessary, starting adulthood with a huge debt may just become the default setting.

The usefulness and economic impact of a college degree also depends on how much the graduate actually paid; with debts ranging up toward $60,000 or more, it can take decades to break even, which may be keeping college grads from taking part in economic milestones, like purchasing a home.

Meanwhile, self-employment and contract work has surged; between 2001 and 2011, self-employment has reportedly increased 14%, though it’s likely that the numbers are even higher than that. And that self-employment, unlike traditional employment, is offering more opportunity to groups, like women and people of color, who have traditionally been left in the dust.

It’s undeniable that a college degree statistically lowers a person’s risk of unemployment — college grads see unemployment rates of 5.6%, versus 6.3% in the general population — however, as the percentage of college grads outpaces the percentage of those who are employed in fields which require a degree, it’s hard not to wonder if vocational training, trade schools, and skill-specific education might not be the best way to gain the know-how required to get work and get paid, without the excessive added cost of a full-time degree.

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Hanna Brooks Olsen is a writer and editor for CreativeLive, longtime reporter, and the co-founder of Seattlish. Follow her on Twitter at @mshannabrooks or go to her website for more stuff.