Is College Worth it?
Can you get a good job after college graduation? Attention-grabbing headlines would have you believe the worst: low wages part-time work... A Pew study finds more people questioning college's value, shown by this TIME magazine graphic, Is College Worth It? You might ask, "Why go to college?" (See our article, on the pros and cons of a liberal arts education).
To answer that question, you need the real story on job prospects after graduation. A report by the respected Federal Reserve Bank of New York (2014) gives you an accurate picture. We summarize it and then make six recommendations to you.
The Federal Reserve tracked the employment rate from 1990 to early 2013 for all U.S. workers, college graduates, and young workers without a college degree.
What you should know
- College graduates are much less likely to be unemployed that those without a college degree;
- About one-third of all college grads have been underemployed for their first five years after graduation. And, among new college graduates this rate is rising (44% in 2012). Many of these underemployed are working in part-time or in low wage jobs.
- Your college major makes a big difference whether you are likely to be underemployed or not (What does it mean? See below).
Here are the Details
- College graduates, as a whole, have done well. Their average unemployment of 2.9 percent was about half the unemployment rate of all workers during this 20+ year period.
- Recent college graduates over these 20+ years (those who are 22-27 yrs., within their first five years after graduation) have done less well. Their average unemployment rate was 4.4 percent. The unemployment rate decreases the longer recent grads are in the labor force.
- College grads have been underemployed at a steady rate of 33 percent. About 1 in 3 works in an occupation not requiring a bachelor's degree. Some are good jobs (average pay of $45,000/yr.).
- Recent college graduates are underemployed at a higher rate than college graduates as a whole, and their rate of underemployment has been rising since 2001 (44% in 2012).
Job Quality among the Underemployed
- Underemployed grads who are in good non-college jobs has fallen sharply over this 22 year period. For example, about 50% in the 1990s to about 36% in 2009. At the same time, the share of those working in low wage jobs has risen. This is particularly true for recent college graduates.
- A similar pattern was found for part-time work. There was an upward trend for both groups of working part-time, with recent grads faring worse (for example, 15% in 2000 to 23% in 2011).
Employment by Major for Recent College Graduates, 2009-2011
- The table above (Chart 7) is clear. Your major is likely to make a big difference whether you are under employed or not.
Caution: You need to be careful in interpreting this table, however. As the report reminds us,
- Not all majors are feasible for every college student;
- These are averages; some graduates will do better, others will do less well; some geographic locations are better for employment than others;
- Some graduates are not included in the study because they have decided to continue in college, working toward an advanced degree - often seen during bad economic times - to avoid being un- or under-employed. Consequently, the situation may be worse than is seen.
- Choose a major that matches your personality and interests. If you do, you are more likely to be motivated to do well -- get higher grades, (and better job recommendations), less likely to drop out or change your major, and graduate on time (1 - 2 years of additional tuition and lost wages). And, you will be happier.
- Consider choosing your major in high school before you choose a college. For many, this will mean better grades and graduating on time.
- Be open to choosing a good job that does not require a four-year college degree.
- Have realistic employment expectations. Underemployment is a reality that you may have to face; it is a growing trend; it varies according to your major;
- Be smart and make a good decision about your educational plans after high school,
- Be aware,
- The nature of work is changing. For example many jobs are becoming temporary and project based, and
- The job market over the past 20+ years has changed and is changing. The recent, and continuing, "jobless recovery" (loss of 8 million jobs) may be a trend that includes your future. A recent article, "After the Jobs Disappear" explores this idea further.