As Michigan Future has researched what makes places prosperous, we have also learned a lot about the new realities of the job market. I want to explore what an economy constantly being reshaped by globalization and, most importantly, increasingly smarter and smarter machines (that can do more of the work people used to) means for you and your peers who are graduating from college this year.
First and foremost: you made the right decision. I know the new conventional wisdom is that we have too many four-year degree graduates, particularly in the liberal arts. Therefore, the story goes, you are likely to end up in jobs that don’t use your skills and pay too little to pay off student loans. Don’t believe it! Its not true.
In fact the exact opposite is the reality. The Pew Research Center reports: Today the unemployment rate for 25-32 year olds with a bachelors or more is 3.8 percent; for those with a two year degree or some college its 8.1 percent; and for those with a high school degree 12.2 percent.
In terms of median annual earnings for full-time workers: those with a bachelors or more earn $45,500; two-year degree or some college $30,000; high school degree $28,000.
No matter what you hear, the reality is Millennials with a four-year degree are doing substantially better than their peers without a four-year degree. End of story!
The gap in median annual earnings for young, full-time workers has grown consistently for those with a four-year degree compared to those with a high school degree, from $7,500 in 1965 to $17,500 today. The gap between 25-32 with a four-year degree and those with some college or an associates degree has grown from $5,000 in 1965 to $15,500 today. So much for, “You would have been better off going to a community college!”
No one can guarantee you a good-paying job in your field of study right out of college. The American economy since the onset of the Great Recession isn’t creating jobs fast enough to fully employ new entrants into the labor market no matter what your education attainment. But as the data indicate, you have a far better chance than those without a four-year degree. And that advantage almost certainly will grow over what is likely to be a 40-year career.
Consider this story from the New Republic:
“Sally Cameron thought she had done everything right. After studying French and Arabic at a tony liberal arts college, she knew that graduate school would help her career chances. But when she hit the job market, her Ivy League management degree didn't seem to matter. The worst recession in decades had pushed the unemployment rate to nearly 10 percent and good jobs were scarce. Sally paid the rent by tending bar and filled her time with volunteer work.
“Meanwhile, experts and government officials warned that the days ahead would be grim. For decades, a growing number of students had streamed into higher education assuming that their degrees would lead to prosperity. Now people were openly questioning whether college was really worth it.
“Sally's story sounds like the kind of depressing story filling the pages of newspapers and the popular press these days. There's only one difference: Sally Cameron earned her master's degree from Yale in 1980. The Washington Post story that described her struggles was published in 1982. For going on four decades, the press has been raising alarms that college degrees may no longer be a sound investment. Two things about these stories have remained constant: They always feature an over-educated bartender, and they are always wrong.”
This is the core lesson Michigan Future has learned. Economies are cyclical, they go up and down. But the constant is that those with the highest education attainment – with the broadest skills – do best.
The New Republic continues:
“Sally Cameron, meanwhile, isn't tending bar anymore. She's a senior manager at an international development consulting company that works under contract with USAID.
“Her recent work includes building railroads in cyclone-devastated Madagascar. Her liberal arts degree from Smith College must come in handy, since one of the two official languages there is French. That’s how things usually work out for people who get college degrees.”
Getting a four-year degree was the most reliable path to a middle class career for Boomers like Sally Cameron and me. It's even more true today. The value of a college degree is far more than how quickly a graduate gets a first job and how much it pays. These are the short term metrics that fuel the “college isn’t worth it” nonsense.
Rather, the payoff is over an entire career. It comes from having skills that give you a competitive edge in all industries and most occupations, in having skills that may not be in demand today but will be in the future and in learning how to learn so that you can better spot new opportunities and take advantage of them in a constantly changing labor market.
The push from policy makers and other thought leaders to demand that higher education prepare students for a job the day they graduate is not good either for students or the economy. Just as bad is the push to steer universities away from the liberal arts.
Building a foundation to do well over a long career is only going to grow in value in an economy where technology and globalization accelerate creative destruction. Destroying jobs and occupations and creating new, unimaginable jobs and occupations at a quicker and quicker pace.
As we describe it, successful careers will go to those who are good rock climbers, rather than ladder climbers. Those who are able both to constantly spot opportunities in a constantly changing world and have the agility to take advantage of those opportunities. Far different than career success in the past which were build around known and stable rungs of a career ladder.
Increasingly employers in knowledge-based enterprises – the source of most new good-paying jobs – understand the importance of hiring for more than job specific skills. Software entrepreneur Bill Wagner in a column for AnnArbor.com writes:
“The country, and especially Michigan, seem stuck in the mode of thinking of education as a means to a job, as a vocation. The problem with this attitude is that the hot jobs change frequently. Preparing people for one job, and one job only, creates a temporary and rigid work force.
“... Your education must prepare you for a long career that meets constant changes in the job market, and supports your own growth. The only constant during a life-long career is that youʼll need to adapt. The important question for our education system: Are you prepared for all the changes that may come in the future?
... In order to grow companies and our workforce, our education system needs to prepare people for an ever-changing world. Preparing for todayʼs hot job is the road to irrelevance. Getting a broad, rich education that lays the foundation for becoming a triple threat is the path to a very successful career.”
The diploma you will receive today from a liberal arts college – no matter what your major or what your first job after college is – puts you on the most reliable path there is to a middle class or better career. You have built the foundation to be a successful rock climber. Don’t let anyone tell you otherwise.