Let’s start with a simple question: if I recommend that you buy a PC over a Mac, am I anti-Mac? I think a lot of us would probably say No, especially if the context of that question includes a small discussion of your needs. Personally I have recommended Macs to people over PCs, but that was after asking numerous questions leading up to that recommendation.
So if I recommend a high school graduate pursue an apprenticeship over going to college, am I anti-college? For some reason, it seems many would say Yes. Anyone have a clue as to how the hell that fallacy came about?
For one, I am a college graduate. I have a Bachelor’s degree in business administration, plus an Associate’s degree in computer programming, and I’m putting serious consideration toward going back to community college to get a paralegal degree – for those curious, a paralegal is to a lawyer what a nurse is to a doctor. So to say I’m anti-college would be incorrect.
But at the same time, to say that everyone should go to college is also not correct. Yet the idea persists, and the most recent incarnation of it I’ve seen is Mandi Woodruff’s article on Yahoo Finance called "Is the anti-college debate over?"
Let’s get the fallacy out of the way: it’s not an "anti-college" debate. Instead it’s about asking the serious question of whether a high school graduate could spend 4 years of their life in a better way. There are people without even high school diplomas who are making more money than those with college and graduate degrees. It’s all about finding the right ideas and running with them. To support the idea the debate is essentially over, Woodruff references a recent Pew Research Center article that shows:
- Median full-time earnings for college graduates is 45,500 (approximately $22/hr full time) per annum compared to 28,000 ($13.50/hr full time) for a diploma
- Unemployment rate among high school graduates is a little over 3x the unemployment rate for college graduates
- Poverty rate among high school graduates is 3.75x higher than among college graduates
Some pretty striking numbers. But does that mean that if everyone goes to and graduates from college, that the unemployment rate will be below the rate for Q4 20001? No! Instead as more people shift to being college graduates, the unemployment and poverty numbers for college graduates will go up. Because the college degree won’t keep you out of poverty and won’t keep you off the unemployment line, plain and simple. The degree is no guarantee of success.
And that is what the "anti-college" debate is all about. As such, the "anti-college" debate is not over.
Arrogantly, Woodruff opens her article saying, "Say what you will about rising tuition, student loan bubbles and the merits of early entrepreneurship but, as with global warming and human evolution, you simply can’t ignore the facts."
We’re not ignoring the facts. Fact: the numbers paint a clear picture that a good way to advance your earnings potential is by getting a college degree.
Fact: A college degree is not the only way to do that. But the "pro-college" side of the debate keeps presuming that to be the case. The "anti-college" side acknowledges that reality, along with the reality that not everyone who starts college finishes – over 1 in 4 college students drop out after 1 year or less, and over 2 in 5 students at 4-year college drop out. And not everyone with a college degree will make more than those with a high school diploma – there are plenty of examples of people without college degrees making a comfortable living.
Plus the degree doesn’t determine your earnings potential. It’s all about what you do with the knowledge that degree is to represent.
The bigger problem is that most do not follow their passions, so what they earn when they start their careers is all they earn throughout their careers, or not significantly higher than that, when you take their future earnings and adjust for inflation. They also probably do not take the opportunities to better themselves, to make themselves more valuable to their employers and to other employers in their area.
Employers know they need to pay their college-graduated employees more than their community college graduates and high school-only graduates because college graduates tend to be saddled with significantly higher amounts of debt compared to 2-year graduates. According to American Student Assistance, four-year college students are almost twice as likely to borrow money than community college students, and more than twice as likely to borrow as students who pursue professional degrees or certificates, with about 1 in 10 college graduates having over $40,000 in student loan debt by the time they graduate. According to CNN Money, the average new graduate in 2012 had over $29,000 in debt. At an interest rate of 4% across 10 years, that debt will cost them about $3,600 per year until paid off. If that debt is refinanced to a 30 year loan (something many borrowers stupidly do), then you’re looking at about $1,700 per year for 30 years at 4% interest.
They will also be saddled with other living expenses and take on other debt in the form of car purchases and credit cards to buy things they will need when starting out on their own. All of that eats into their salaries and saps their discretionary income. In other words, higher earnings does not necessarily translate into higher standards of living, an assumption so many people tend to make.
And if the borrower falls behind on that student loan debt, it cannot be discharged in bankruptcy, meaning it will follow the borrower until it is paid in full.
Employers are paying higher for college graduates knowing their employees will have loans to pay off, and it’s better to pay an employee enough to cover what they expect living expenses to be than to have employees who can barely make ends meet. Sure they may be paying the employee more than what they might actually be worth to the company, but the company makes up for that by providing only cost-of-living adjustments to future salaries unless the employee can demonstrate additional value in some other way, thus warranting higher than just mere inflation adjustments to their salaries.
All of that debt needs to be paid back, and that hits the discretionary spending for the borrowers. That is why the economy is still being sluggish in its "recovery". When you have a mountain of debt to pay back – whether due to borrowing, collections, judgments, garnishments or foreclosures – it takes away from spending in other areas, meaning you have less to spend overall, and less money circulates within the economy to keep it going. You cut back to make ends meet, meaning less revenue for businesses, and the problem just cascades from there.
So why is the poverty rate for high school graduates higher than college graduates? To pursue higher-earning jobs, you obviously need the skills and education to qualify for those positions. College is not the only way to obtain them. I was learning what I needed to know before I stepped foot in a classroom, and my self-training has given me more than my classroom training ever did.
Beyond this, in today’s economy, college graduates are going after the jobs high school graduates tended to pursue. According to ProCon.org, 1 in 3 college graduates had a job requiring little more than a high school diploma in 2012, while 1 in 2 college graduates in 2011 had no job or were working only part time. Obviously this is going to put a squeeze on those with only a high school diploma, as fewer jobs requiring the skills of a college graduate means those grads – with their large debt loads – seek other employment, displacing those with lesser educations. This also limits the earning potential of the college graduate, both in the short and long term.
Further, of who the Bureau of Labor Statistics calls the 30 fastest growing jobs, only 12 require a Bachelor’s or better. There’s also a growing "skills gap" in the United States. It is estimated that approaching 1 in 2 job openings in the US are for "middle skill" jobs like construction, plumbing and electrical work. There isn’t enough labor to fill those jobs, though, so there is plenty of potential for people to take on an apprenticeship and earn a middle-class income in the process because of demand for those jobs and the services they provide. Even a trade school would do the trick for significantly less than the cost of a 4-year degree while still having nearly the same earning potential.
A generation ago, apprenticeships and trade schools along with the military taught people skills that could make them a living. And it tended to be better education because you tended to be taught through hard experience as well. That’s not exactly true today, but with the growing skills gap in the US, it needs to become true again.
All of this will play into the advice that should be given to high school students. It may be more beneficial for the student to take on an apprenticeship and learn a trade than to go to college, depending on what they think they want to do with the rest of their life, assuming their desires are realistic. Other students may be better served going to college and getting a 4 year degree.
Either way, there are jobs to be filled but not enough people who can fill them, and that is the problem that needs to be corrected. But touting the statistics on 4 year degrees isn’t going to improve an economy that is still dependent on the laws of supply and demand.
- According to the Bureau of Labor Statistics, the unemployment rate for September through December 2000 was 3.9% [↩]