College got something of a bad rap during the recession and the “jobless” recovery.
Thousands of university graduates were unable to find full-time work in their target careers. They took jobs as baristas, bartenders or other part-time, low-wage workers, burdened with tuition debt that made their years in college seem like an expensive waste.
But take another look. Professional hiring has plumped up, and studies continue to indicate that college provides the odds-on path to bigger paychecks.
Liberty High School student Meg Whipple is a believer. A junior, she is already evaluating comparative costs and scholarship opportunities to prepare for her desired career as a psychologist.
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“College costs a lot,” Whipple said. “But I need more education, so the costs haven’t changed my goal. And among my friends I see more people going to college too. They know they need college to get ahead.”
It’s not just that college graduates continue to earn more. What’s different recently — despite the recession — is that that more and more employers are asking applicants to have bachelor’s degrees, even for jobs that don’t require such education.
For all sorts of jobs now, college degrees are the new “rule of thumb screen for hiring,” said Matt Sigelman, chief executive of Burning Glass Technologies, a labor analytics firm.
This “upcredentialing” means that these days young people without degrees — as well as older workers — are less likely to even be considered for well-paying, full-time jobs. A college degree is the new recruitment filter, logical or not.
If the ability to land an interview isn’t incentive enough to go to college, studies also find that the earnings gap between young adults who have bachelor’s degrees and those whose education stopped in high school is wider now than it was for any previous generation.
The parents and grandparents of today’s 25- to 32-year-olds were far less likely to be college graduates than today’s millennials are. But they were far more likely to earn wages that weren’t too far beneath those of college graduates.
Times have changed. The earnings gap has widened.
A detailed Pew Research Center examination of median annual earnings, published in 2014, found that millennials in that 25- to 32-year-old age group who had only high school diplomas were earning less than two-thirds — 62 percent — of what their college graduate peers were earning.
In contrast, a typical high-school-only member of the baby boom generation earned three-fourths — 77 percent — of what their bachelor’s-degreed peers earned when they were in that age group.
Pew said millennials with bachelor’s degrees or more had median annual full-time earnings in 2013 of $45,500. That compared to $28,000 for millennial high-school-only graduates, a gap of $17,500 in just one year of earnings.
Supporting a household on $45,500 a year is hard enough. At $28,000, quality of life takes a major hit.
Translated into 2012 dollars, that $17,500 earnings gap for college vs. high school today compared to an annual earnings gap of:
▪ $15,780 for Generation Xers, who came of comparable age in 1995.
▪ $14,245 for “late baby boomers” in 1986.
▪ $9,690 for “early boomers” in 1979.
▪ $7,449 for members of the “silent generation” in 1965.
In other words, the education premium has grown despite the recent economy that left many college graduates without work in their chosen professions.
Still, a Young Invincibles analysis of U.S. census data, published in December, found that “too many millennials are struggling in low-wage sectors.”
For example, the “Where Young Adults Work” report said that in Kansas last year the dominant employment sector for 25- to 34-year-olds was retail and wholesale — one of the two lowest wage-earning labor market sectors along with leisure and hospitality.
Such low-wage service jobs put people behind the lifetime earnings curve, whether they’re held for a short while or an entire career.
The unusually severe recession and job market collapse put the whammy on entry-level job hunters in another way: Many employers no longer are willing to hire and train; they want experienced, ready-from-day-one workers for their relatively few job openings.
That makes it harder for college graduates to open the career door — but it closes the door completely to many less-educated applicants.
The national job market appears to have finally turned the corner last year, producing month after month of healthy job growth and lower unemployment rates. But analysts say trends need to be monitored to see how that affects millennial earnings and college decisions.
Here’s the rub: Slightly less than two-thirds of the high school class of 2013 enrolled in college that fall. It was the lowest percentage since 2006 and the third annual drop in a row. Last year’s numbers are still being processed.
Economists said high school graduates opted for college during the recession because no jobs were available. Now that employers are hiring again, more of them are heading straight to the work world.
But cold, hard facts counsel against it. Not only are millennials with college degrees earning about 50 percent more than those with only high school, analysts estimate that college grads are still likely to earn more than half a million dollars more over their careers.