Free Markets, Free People
The Wall Street Journal provides an interesting infographic which fairly well outlines what the market for college graduates is looking for. Or said another way, employers determine what majors they’ll hire, not college students.
So we have college recruiting picking up – a good sign – and we have a buyers market. Bottom left tells us all what they’re interested in and, more importantly, what they’re not interested in. Of course that’s of the 160 employers surveyed. That obviously doesn’t mean that the bottom five can’t and won’t find employment. It’s just likely they won’t find it with those 160 surveyed. They indicated, however, a trend we’ve talked about quite often. Hard skills or business related skills.
Bottom right shows us how the market for college graduates has changed in the last few years. Only 25% are hired while still in college, most, one would suppose, in those top 5 categories. The huge difference, however, comes in the last number for 2009-2011 graduates. 45% still have no “first full-time job”. That means some are going on 3 years. That adds more credence to the last chart on this post.
As for this year’s college grads, they face even tougher prospects when it comes to finding a job. They not only have to compete against their peers, but against the graduates from from previous years still seeking their “first full-time job”.
Which brings us to the politics of this situation. In 2008, Obama charmed the college age crowd who treated him like a combination of a rock-star and the second coming.
With the sort of situation the chart depicts now being the reality and with the youngest demographic (which includes these college age job seekers) the worst hit by the still staggering economy, one has to wonder whether or not he can pull them back into his orbit again in any significant numbers with the promise of saving them $7 a month on college loans.
I’m guessing the answer is “no”.
And it isn’t what they expected or hoped it would be:
A weak labor market already has left half of young college graduates either jobless or underemployed in positions that don’t fully use their skills and knowledge.
Young adults with bachelor’s degrees are increasingly scraping by in lower-wage jobs — waiter or waitress, bartender, retail clerk or receptionist, for example — and that’s confounding their hopes a degree would pay off despite higher tuition and mounting student loans.
An analysis of government data conducted for The Associated Press lays bare the highly uneven prospects for holders of bachelor’s degrees.
We continue to hear that we’re in a recovery, that we’re seeing better times, that all is now well.
Of course, it’s not. In fact, as we mentioned in the podcast last night, we’re not seeing anywhere near the growth necessary to shake this recession. Instead, we’ve found and are bouncing along the bottom (or at least what is the bottom for now – believe it or not, it could again get worse).
Unemployment numbers for the last two months have “unexpectedly” worse. And while the official rate is 8.2%, most realize the real unemployment rate is much higher and in double digits.
That is the world today’s college grads are facing. It is a buyers market, for those that are actually hiring college grads and so they are able to select among the best. Guess what majors are faring best?
While there’s strong demand in science, education and health fields, arts and humanities flounder.
Majors with immediate applicability in still growing fields of course. Meanwhile, there’s not much demand for the softer and less applicable fields. And even in the majors where demand is still high, entry level jobs are of a lower type:
Median wages for those with bachelor’s degrees are down from 2000, hit by technological changes that are eliminating midlevel jobs such as bank tellers. Most future job openings are projected to be in lower-skilled positions such as home health aides, who can provide personalized attention as the U.S. population ages.
This is one of those teachable moments. A sheepskin is no longer a guarantee to a high paying job. And that’s certainly true of those who indulge themselves in a humanities or art degree, etc.
College graduates who majored in zoology, anthropology, philosophy, art history and humanities were among the least likely to find jobs appropriate to their education level; those with nursing, teaching, accounting or computer science degrees were among the most likely.
While perhaps the brightest and best in those areas will indeed find good paying jobs coming out of the chute, the vast majority are going to be taking jobs, if they can find them, well outside their major field of study.
By the way, I use the term “indulge” above purposefully. It would be nice to indulge yourself in something you might enjoy in college and major in it. But then don’t whine when you find out that all of the companies you feel should have the benefit of your august presence aren’t as excited about your degree in gender studies as you are.
That gets down to the purpose of college to each person. Is it a means of achieving a job and a life style to which one aspires and a willingness to do what is necessary to accomplish that? Or is it a place one indulges themselves giving little or no thought to the reality that awaits them at graduation?
What we are seeing is the market for college grads making a very definitive statement. It is sending signals. It is telling everyone what type of degrees are being sought and which aren’t. And because of the tightness of the market, it is making decisions on merit, with the brightest and best capturing jobs and the also ran’s waiting tables.
"I don’t even know what I’m looking for," says Michael Bledsoe, who described months of fruitless job searches as he served customers at a Seattle coffeehouse. The 23-year-old graduated in 2010 with a creative writing degree.
Imagine that … creative writing degree. Wonderful stuff, but not to the market for those with college degrees. One would think that a person pursuing that sort of degree would have probably researched that and have a plan which might not include someone else hiring them first (i.e. selling their work on a freelance basis, etc. and knowing how to do that).
Had Mr. Bldsoe had a degree in physics or accounting or engineering, he’d stand a much better chance of being employed in his field of study. Then he could indulge himself in his creative writing passion. In fact, it would likely give him the means to do that.
Instead … “you want a tall or a grande?”
I still haven’t yet figured out why supposedly bright people can’t figure that little thing out. Markets are talking. Markets are sending signals. When you choose something as your major that these markets have no interest in, what do you suppose is going to happen unless you have a plan to go out on your own immediately?
They’re not going to hire you just because you feel your major is important. You’re going to hire someone if they feel the major is important and you have demonstrated competence in that field at a level they require.
This is the reality that, for the first time, many recent college grads are coming to grips with.
One thing this recession may finally do is drive home the idea that indulging yourself is a useless degree is not very bright or productive.
Want to study creative writing? Fine. They have minors as well in colleges. Make it your minor. But for heaven sake, take a clue and look at what is being demanded out there before declaring a major. Certainly it may not be your passion, but then unless you want to spend your days immediately after college waiting tables or hoping for a labor sellers market, where jobs are plentiful, you had better commit to a useful major.
I know, I know, that supply and demand thingy again. Gender studies majors aren’t into “markets” and “supply and demand” stuff. What’s wrong with me? They have a college degree, the world should be beating a pathway to their door, no?
Welcome to reality … and reality includes the immutable laws of economics whether one likes them or not. And right now, those with useless degrees find themselves on the wrong side of the demand curve.
Don’t like economics?
Then content yourself with making frappes.
Otherwise, it’s time to wise up, use that superior brain for what it was designed and “indulge” yourself in something the job market finds useful and valuable. Refusal to do that means a guaranteed rough transition into the real world, especially now.
In line with the recent posts here on the worth of college education (and Bryan’s post on a possible loan bubble) it seems that the job market is also making a statement on college:
Now evidence is emerging that the damage wrought by the sour economy is more widespread than just a few careers led astray or postponed. Even for college graduates — the people who were most protected from the slings and arrows of recession — the outlook is rather bleak.
Employment rates for new college graduates have fallen sharply in the last two years, as have starting salaries for those who can find work. What’s more, only half of the jobs landed by these new graduates even require a college degree, reviving debates about whether higher education is “worth it” after all.
Of course in any economic downturn, especially in one which unemployment is high, this sort of thing is going to happen. According to the NY Times story, 22.4% of recent graduates are not working. 22% are not working in jobs that require a college degree. And, of course, of the 55.6% who are working in jobs requiring a degree, many are not working in their degree area. It also appears that the median salary has dropped significantly during the recession – after all, it’s a buyer’s market:
The median starting salary for students graduating from four-year colleges in 2009 and 2010 was $27,000, down from $30,000 for those who entered the work force in 2006 to 2008, according to a study released on Wednesday by the John J. Heldrich Center for Workforce Development at Rutgers University. That is a decline of 10 percent, even before taking inflation into account.
That’s a significant drop and again, it makes the argument that going to work for 4 years instead of college may have two benefits: 1) no college loan debt and 2) 4 year work history which would most likely see a salary or earnings well above the median starting salary for college students. And as might be expected, it is those college students who are graduates from liberal arts programs who are suffering most.
The choice of major is quite important. Certain majors had better luck finding a job that required a college degree, according to an analysis by Andrew M. Sum, an economist at Northeastern University, of 2009 Labor Department data for college graduates under 25.
Young graduates who majored in education and teaching or engineering were most likely to find a job requiring a college degree, while area studies majors — those who majored in Latin American studies, for example — and humanities majors were least likely to do so. Among all recent education graduates, 71.1 percent were in jobs that required a college degree; of all area studies majors, the share was 44.7 percent.
So what sort of jobs are those who are degreed but not working in a job requiring a degree holding?
An analysis by The New York Times of Labor Department data about college graduates aged 25 to 34 found that the number of these workers employed in food service, restaurants and bars had risen 17 percent in 2009 from 2008, though the sample size was small. There were similar or bigger employment increases at gas stations and fuel dealers, food and alcohol stores, and taxi and limousine services.
Of course that has a ripple effect in which less-educated workers may be displaced.
“The less schooling you had, the more likely you were to get thrown out of the labor market altogether,” said Mr. Sum, noting that unemployment rates for high school graduates and dropouts are always much higher than those for college graduates. “There is complete displacement all the way down.”
Obviously the lesson here is education is still valuable, the question however is “how valuable”? Valuable enough to commit to the tremendous debt a college degree can bring? It is that sort of ROI that young people must begin making – especially those considering liberal arts programs. Assuming a desire by most who attend college to use their credentials to get a high paying job and secure a better future than foregoing such a program of study has to be under scrutiny by those in such a situation.
Opting to begin work out of high school vs. pursuing a college degree may become a real possibility. And naturally that will have another ripple effect. Colleges and universities will see decreased attendance which will in turn mean less revenue and possibly spur competition among them to attract students.
I actually see that as a beneficial effect, especially given the cost of higher education today, that may eventually make the ROI work somewhat better for potential college students. It is obvious the cost of higher education has risen much higher than any inflation rate. That’s a bubble that needs to be popped and popped rather quickly. Dropping enrollment because of a perception of not receiving the value for what is paid may be the motivator for higher education to cut their prices or suffer the consequences.