Friday, July 16, 2010

Does Having a College Degree Pay Off During the Recession? You Bet It Does!

Does college matter anymore?  Should parents encourage their children to seek a college degree? If you  have a college degree, should you obtain an advanced degree?  With rising costs of education and increasing student indebtedness, does having a college degree make a difference?

The recession has made it difficult for anyone to find a job.  College graduates, even those with master's degrees are having trouble finding jobs, although they have been less likely to lose jobs during the recession and more likely to find jobs if they did lose their job than high school dropouts or those with only a high school degree.

According to the June BLS data, Americans without a high school diploma experienced 21 straight months of unemployment above 10 percent with a high of 15.6 percent in February. The rate declined to 14.1 percent in June, the lowest level since March 2009.  High school graduates fared slightly better with unemployment hitting a high of 11.2 percent in October 2009, and dropping to a 10.8 percent level in June.

By contrast, those with bachelor's degrees have not seen unemployment rates higher than 5 percent since the recession began, dropping to 4.4 percent in June of this year. So, those with a college degree were much more likely to have a job than those without one.  View graphs of the data here.

But, how about those with advanced degrees? According to one report, those with advanced and professional degrees did better in retaining jobs and income than even those with undergraduate degrees.  Moreover, college grads with advanced degrees saw real wages increase by 3.7% since 2007, while those with just a B.A. or less actually saw a decline in real wages of 0.7%!

So, education clearly matters, even in tough times.  But just because you have a degree doesn't mean you get hired.  You have to have the type of degree and skill sets needed by employers.  Still, there is some evidence that those who re-tool or who obtain certificates and degrees are more likely to find jobs, particularly if their degrees and skill sets match market needs.

And America is hiring.  While the most recent Jobs Report showed that America lost 125,000 jobs in June, 2010, the economy created 85,000 new jobs. Even so, because of globalization (particularly outsourcing) and restructuring, more than a million jobs lost during the recession will never return.  There is also a mismatch between the skill sets needed for new jobs, particularly for knowledge jobs, and skills possessed by the existing workforce.

A recent study of the Institute of Manufacturing entitled People and Profitability: a Time for Change found in their survey of nearly 800 U.S. manufacturers that even during the worst part of the recession roughly one-third of all manufacturers could not find skilled workers to fill jobs within their industry.

The percentage of unfilled jobs varied by sector.  Two-thirds of manufacturers in the life sciences, two-thirds in aerospace and defense, and almost half of those in energy-related fields were unable to find workers with the skills or degrees necessary to fill the available jobs.   This mismatch is greatest for blue collar jobs, where manufacturers are seeking workers to operate computers and skilled in robotics, particularly those who can read and follow blue-prints, understand and solve complex problems, and possess high-order mathematical and computational skills. So, re-tool and get a certificate or degree.

While there is no guarantee that a college education will protect you from losing your job, clearly those with degrees, particularly advanced degrees, were more likely to keep their jobs in the recession and those who seek new degrees or certificates were more likely to get or keep a job than those who don't have a degree. 

So, yes, getting a college degree does matter.  If you don't have a college degree, get one--or at least get a certificate and re-tool!

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