The Job Market: Is College Overrated?
The economic downturn that began in 2007 has been particularly hard on both educated workers and employers. However, a 2012 survey from the staffing firm Manpower, Inc. found that nearly half of employers are still having difficulty filling jobs. Yet, according to the Bureau of Labor Statistics, half of all college graduates under the age of 25 are either unemployed or underemployed — working part-time or at a job below their skill level.
Furthermore, today’s graduates carry an average student loan balance of $25,000. Is college and a mountain of debt the only path to employment?
Public Policy Promotes College. Though the majority of jobs today require specialized training beyond the high school level, many jobs do not require a four-year degree. In fact, economists have noted that degrees serve as credentials on a potential employee’s resume, but they are no guarantee of needed skills.1
The federal government has poured billions of dollars into college aid to those who want to pursue a college degree. The U.S. Department of Education now makes below market-rate loans, which have replaced college loans from private banks. According to the Department of Education:2
- In 2010, the federal government made $145 billion in student loans and grants available.
- By 2011, federal student aid had increased to $155 billion.
- By 2012, the amount was $166 billion.
In addition, there are various federal tax credits and deductions available for college students. For example, the American Opportunity Tax Credit provides a partially refundable tax credit of up to $2,500 for tuition, books and course materials for the first four years of college.3
Some federal loans and the American Opportunity Tax Credit are available for accredited vocational and technical schools, but because these institutions are generally cheaper than four-year colleges, federal aid does not flow to them as freely. Thus, without private-sector loans, students with few resources may have difficulty obtaining aid for such things as training in cosmetology or for HVAC (Heating, Ventilation and Air Conditioning) certification.4
Since 1988, college costs have risen 130 percent more than inflation.5
Most consumers have assumed that the rising cost of college was a given. More recently, however, economists and policymakers have debated the role federal aid plays in tuition hikes. Grants, low-cost loans and programs that admit the top 10 percent of high school graduates may make college more accessible, but because most colleges are nonprofits or governmental, they have little incentive to reduce costs. Thus, college aid has put upward pressure on tuition and fees, benefitting colleges and universities rather than students.6 While the number of college graduates has increased over the years, "college at all costs" policies could be distorting the supply of and demand for workers with certain skills, thus pushing unemployment higher than it would be absent widespread college aid.
College Graduate Supply versus Job Demand. Some jobs requiring a degree are projected to grow at below the average rate of growth for all jobs. Employer demand for degrees in some fields is expected to decline through 2020, despite the fact that colleges are producing thousands of graduates in those areas. Consider degrees in education, for example. According to the U.S. Census and the Bureau of Labor Statistics:7
- Over a quarter of a million bachelor’s or master’s education degrees have been awarded annually since 2000.
- In 2009, about 280,000 bachelor’s and master’s education degrees were awarded.
- However, only 539,100 teaching positions will be available from 2010 to 2020 — for elementary, secondary, high school and special education.
The Bureau of Labor Statistics projects the growth for teaching jobs through 2020 could be less than the 14 percent national average growth for all occupations. There are job/education mismatches in other fields, too. Assuming degrees are conferred at the same rates in the 2010-2020 period as over the past decade, almost 240,000 people will be awarded advanced degrees in psychology, but only 38,000 jobs will become available.
Jobs That Do Not Require a College Degree. Interestingly, some of the fastest job growth is projected for work opportunities that do not require a college degree. These jobs usually involve an apprenticeship or extensive on-the-job training. The Manpower, Inc. survey reports that four of the top 10 jobs that are most difficult to fill do not require a college degree. They are skilled trades, machinists, mechanics and drivers.
According to the Bureau of Labor Statistics, from 2010 to 2020 [see Figure I]: 8
- Opportunities for brick masons, which numbered 104,800 in 2010, are expected to grow 40 percent
- to 146,600, significantly above the average for all industries.
- Jobs for plumbers and pipefitters — 420,000 in 2010
- — will grow 26 percent to 527,500.
- And jobs for construction equipment operators — 404,000 in 2010 — will grow 23 percent to 499,700.
Not all of the job growth is for blue-collar jobs, however. For example, about 412,000 insurance sales jobs existed in 2010, and the number of positions available is expected to grow 22 percent to 502,100 by 2020.
Associate’s Degrees and Vocational Training. Other fast-growing jobs require only an associate’s degree or vocational training. In particular, a growing demand exists for health care workers other than doctors or nurses. From 2010 to 2020 [see Figure II]: 9
- Demand for diagnostic medical sonographers will increase 44 percent, from 53,700 to 77,100.
- Occupational therapy assistant jobs will grow 41 percent, from 36,000 to 50,800.
- Opportunities for dental hygienists will grow 38 percent, from 181,800 to 250,300.
- Jobs for medical equipment repairers will grow 31 percent, from 37,900 to 49,800, and cardiovascular technicians will grow 29 percent, from 49,400 to 63,900.
Among nonmedical jobs, positions for construction managers will grow 17 percent from 523,000 in 2010 to 611,910 by 2020, and jobs for HVAC mechanics will grow 28 percent, from 267,800 to 342,784 positions, over the same period.
Bachelor’s and Master’s Degrees: Where Are the Jobs? There are positions requiring a bachelor’s or master’s degree that are expected to grow from 2010 to 2020.10 For example, concerns over labor shortages in engineering are often discussed by the media and policymakers. However, since engineering is a broad field, the outlook for new jobs depends on the specific field. The specialties that are projected to grow the fastest are:
- Biomedical engineering jobs, with an astonishing 62 percent growth, from 15,700 in 2010 to 24,900 by 2020.
- However, software engineers (developers), which are projected to grow at about half the rate (30 percent) of biomedical engineers, have thousands of more jobs available, with an expected growth from 913,000 in 2010 to 1,184,000 by 2020.
- Environmental engineers are expected to grow 22 percent over 10 years, from 51,400 in 2010 to 62,700 by 2020.
Among nonengineering jobs, from 2010 to 2020:
- Market research analyst positions will grow 41 percent, from 282,700 to 399,300.
- Cost estimators will grow 36 percent, from 185,400 to 252,000.
- Although small in number in 2010 (1,600), jobs for geographers will grow 35 percent to 2,200.
Economic Impact. The mismatch between education and the job skills demanded by the market will raise unemployment. A shortage of skilled carpenters means that wages to attract these workers will increase, and homebuyers will pay higher prices. Likewise, fewer health care technology workers will reduce access for patients to important diagnostic procedures, such as sonograms and MRIs. Importantly, these jobs require locating in specific areas and cannot be moved overseas.
A Federal Jobs Policy. The federal government should stop interfering in employment and education markets, and allow supply and demand to achieve equilibrium. Government student loan programs should be severely curtailed and the private loan market should be restored. Furthermore, tax credits for college tuition should be equally available to vocational, technical and community college students.
Pamela Villarreal is a senior fellow with the National Center for Policy Analysis.
1. George Leef, "Are Government Investments in Higher Education Worthwhile?" Library of Economics and Liberty, December 1, 2008.
2. "Federal Student Aid Strategic Plan, FY 2012-2016," U.S. Department of Education, 2012.
3. "American Opportunity Tax Credit," Internal Revenue Service. Available at http://www.irs.gov/uac/American-Opportunity-Tax- Credit.
4. "How to Pay for Vocational Training," Bankrate.com.
5. Annalyn Censky, "Surging College Costs Price Out Middle Class," CNN Money, June 13, 2011.
6. Richard K. Vedder, "12 Reasons College Costs Keep Rising," Fiscal Times, June 18, 2012.
7. Occupational Outlook Handbook, 2012, U.S. Bureau of Labor Statistics; and Tables 302 and 303, 2012 Statistical Abstract, U.S. Census Bureau.
8. Occupational Outlook Handbook, 2012.