Higher education remains a good investment jobwise – at least according to aggregate numbers. Young people with a bachelor’s degree suffer only about half (approximately 11%) the unemployment rate of those with only a high school education.
But this good news really isn’t all that good, unfortunately. While the overall unemployment rate is a distressing 7.6% or so, the rate for those under 25 is a whopping 16.2%, and workers between the ages of 18 and 34 make up about 45% of all those who can’t find work.
A study by the Economic Policy Institute, “The Class of 2013,” points to the simple, if harsh, reality – the economy isn’t producing enough jobs matching the qualifications of new higher education graduates. Supply exceeds demand, making things tough not only for the college graduates, but for those with less education who are “outcompeted” for jobs further down the skill scale.
Contrary to the claim that America suffers a mismatch of skills and job demand, the real culprit is weak demand for goods and services that can’t absorb the stream of new graduates. Worsening the picture is a fairly dramatic decline in consumer purchasing power; the EPI study found that between 2000 and 2012, wages of college grads actually fell 8.5 percent, adjusted for inflation. Even non-economists like me can figure this much out – people without money don’t buy stuff, especially “big stuff” like houses.
It’s not a pretty picture. Especially for graduates saddled with high student debt, unemployment or underemployment can impact not only the young workers, but the economy as whole, for decades. No wonder there’s growing skepticism about the economic “payoff” of a college degree.