(This column runs today in USA Today. If you’re coming over from the newspaper website, welcome! I hope you’ll look around and read some of the posts from our archives).
By Laura Vanderkam
Kiki Okaly has a great résumé for a young engineer, with a bachelor’s degree from Lehigh University and multiple internships. Unfortunately, when she graduated this spring, she faced the bleakest job market in decades. She handed in her résumé at “countless” career fairs, but despite a few interviews, “none of them resulted in job offers.”
Her solution? She took out loans and enrolled in a masters program in structural engineering at Lehigh, wagering that “having my masters puts me on the top of the pile for all job applicants this coming year.”
Plenty of other people are making the same bet. The Council of Graduate Schools reports that applications from American students rose 9% in 2010. When the economy slumps, “school becomes a safe haven” from un- or under-employment, says Anthony Carnevale, director of the Georgetown UniversityCenter on Education and the Workforce. You gain skills and bide your time. The question is, “Does that do you any better when you get out?”
Unfortunately, despite the rising cost of education, the answer is no longer as clear as it once was. As we are discovering with home loans, “anytime you borrow money to gain upward mobility, it’s a gamble,” notes Jodi Nelson, a filmmaker who is pursuing a Ph.D. in film/media.
It’s often a smart gamble (in Okaly’s case, the engineering market seems to be reviving), but here’s something that isn’t in doubt this back-to-school season: Life in the modern economy is uncertain. You can hit that uncertainty at age 18, 22, 25, 30, or later, but eventually you’re going to have to spin the wheel. Whether you go to grad school or not, the smartest thing to learn might be how to enjoy the game.
An outdated mindset
The model that “most Americans walk around with in their heads — and it used to work — is that the longer you stay in school, the more money you make,” Carnevale says.
Degrees do confer some advantages; the unemployment rate among those with bachelor’s degrees or more is 5%, vs. 9.6% overall.
Even so, “the gains from going to college have stagnated” for certain groups and occupations, reports Richard Vedder, an economist at Ohio University. One potential explanation? College students these days spend about 14 hours per week studying, according to a new report from the American Enterprise Institute, vs. 24 hours in 1961. This decline has happened within majors, among those at highly selective schools, and even among students who don’t have part-time jobs. Perhaps college is worth less (in some cases) because we’re studying less. Or, perhaps the problem is that 70% of high school graduates now enroll in college, “most of them to get a piece of paper that they think will let them lead an upper-middle-class life,” says Vedder. “It’s becoming mathematically impossible for that to happen.” We cannot all earn more than average.
If most of us try college, though, few Americans attempt graduate education, which suggests that a graduate degree might offer the edge that a college degree does not. More training can be helpful; Okaly says that “in three months of grad school, I’ve learned more than during all of undergrad,” with a focus on the practical aspects of engineering projects.
Yale economist Lisa Kahn famously found that college-educated white men lost 6%-7% in initial earnings for every 1 percentage point increase in the unemployment rate. Even after 15 years, the gap was about 2.5%. Less reported: One of the reasons the gap narrowed is that those who graduated in recessions were more likely to go to grad school which, over time, raised their earnings.
‘The degree doesn’t save you’
But “underneath those averages are huge variations,” reports Carnevale.
I asked Adam Ruben, a Ph.D.-holding molecular biologist and author of Surviving Your Stupid, Stupid Decision to go to Grad School, whether grad school was a good idea if the alternative was waitressing. “I know people who have gotten graduate degrees and then end up waitressing,” he told me, only this time with 5-figures of loans. “Even the degree doesn’t save you all the time.”
The dark side of a belief that more education is universally good is a lack of rigorous cost-benefit analysis. Databases on the returns on extra degrees in different occupations exist, but “most people don’t go bother to look,” Carnevale says.
Here’s a general rule: If you have a scholarship, there’s little downside. Jenn Kloc, a 2010 graduate of DePaul, is pursuing a Master of Science in Journalism at the University of Illinois at Urbana-Champaign partly because she is getting paid to teach; with the job market “bad across the field,” Kloc had nothing to lose by “having this year in graduate school to focus intensely on journalism.” One discovery, though, is that there’s no reason to believe that the situation will be better in 2011. “We’re going to have to get more comfortable with the idea of being more entrepreneurial,” she says.
Kloc’s on to something — what our current obsession with raising Americans’ skill levels misses is that all the education in the world won’t help if jobs don’t exist. But there are ways to learn to live with that. The job market wasn’t great eight years ago when I faced it, either. Rather than go to graduate school, I started freelancing for various places. Over time I learned to find new clients, pitch projects, manage my pipeline and make as good a living as I would have in a normal job. Few schools teach these skills — but if they did, that would make a degree worthwhile.
Laura Vanderkam, author of168 Hours: You Have More Time Than You Think, is a member of USA TODAY’s Board of Contributors.
3 thoughts on “With no jobs, grads “gamble” on education”
I like the scientists’ comments here about individuality and that being a personal characteristic. It is interesting how also some of the qualities that make for a great student, drive, work, great study habits are not exactly what a lot of companies are looking for and why some of us do better as entrepreneurs. I wonder if this woman from yesterday’s post might have been happier in more of her own company or an entrepreneurial role.
I am too individualistic or something for corporate america..
I really like working on my own having my own pace, and my own schedule… so much so that when I hired an assistant I put her in a totally different area of the office, I don’t like to have anyone work near me. I think I am highly motivated but would be put in a corner (and have been) in many or most corporate jobs for “bad behavior” !!!
Laura, how definite is that the value of higher ed has eroded? It’s clear it doesn’t ensure economic security. Still, I’ve read sources they say it’s risen.
Consider, this by a Nobel and Clarke winning pair:
Anon- I think it depends on the calculations. The economists I talked to said the returns were declining for some sub-groups, but not for others. And of course, a degree is worth more than attending some and not finishing. In general, college is worth it for most people but you have to be more careful with graduate degrees. Many of those do not return enough, accounting for debt loads, to justify their costs on increased earnings. There may be other reasons to go.