Brad Waters MSW

Design Your Path

Does It Pay to Go to College?

Using data and labor market trends to make the big decision

Posted Nov 02, 2017

The unemployment rate is currently about 4.2%, but what does that mean? It sounds encouraging, but it doesn't tell us who is doing what. Unless we dig deep, jobs numbers don't tell us, for example, if previously unemployed recent college grads have given up trying to find a job in their major and have instead taken a low-skilled or part-time job. Maybe they're employed (or underemployed) but are they making a living wage? Are they making enough to pay off student loans? Or—as the rosy job reports would like you to believe—has everything everywhere been made great again? 

I should probably state my bias. I'm pro-education in the sense that I've attended five different universities and earned three degrees. On the whole they were enriching experiences, but there's more to the story. I stayed in school a long time not because I was gorging on information, but because I didn't know what to do with my life. My philosophy was to try everything and see what sticks. An approach that may make someone a whiz at armchair Jeopardy!, but really racks up the student loan debt.

When I wrote last week about tips for switching careers without racking up these massive student loans, I wasn't suggesting people avoid college altogether. In fact, my intended audience was those with an existing degree or those who don't feel a traditional four-year degree is the right path for them.

Regardless, many people at some point face a big question: Should I go to college (or go back to college)? To address that question, I've looked at the numbers as well as current concerns and trends in the labor market. Because we all have biases and assumptions about the value of higher education, I find it important to look at both hard data and anecdotal evidence. I intend not to present a single answer to this most  personal and life-altering question, but to shed light on some data and resources- information I wish I'd known when I was making education decisions.


Looking at the September 2017 unemployment rates, we get a surface view of the correlation between education and employment rates. "Unemployment rate" is the number of unemployed individuals divided by all individuals currently in the labor force.1

Civilian unemployment rates age 25 and over:

  • Those with less than a high school education: 6.5%
  • High school graduates: 4.3%
  • Some college or associate's degree: 3.6%
  • Bachelor's degree or higher: 2.3%2


We hear a lot about "underemployment", with its stereotype of the college graduate working at Starbucks. Does our country really have a big underemployment problem? "Underemployment" is defined as "the under-use of a worker due to a job that does not use the workers skills, or is part time, or leaves the worker idle. Examples include holding a part-time job despite desiring full-time work, and overqualification, where the employee has education, experience, or skills beyond the requirements of the job."3

According to a 2015 Georgetown University Study, high school grads have a 13% underemployment rate, the rate dropping to 6.2% for bachelor's degree holders. That number drops further to 4.2% for graduate degree holders. The study points out that employment rates fluctuate by race, with minorities experiencing higher rates of unemployment and underemployment for both non-degree holders and degree holders, though significantly less of each category for minority degree holders.While the numbers in this study have most certainly changed since 2015, we can infer a correlation between education level and underemployment.

In an oft-cited 2015-16 report by the Federal Reserve Bank of New York, underemployment rates by degree holders vary by field and degree type. They found that degree holders in STEM fields (science, technology, engineering, and math) and healthcare are more likely to land jobs in their field of study than those who majored in a less occupation-specific concentration such as humanities. "For example, those with majors in Liberal Arts or General Business are two to three times more likely to be underemployed than those with Engineering or Nursing majors. The patterns we uncover suggest that those recent graduates who major in more quantitatively oriented and occupation-specific fields tend to have much lower underemployment than those with majors that are more general."

The authors optimistically point out that only one fifth of underemployed recent grads work in low-skilled jobs and, regardless of major, underemployment for degree holders is usually temporary.

Degree Inflation

Last month Harvard Business School, Accenture, and Grads of Life published the paper Dismissed By Degrees: How degree inflation is undermining U.S. competitiveness and hurting America's middle class. They state that, "the rising demand for a four-year college degree for jobs that previously did not require one—is a substantive and widespread phenomenon that is making the U.S. labor market more inefficient. Postings for many jobs traditionally viewed as middle-skills jobs (those that require employees with more than a high school diploma but less than a college degree) in the United States now stipulate a college degree as a minimum education requirement, while only a third of the adult population possesses this credential ...This phenomenon hampers companies from finding the talent they need to grow and prosper and hinders Americans from accessing jobs that provide the basis for a decent standard of living."6

The result has twisted both our labor market and our college graduates in a pretzel. Employers are expecting college degrees so more and more Americans are earning college degrees (nearly 40% of working adults now hold at least an Associate's degree7). On the other hand, with a bachelor's degree becoming the baseline for employment, we're starting to see traditional degrees giving us less and less competitive edge or even being inadequate for landing a job. In other words, many degree holders are competing for the same jobs and employers are looking for something that stands out. As a career coach I've seen degree-holding clients struggle to land good jobs because they lack that extra something: that internship, that pre- entry level work experience, that networking edge, or that high level technical skill set that used to be learned on the job but now is expected by graduation day.

Interestingly enough, Dismissed By Degrees reports that, "While a majority of employers pay between 11% and 30% more for college graduates, many employers also report that non-graduates with experience perform nearly or equally well on critical dimensions like time to reach full productivity, time to promotion, level of productivity, or amount of oversight required."

Damned if you do, damned if you don't? Perhaps the takeaway here is that even though degree holders, on average, have higher rates of employment and earn higher incomes, they must think strategically during their college career about how to gain that competitive edge.

Skilled Labor Shortage

I also mentioned in my last article about the alarming shortage of skilled manual labor. There is and will continue to be high demand for construction workers, electricians, welders, and all those skilled blue-collar jobs that are repairing our weather-damaged, outdated, and growing infrastructure. The Bureau of Labor Statistics predicts job outlook for construction workers to rise by 13% and for electricians by 9% over the next ten years, both ahead of the national average job outlook of 7%.But as more and more of us are getting college degrees, blue-collar jobs are going unfilled and the companies hiring for them are getting desperate.

These careers, especially as they progress in experience and specialization, can earn good pay with benefits and often come with the advocacy and protection of labor unions. But when it comes to making a long-term career choice, can labor unions and today's strong job outlook protect us from a future downturn? Is a construction or skilled-trade career a recession-resilient career? If and when another recession hits, will those construction jobs dry up like 1.5 million of them did during the last recession?9 Perhaps career seekers can inquire with those who endured the recession with jobs in these industries.

It should be noted that, increasingly, these positions are requiring some form of formal education such as an associate's degree, but apprenticeship programs are still available and even promoted by the government

Higher Ed Income and Debt Expectations

The U.S. Department of Education estimates that college graduates, on average, earn a million dollars more over a lifetime than non college grads9. And it's widely understood that the degree we choose and the school from which we earn it will impact our earnings potential. For example, it comes as no surprise that Georgetown and Harvard degrees are top-earners. When it comes to earnings potential, how do students decide which school to attend and which degree to choose? We're talking strictly numbers here, not which school gives us pride or which career field ignites our passion. 

To assist, the Department of Education provides a research tool called College Scorecard. It's packed with data that can be explored in all kinds of ways. Georgetown's Center on Education and the Workforce synthesized the Scorecard's per-school salary averages into a simple table here. How does your school stack up? 

Understand that college is incredibly expensive and it pays to research the ten year salary averages per school and degree- that's what's going to pay off those student loans. Average tuitions for public, in-state, four-year programs range from $10-20,000 per year depending on many factors such as room and board, fees, and books. And for the 1.3 million students who take out student loans each year to pay for it, debt can accumulate quickly while they're busy studying and partying. The U.S. currently has 44 million student loan borrowers, borrowing a combined $1.45 trillion. The average undergrad accumulates $6,590 in federal student loans annually, and that doesn't include parent loans, private bank loans, or credit card debt. 10,11

Summary and Commentary

The decision on whether or not to attend college, compounded by deciding where to go and what to major in, can feel overwhelming and high-stakes, but never before have we had so much data and support to help us make those decisions.

College is not the right fit for everybody. Or maybe college isn't the right fit for somebody at this point in time but it will be later. We must listen to our young people when they have doubts about attending college. Are their doubts fear-based that can be worked through? Or are they tapping into a deeper sense that college will not be a good fit?

If the latter is the case, rather than making them feel bad, let's help them make a strategy for attaining the skills and experiences vital for creating a career path that will support them. There is so much help out there for supporting parents/guardians/teachers and their students through the process- guidance counselors, career counselors, career coaches, career centers, mentors, assessments, youth centers, enrollment advisors, and the list goes on.

Meanwhile, employers need a reality check. Big time. What do they really need from their workforce in terms of skills and formal education? Can a one or two year community college program better prepare a worker for their job openings than a general four-year degree? If so, it's time to start making those job requirements reflect as much. We have a highly willing and able pool of unemployed and underemployed workers waiting to fill jobs that they're being rejected from because of arbitrary requirements.

As the first in my working class nuclear family to earn a college degree, I didn't come from a culture of higher education. I received encouragement but not undue pressure to enroll. In my teens and early 20s I was not well equipped to make wise career and financial decisions. I traded tens of thousands of dollars in student loans for my mortarboard and took the long way around to a career that now gives me pride and pleasure. 

While I may personally believe that some of the greatest value in a college education lies in its potential to make us well-rounded individuals, critical thinkers, and informed citizens, I've known plenty of people in my life who are all of those things without the piece of paper... the degree or the promissory note. Many of them were my biggest champions along the way.