To degree or not degree, that is the question.

This was posted on another one of my blogs that is now defunct.  I have decided to repost it here so that I can link to it in another post.


 

The Bureau of Labor Statistics released their most recent Occupational Outlook Handbook on their website last January.  I have downloaded the data and parsed through it.

There are 579 different occupations listed in the OOH.  The occupations are listed alphabetically and include information on 2012 median pay, the entry-level education required to enter the occupation, and the projected level of new jobs for 2012 through 2022.  I have summarized the important information below.

Educational Requirements

For my purposes, I ignored the data on projected occupational information for those who will earn a degree or post-secondary award above the bachelor’s degree level.  Occupations that require a Master’s degree, or  a PhD or professional degree (i.e., law or medical degrees) are not included.  As a result, only 452 out of the 579 occupations listed in the OOH require a bachelor’s degree or less.

The graph of the educational requirements for projected future job openings looks like this:

Jobs by Education Level

The numbers break down this way:

Entry Level Education Total % of Total
Less than high school 63 13.94%
High School Diploma or equivalent 206 45.58%
Some college, no degree 5 1.11%
Associate’s degree 42 9.29%
Bachelor’s degree 136 30.09%
Grand Total 452 100.00%

As you can see, 45.58% of all jobs in the next ten years will require no more than a high school diploma or GED.  Only 30.09% of those jobs will require a bachelor’s degree, while 69.91 % will not require a bachelor’s degree.  What this means is that almost half of the projected future workforce will be overqualified for a job if they obtain a bachelor’s degree.  And in today’s labor market, being overqualified is worse than being underqualified.

Level of Education and Income Level

Now that we have seen that a majority of jobs in the future will not require a bachelor’s degree, the next step is to ask how much money you will make in those jobs.  After all, it is often reported that college graduates will make more money (up to $1 million more) than people who don’t get a college degree.

And looking at the OOH projections, that appears to be true.  People who earn a bachelor’s degree are projected to make more in salary than people who don’t.  Let’s take a closer look at this.

The OOH divides the income levels for occupations into six categories: wage not available; less than $25,000 per year; $25,000 to $34,999 per year; $35,000to $54,999 per year; $55,000 to $74,999 per year; and $75,000 or more per year.  Here is the projection of future occupations by degree and income level:

Degree and Income Level

With less than a bachelor’s degree

There are 3 occupations where the wage is not available.  Those three jobs are: actors (some college, no degree); Dancers (high school diploma or equivalent); and musicians and singers (high school diploma or equivalent).  The ‘starving artist’ trope exists for a reason.  I don’t care what you see on The Voice, American Idol, or So You Think You Can Dance?   Under no circumstances should you plan on earning a living as an actor,  musician/singer, or dancer.

There are also three occupations it is possible to make $75,000 or more without a bachelor’s degree, according to the OOH: air traffic controllers (associate’s degree), radiation therapists (associates degree), and elevator installers and repairers (high school degree or equivalent).  Unfortunately, job growth is projected to be low for these professions.

With a bachelor’s degree

For occupations that require a bachelor’s degree, there is one occupation where workers earn less than $25,000 per year: recreation workers.  And the two groups projected to earn between $25,000 and $34,999 with their bachelor’s degree are coaches and scouts, and radio and television announcers.  So there’s little point in getting a bachelor’s degree for those jobs.

If you are planning on making $75,000 or more with your bachelor’s degree, there are 50 occupations in this income category.  That’s the good news.  The bad news is that these occupations are dominated by the STEM fields (Science, Technology, Engineering, and Mathematics).

Groups making 75k or more

Good news for those who don’t get a bachelor’s degree

The whole point of this post is to convince people that they can earn a decent living without wasting their time and money on a bachelor’s degree.  And the good news is that 49.56%  of the occupations for those without a bachelor’s degree will pay between $25,000 and $54,999 per year.

Income Level No Bachelors Degree Bachelors Degree
Wage Not Available 3 0
< $25,000 55 1
$25,000 to $34,999 95 2
$35,000 to $54,999 129 34
$55,000 to $74,999 30 49
$75,000 or more 3 50

And you shouldn’t be too envious of those who get a bachelor’s degree. The average college graduate has incurred $29,400 in student loan debt.  And they are also struggling to find a job:

Seven in 10 seniors graduated with student loan debt, and a fifth of that debt was owed to private lenders, which often charge high interest rates.

To make matters worse, the job market still hasn’t recovered, leaving many graduates with little or no income.

***

Still, the employment prospects of college grads are a lot better than those without college education. High school grads without college degrees faced an unemployment rate of 17.9% in 2012, compared to 7.7% for young college graduates.  (emphasis added)

Even college students who do find a job are finding out that they wasted their time getting that degree:

It’s getting tougher for recent grads to land a job worthy of their college degree.

Though the demand for college graduates rebounded after the Great Recession, it has leveled off over the past 18 months, according to new Federal Reserve Bank of New York research.

This is not to say that recent grads aren’t getting jobs. In fact, their unemployment rate has fallen to just over 5%, down from a peak of slightly more than 7% in 2011. And it’s less than half the rate of young workers who don’t have a bachelor’s degree.

But many recent grads are underemployed, working in jobs that don’t require degrees. The underemployment rate has been on the rise since 2003 and now stands at 46%. (emphasis added)

“It’s not a great time for college grads,” said Jaison Abel, an officer with the NY Fed’s research and statistics group. “This pattern we’ve seen of increasing underemployment could continue for some time to come.”

I wonder how those underemployed college graduates are making payments on their student loans?

Reality bites

9 of the top 10 occupations in the U.S. today pay less than $35,000 per year:

  1. Retail salespersons, 4.48 million workers earning  $25,370
  2. Cashiers  3.34 million workers earning $20,420
  3. Food prep and serving staff, 3.02 million workers earning $18,880
  4. General office clerk, 2.83 million working earning $29,990
  5. Registered nurses, 2.66 million workers earning $68,910
  6. Waiters and waitresses, 2.40 million workers earning $20,880
  7. Customer service representatives, 2.39 million workers earning $33,370
  8. Laborers, and freight and material movers, 2.28 million workers earning $26,690
  9. Secretaries and admins (not legal or medical),  2.16 million workers earning $34,000
  10. Janitors and cleaners (not maids),  2.10 million workers earning, $25,140

Guess what?  You don’t need a bachelor’s degree to get any of those jobs.  And the job market may not be getting any better for those who have earned their bachelor’s degree:

Dear Class of 2014: We regret to inform you that the nation’s job market continues to force college graduates to take jobs they’re overqualified for, jobs outside their major, and generally delay their career to the detriment of at least a decade’s worth of unearned wages. Good luck on your job search.

A job rejection letter to this year’s graduates, who are supposed to be starting their first truly independent adult years, might as well go something like that.

A jobs report for April gave grads a puzzling picture. Employers added the most jobs in more than two years, 288,000. Unemployment dropped from 6.7% to 6.3%, the first time it was that low since September 2008. Still, the portion of Americans 25-34 who were working in April fell to a five-month low of 75.5%, down from 75.9% in March.

“The entire drop (in unemployment) was due to people dropping out of the labor force, in particular young people,” says Heidi Shierholz, a labor market economist who writes an annual report on the state of employment for young adults for the Economic Policy Institute.

There is another reason to avoid getting a 4-year degree: there are already more college graduates than there are jobs that require a college degree.  Here are the facts:

#1 There Are Not Enough Jobs for College Graduates

A recent study by non-profit Center for College Affordability and Productivity says there are far less jobs available that require college degrees than there are college graduates seeking employment. Labor Department data used by the study showed 28.6 million jobs available that required a college degree and 41.7 million degreed professionals available to fill them. That means that unless something changes, some 13 million workers are not getting their money’s worth out of their education.

#2 Many College Graduates Are Working in Jobs That Require a High School Diploma (or less)

Not only are 13 million degreed workers not going to land in a job that makes use of their bachelor’s or master’s degree, many will work in jobs where a high school diploma is likely optional. 15% of taxi drivers have college degrees, 25% of retail clerks have graduated college and 5% of janitors are college alumni. Study author Richard Vedder says, “There are going to be an awful lot of disappointed people because a lot of them are going to end up as janitors.” Wow!

#3 You May Be Able to Make As Much Or More As a Skilled Laborer

There are over 500,000 manufacturing jobs across the US sitting open and hundreds of thousands more skilled labor positions. These require on-the-job training rather than any formal education and experts predict this job segment will be booming over the next decade. The age of the average skilled manufacturing worker is 56, so within the next decade, this generation will phase into retirement, leaving a huge skills gap. Skilled jobs like these pay an average wage of around $25 per hour which equates to about $50,000 per year. Average wages for someone with a bachelor’s working in their field are just $59,000. And manufacturing jobs often come with union protection, great benefits and no student loan debt!

#4 You May Be Able to Make as Much or More With an Associate’s Degree

While the cost of four year colleges and universities has been on the rise, community college and trade school tuition have remained low cost alternatives. The highest earning careers you can launch with an associate’s degree are in healthcare, occupational trades and technology. A good indicator of the earning potential of a career path is how much science and math are involved in the program. Nurses, respiratory and radiation therapists, engineering and aviation jobs are among the high earning jobs you can get with just two years of school.

#5 The More Debt You Graduate With, The Less Your Effective Earnings Are

Bachelor’s degree graduates average $20,000 in student loan debt. At 6.8% interest, paying back over 10 years, the monthly payments would be $230. That’s $2,760 per year less in your pocket. When you are job hunting fresh out of university, the impact of your student loan debt is important to bear in mind. To optimize your debt and ensure you are paying in the most effective manner, consider consulting a student loan expert. Trade school and community college graduates emerge with drastically less debt, often just a few thousand dollars. Your wages will be effectively higher if you owe less debt!

Save your time and effort to use on something you really want to do.  And avoid the student loan scam at the same time.  You’ll be better off down the road.

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Categories: Bad News Everyone!, College, Education, Opportunity Cost, Student loans, Tuition

Tags: , , , , , , , ,

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