Making College Pay
By The Editorial Board
Feb 12, 2014
It seems logical: College graduates have lower unemployment and earn more than less educated workers, so, the thinking goes, the fix for today’s anemic growth in jobs and wages is to make sure that more people earn college degrees. But that’s a common misperception, deflecting attention from the serious work that has to be done to create jobs and improve incomes.
A college education remains a path to more stable, higher-paying employment. The recent jobless rate for college graduates ages 25 and older was 3.2 percent, and their median pay at full-time, full-year jobs was $75,300 for men and $53,700 for women. That is a far lower rate of joblessness and a far higher pay level than for high school graduates and people without high school diplomas.
But that doesn’t mean that enough good jobs are, or will be, available for college graduates. Though joblessness for college graduates ages 25 and older looks tame, the jobless rate for those under 25 averaged 8.2 percent in 2013, compared with 8 percent in 2012 and 5.4 in 2007, before the Great Recession hit in full force.
Recent graduates also face rising underemployment, meaning that they work in jobs that typically do not require bachelor’s degrees. According to new research from the Federal Reserve Bank of New York, the rise in underemployment for graduates ages 22 to 27 never fully retreated after the recessions of 2001 and 2007-9; in 2012, it was a dismal 44 percent for that age group, compared with a steady underemployment rate of 33 percent for college graduates as a whole over the past two decades.
Pay, meanwhile, has stagnated for college-educated workers over the past 12 years. That’s better than declining, as has been the case for less-educated workers. But it also shows that a college education, in and of itself, does not create good jobs at good pay. For that, a thriving economy is essential — including consistent pro-employment policies and investments by business and government.
Right now, the outlook for more good jobs at good pay is not good. According to recent data from the Bureau of Labor Statistics, of the 20 occupations expected to add the most new jobs from 2012 to 2022, only one — general and operations management — requires a bachelor’s degree. It also pays well — the median salary in 2012 was $95,440. Most of the other big-growth occupations offered very low or moderate pay, with the biggest growth areas generally being the worst paying, including home health care, retail sales and food service.
The bureau also ranked the occupations that are expected to grow the fastest from 2012 to 2022. Of the top 20, seven require a bachelor’s degree or higher, including jobs as interpreters, information security analysts and health care professionals; median pay for those jobs in 2012 ranged from $45,430 for interpreters to $90,930 for physician assistants. Of the 13 fast-growing jobs that do not require a degree, most are in health care or building trades, with typical annual pay of about $20,000 to $30,000.
All of which means that a major challenge for policy makers and business leaders is to confront the obvious: that most new jobs are likely to be lower-wage jobs. That requires plans for creating pathways from low-wage work to better-paying jobs, say from home health aide to vocational nurse, as well as strategies to foster the development of higher-paying industries. The situation also demands support for policies and institutions that lift wages, including a robust minimum wage and unions.
On its own, more college won’t change the economy’s low-wage trajectory.