Monday, May 24, 2010

Our Growing Glut of College Graduates

I've long warned against justifying going to college because of the GROSSLY misleading statistic that you earn much more with a college degree. See my previous writings on the topic, for example, this, which first appeared in the Chronicle of Higher Education.

But now, college degrees are becoming an ever WORSE value:
  • The ever-higher percentage of high school graduates going to college forces professors to dumb down classes. That's a key reason why the percentage of college GRADUATES with good literacy skills is declining (from 40% to 31% in the last decade alone.)
  • The glut of college graduates. As the quality of college graduates declines while their supply goes up, employers are loathe to hire them, not just because their supply is high and quality is low, but because government-mandated costs of hiring Americans continues to escalate: social security, workers comp, unemployment insurance, mandated diversity and sexual harassment training, etc. The latest, of course, is the ObamaCare requirement that employers provide health care for not only employees but an extra percentage tacked on to pay for low-income people who don't work for the employer. Ever more, it makes sense for employers to automate or offshore, and to hire what Americans it needs, part-time, temp.
  • The price tag of a college education continues to soar, far in excess of the inflation rate. The published sticker price for four years at many brand-name private college is $200,000. And MOST students do not graduate in four years. Indeed, when you look at the 200,000 college freshmen that graduated in the bottom 40% of their high school class, 3/4 of them don't graduate even if given 8 1/2 years! And even if they defy the odds, they usually have attended a third-tier college with an easy major such as sociology, neither of which moves many employers to pay them more than they could have earned straight out of high school. And if such students hadn't gone to college, not only would they not have accumulated all that debt, they wouldn't have had to endure years of boring, too-difficult-for-them courses, and the resulting non-stop assault to their self-esteem.
Well,, I've said much of that in previous posts. What's the most recent data show about college graduates:

ATThe just released national poll of employers is titled: "College Graduate Hiring Declines." The report states, for example, "55% of companies said that 2010 graduates are in a less advantageous position than other job seekers – and the top two reasons are the economic climate and their lack of qualifications."

And this from Bloomberg: College Grads Flood U.S. Labor Market With Diminished Prospects.


WhWhen will prospective college students and especially the parents of not academically oriented high school students and their counselors realize that for many students, a wiser post-high-school path is an apprenticeship, on-the-job-training, or career training in the military.


Anonymous said...

But Marty, this is a vicious cycle. The unprepared kids go to college, the college curriculum gets dumbed down, and then you have employers face palming themselves and asking for ever more credentials. You have NYC Craigslist ads asking for college degrees to be someone's secretary. I find myself in this predicament for being smart and skipping college and working for 15 years. Now, I'm put in the circular bin because I don't have a college degree.

It has to start with the employers. They need to be able to better screen candidates via behavioral interviews, tests of knowledge and temp-to-perm arrangements. Otherwise, this vicious cycle will not stop.

Anonymous said...

The second point, about the costs of hiring anyone, is just that - a point about the costs of hiring anyone, not just college grads.

It's probably also a point about why so many small businesses stay small, and why so many fail. When a business limits itself to what a single person can do, it's fighting for scraps. In a consultancy, for instance, there's a big wall for a one person shop.

And on the other side of the table, the folks evaluating bids are going to have to consider the mythical bus: what if a sole proprietor consultancy lands an important ongoing contract, and then the proprietor gets hit by a bus?

So there are a lot of multimonth or multiyear contracts that a sole proprietor won't bid on, or won't win on. That's truer the older the proprietor gets. The bus might become a more-likely illness or disability, and there's skepticism about what level of energy someone in their 50s brings to the job.

Those longer jobs are what tide people over and let them build bank so they can bid on other gigs.

Honest question: Was your partner working at a gig with benefits that extended to you during most of your freelance career?

Marty Nemko said...

Candidly, my wife's job had no impact on my career choices. I've always felt that my intelligence and drive would allow me to do okay.

Anonymous said...

No argument about your brights, but I wonder how many - even of the brightest folks - would be willing to have kids these days without one partner having access to health insurance through an employer-subsidized pool.

If a sole proprietor in a consultancy has a partner with access to that coverage, unless he goes out and buys a policy on his own, there are two things that go on: he's less likely to have large, unexpected medical bills and (depending on the relationship rules, of course) more likely to have a revenue stream which covers basics even between contracts.

Marty Nemko said...

If I couldn't get individual or group insurance, I'd self-insure, putting away a few hundred a month in a China etf. And I'd negotiate with my provider for a discounted rate each time I needed health care.

Anonymous said...

If only healthcare were that cheap. Maybe you have never been seriously ill and had to pay out of pocket. And without the insurance company negotiating for you, the provider will charge you MORE, not less, as a non-insured customer. I had to pay $260 for an EYE EXAM because I couldn't produce my insurance card. Contacted the insurer later, they insisted on the negotiated price, and I got a refund of $126, nearly HALF. Years ago uninsured for a summer I had to pay $250 to see a rhumatologist for 10 min. My mom paid $120 on her plan, same guy.

An "I can handle anything" attitude tends to discredit your advice and credibility suffers with your readers. I'm doing fine, but lots of folks out there are not. Telling them it's just their bad decisions would be a mistake.

Anonymous said...

Back to the topic. My wife was a VP for a major bank, worked for years at another financial institution that was huge but was going bankrupt, and when she was laid off in 2008 she would get nixed by employers because she didn't have a college degree. They didn't care if it was in PE or history, they just wanted the stupid piece of paper. They would be ready to hire her and only then find out she had no degree, then back out of the deal. Crazy. Meanwhile her college grad and even MBA employees could not even write a proper email. It's definitely dumbed down. Thankfully she found a much better job, works from home for a small privately held lender. Find the right place and the experience matters much more than any degree. But that experience needs to be successful, not just taking up space. She makes a lot of money now because of job experience, not college.

Anonymous said...

The first poster made a good point about "credential creep." It's probably inevitable, given that more and more credentialed people are chasing a relatively static number of jobs.

Another factor is that more hirers are credentialed themselves and will pass over an uncredentialed applicant rather than admit that their own long, expensive career preparation was unnecessary.

Finally, the Supreme Court outlawed the use of IQ tests in hiring almost 40 years ago. Most companies feel they have no way other than degrees to measure an applicant's intelligence.

Marty Nemko said...

A decent shopper can get an eye exam for free or under $50. If we had to pay for health care out of pocket, the invisible hand of the markets would drive down prices. When the consumer has no skin in the game, prices go up.

Anonymous said...

As a member of the much-reviled Generation Y, I have seen this play out in real life in many devastating ways. Not so much for the smart kids––although they, too, suffer––so much as the not-quite-smart kids, who have had to work themeselves to the brink of a nervous breakdown just to get a piece of paper that is, at bottom, worthless. Such a kid would do fine as phlebotomists, veterinarian's assistants, stonemasons, EMTs or another rewarding but demanding mid-IQ job. As it is, they remain stuck in degrading service jobs, or as low-level cubicle slaves.

We really have to legalize IQ testing for jobs, as well as aptitude and certification tests. Not because IQ is the be- and end-all of human achievement (it's not) but because it saves young people so much time, money and humiliation. If you take six IQ tests over an eight year period, your employer gets the gist of your intellectual level.

Jeffrie said...

The statistic that college classes are dumbed down more & more does not surprise me at all. To me, it's the natural result of people who shouldn't be in college being in college.

I wonder when we'll start seeing the statistic that people with college degrees earn less than generations past. It's already not a job guarantee anymore.

And if this trend continues, with declining quality & rising costs, where will the really smart people go? Will grad school be enough? If undergraduate education is getting worse, it's only a matter of time before post-graduate courses are affected. If I were very smart, and facing this situation now, I'm not sure I'd want to go to college at all.

Frustrated Fed said...

I agree 100% about the need for valid IQ/aptitude testing. They did this in the military during WWII. Why was it eliminated?

Anonymous said...

Anonymous at 10:49 PM, the reason why employers can't give IQ tests for jobs and the reason why so many employers want to see a degree is that it's considered discriminatory to do so, according to the 1971 Supreme Court ruling in Griggs v. Duke Power.

Because giving IQ tests could potentially show a "disparate impact" (whites and Asians scoring higher than blacks and Hispanics), and any form of pre-employment testing must be based on a business necessity to be legal, employers use degrees as a very rough proxy to gauge applicants' intelligence and work ethic.

Anonymous said...

Thank you poster May 26, 2010 6:18 AM. I had a feeling this was the reason for not administering IQ tests. What about aptitude tests?

Jeffrie said...

It appears that my previous question may have an answer.

This New York Times article discusses how the job market looks for new college graduates. The average salary for those who find a job, $47,673, is slightly down from last year.

Here's a quote from an economics professor: "If you work in a job that doesn’t require a college degree, you’ll make 30 or 40 percent less," he said. "One reason a lot of high school grads are having such a hard time is you have college grads willing to take jobs that high school grads used to get."

That same professor also said that only 51% of college graduates under age 25 were working in jobs that required a college education, down from 59% in 2000.

I have no proof, but I'd guess that number is probably bigger. How many jobs that ask for a college degree really need them? How many of those jobs are more on-the-job training than anything else?

Louis Lapides said...

Marty, I learn more from you about job hunting than any college could teach me. And I have a B.A. and two Master degrees. Big deal. I happened to post a blog on the same subject. It's an honor to know we think alike.

Marty Nemko said...

Especially under the new health care plan, in which a person can't be denied coverage because of a preexisting condition, the lack of a spouse with group insurance shouldn't be a deal killer in deciding whether to be self-employed. Even at my age, 59, an individual Kaiser plan (and I think Kaiser is a good provider) costs, if I recall, under $5,000 a year.

ST said...

I don't agree with giving IQ tests for employment screening. Even aptitude testing is limiting. Better, would be an in-person test where you are given short "assignments" and problems to solve in the interview to prove you can do the work (or have the potential to learn and grow into the work). Then, all this can fail too, good employees are not just an IQ, an aptitude number, or skilled, they need to be motivated to actually perform day in and day out, something you don't learn until the employee actually starts working (references "might" help here, but again, not perfect, who would give a "bad" reference). There's a lot of BSer's out there who talk a good game (and should probably be in sales :) ). They spend a lot of time NOT working while using their verbal and political skills to avoid work and make it look like they are part of a "team" and getting stuff done.

Some of the best computer programmers I ever worked with weren't geniuses, but they could learn the basic tasks, got pretty good at them, and worked like dogs. Work ethic and passion for the work can't be tested for apriori.

Anonymous said...

My officemate, a nonsmoker in her 50s with no visibly obvious health problems, kept her coverage in Kaiser via Cobra after being laid off by UC.

Once Cobra ran out, the premiums reached 600/mo before she had to stop paying them.

Obviously, the new Federal health insurance laws are not yet in play, so banking on them won't work.

I gather you do not have personal experience putting 'skin' in the individual policy health insurance 'game.'

For those of us not lucky enough to be married to someone with public education union negotiated health benefits, please do remember: it's not a game.

It's a continuing expense - with or without a college degree - that you ignore quite literally at your peril.

It's not, in itself, a reason not to try going it on your own. However, a small shop with thin margins that can't bid on long continuing jobs - in part because the shop is small - may well find during the lean times that, hey, that job working for someone else? not a bad idea.

John said...


Factor in the irresponsible policies of for profit colleges coupled with the government programs enouraging anybody with a pulse to get a degree, even a dubious one.

The result: A financial aid default bubble very similar to the "everybody with a pulse gets a mortgage bubble".