College Degrees and Social Mobility
Are you currently or about to be a college student? A recent college grad? If so, you probably hope that your college degree will help you in the job market. According to the Cooperative Institutional Research Program (CIRP)’s annual study of college freshmen, in 2009 78 percent of college freshmen said it was very important or essential to be well-off financially. This isn’t a big surprise during economically hard times. But does a college degree help you move up economically?
A recent Los Angeles Times article posed this question, noting that “a diploma is no longer seen as a guarantee of a better job and higher pay.” In light of the rising costs of a college degree, which Sally Raskoff recently blogged about, it is worth exploring whether going to college is still linked with upward mobility.
As you can see from the Bureau of Labor Statistics (BLS) unemployment data below, more education means a greater likelihood of having a job. The recent recession impacted construction work and retail positions especially hard, so it’s not surprising that those with less education who might be more likely to work in those fields would have higher unemployment rates. Having a bachelor’s degree instead of only a high school diploma essentially reduces the odds of unemployment by more than half.
BLS data also show that more education means higher median income, as the graph below details. People holding advanced degrees have the highest median weekly income, but notice the big jump between earnings of those with some college and those with a college degree.
Seems pretty straightforward so far: going to college means earning more money. But when we look at earnings by education and gender, the picture becomes a bit more complicated. Education has a more modest impact on women’s weekly earnings. The BLS data show that men out earn women at every education level and that women with college degrees earn only slightly more than men without four-year degrees ($45 a week).
Women with advanced degrees actually have a lower median income than men with only bachelor’s degrees; likewise, women who have attended some college earn less than men with only high school degrees. For women, a college degree might yield less income than it does for men, but it still provides a boost compared with those without degrees.
The Times story notes that the percentage of bachelor’s degree holders in professional and managerial positions has declined over the past several decades, and future job growth is expected in the service sector. Jobs like customer service, food servers, and healthcare aides don’t tend to pay very well in contrast to professional and managerial jobs: in April 2010, the median weekly income of someone in a management-level position was $1,068 compared with $476 in a service job, according to the BLS. When you consider that service sector work is more unstable and subject to seasonal ups and downs, there is an even greater disadvantage.
So what does this mean for an aspiring college student or recent college grad?
You could choose your major based on the job prospects it carries. A 2009 Forbes magazine article lists the top ten majors with the lowest unemployment rates:
Management Information Systems
Bear in mind there are likely people with degrees in these disciplines who are still looking for a job. But what if nothing on this list appeals to you?
Choosing a major only based on potential income virtually guarantees you boredom at school and on the job. I haven’t been shy about touting the marketable skills that a sociology degree brings, and a college degree is worth very little if it doesn’t enhance your personal skill set and interests.
The bottom line: college degrees matter. On average, your income will be higher and your chances of being unemployed will be lower if you have one. But keep in mind that a degree does not guarantee a permanent position in the middle class. With more people holding bachelor’s degrees than in the past, (11 percent of Americans 25 and older had a bachelor's degree in 1970, compared with nearly 30 percent today), there is more educated competition in the labor force than there was a generation ago. As the Brookings Institution recently reported, many middle-class families experience an “income rollercoaster” due to shifts in the economy.
A degree is like having a life vest while sailing: it’s really important to have, but it will not always save you. The rising costs of a four year degree may make earning one a bigger challenge, particularly as colleges raise tuition and fees. It’s likely that a degree has never been more economically important, but it is vital to be realistic about your earning potential, especially if you are going into debt in the process. Graduating with massive student loan debt could offset the income gains a degree brings.