Tuesday, February 12, 2013

The Perception and the Reality

There's this writer over at The Atlantic who constantly writes about the value of a college degree. And he gets these charts and data sets from various sources and I always shake my head because he's looking at the wrong data sets. It doesn't matter what the average college graduate makes because, in the current labor market, a college degree is only really important when you're finding your first career track job.

After that, it's all on you to deliver to the company. Because once you get actual real world job experience, your college degree matters less and less. By the time you move onto your third or even your second job, it becomes nothing more than a small line towards the bottom of your resume. Work experience is worth its weight in gold and it's much more important to your career than your college degree.

The degree only really helps you get your foot in the door. But considering the average young adult takes just over 5 years to gain their 4 year degree and that only 47% of recent college graduates hold a "college level" job, it has become pretty apparent that for the newest college students, college hasn't become the ticket to success that they were led to believe.

That writer over at the Atlantic, Derek Thompson, made the mistake of conflating older college graduates, who have already been in the labor market for an average of two decades with the value of current college degrees. When the "Great Recession" hit, it uncovered and exacerbated the declining value of college. Because suddenly businesses and employers didn't have the luxury of taking on marginal candidates and they quickly shed all of their employees who were really nothing more than barnacles encrusting the hull of the corporate ship.

About 18 months after the financial crisis, we were right back at the same amount of GDP, except we had shed about 4 million jobs in the process. Think about that. We essentially got rid of 4 million useless employees, who were apparently nothing more than window dressing and suffered nothing for it. That's what financial crises do. It makes people focus on the bottom line. You wanna work here? Close.

So every other college graduate is essentially stuck in a retail or restaurant job and we have people defending the value of a college degree? They were better off defending the better economy they had the good fortune to be in by the time they got out of college and got their first job.

Now, I'm not pissing on all college graduates. Because the fact of the matter is, in better times, all bachelor's degrees were a signal for employability. What exactly did it signal? A mixture of good parenting, intelligence, hard work (supposedly), perseverance, and social awareness. So if you got out with a college degree, that signaled to employers that you were somebody worth hiring.

Well now the recession (and its aftereffects) has put an end to all that. Now employers (with career track positions available) want the cream of the crop. So things have changed and so have the signals. Do you still want to signal employability to prospective employers? Now you have to get a B.S (bachelor of science) in a STEM discipline with a calculus requirement. That's the bare minimum.

Other signals of employability? Top half of your class in a top 14 law school. 700+ GMAT with an MBA from a top 10 business school. Oh, and the good sense to look sharp in a suit, speak in clear, full sentences, and look into the interviewer's eye when talking.

What everybody in the upper middle class always forgets is that 70% of this country don't have even a bachelor's degree. And most of those people who are working age have jobs. The great lie that parents have told their kids and to themselves is that college is a springboard to success. I'm coming around to the notion that, for the vast majority of people in the US, it's not.

I suspect that there is quite a large minority of high school students who are perfectly capable of getting through college who could also skip college entirely and enter in the workforce as soon as they got their high school degree, and then by the time their former high school friends graduate from college and enter in the workforce with them, they'd be in very similar overall situations. There is a definite opportunity cost for people who go to college. And half of them won't even graduate within 6 years or drop out completely.

In its current form for most people, college is nothing more than a social experience where kids can cloister together with other kids around the same age so they can drink, party, attend football games, have sex, and learn how to socialize in a non-high school format. And it's only recently that the perception of college and the reality of college have begun to intersect.

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