The case against needing a degree to get a good job
It's long been a given in America that higher education is the path to career success. And it still may be, but more questions are arising about exactly what type of education people should get. Some evidence suggests that forgoing a traditional four-year college and focusing on trade or cutting-edge factory skills might make more sense, leading to a good-paying job and with far less debt to manage.
It's easy to see that telling people if they get a college degree they'll enjoy the unlimited opportunities is an overstatement. There have always been periods during which education, particularly STEM-related (science, technology, engineering, and math), has taken a beating. When the economy slows or a recession develops, many in high-flying jobs find themselves sailing out of employment.
But, in general, there's a strong correlation, particularly today, between education level, employment rates and median earnings, as the following graphic from the Bureau of Labor Statistics (BLS) shows.
If anything, the relationship is understated because only full-time workers age 25 and older were taken into account. The benefits of higher education would be clearer if you add in part-timers, people working in the so-called 1099-, gig-, or task-economy, and unemployed youth.
Unfortunately, another strong relationship exists between family income and matriculation rates, according to the Pell Institute. First, dependents of wealthiest quarter of families are more likely to enter college than those in the bottom three-quarters, with the chance dropping sharply as income gets lower.
And even when those not from top-earning families do get into college, they face enormous difficulty, in large part because of the cost can overwhelm their ability to pay. In 1974, the maximum Pell Grant, a low-income form of federal financial aid, was $4,680 while the average college cost was $8,858. For the poorest, that Pell Grant could represent 53 percent of the cost of college. In 2012, the maximum Pell Grant was $5,550 while the average cost of college was $20,234. Pell Grants represented only 27 percent of the cost of college.
In 1977, families bore 33 percent of higher-education costs. In 2012, the number was 49 percent. Coincidentally, the chance of people from lower-income families getting through college dropped significantly. In 1970, those from the wealthiest families were six times more likely to obtain a bachelor's degree by age 24 than those from low-income families. By 2013, that factor increased to eight times more likely.
What many from middle- and lower-income families need is a path that can lead to better jobs without being so burdensome that students have to give up or borrow so much that they're under significant financial pressure for years to come.
Training for modern manufacturing, which uses high-tech methods and tools, is one possibility. According to a Deloitte estimate, 3.5 million manufacturing jobs will need to be filled over the next 10 years as baby boomer workers retire. However, 2 million are likely to go wanting because younger applicants won't have the necessary skills. That means 80 percent of manufacturers will pay more than the market rate to get the people they need.
One or two years of vocational training can ready people for jobs that pay $44,000 to $55,000 and more, even to figures approaching $100,000, depending on location. The schooling is far less costly than a traditional university education, and workers may find themselves in a position, depending on company benefits, to more easily continue their education.
Some trades may also provide good opportunities after the appropriate training. Some in the HR field have already reported shortages of people becoming electricians or plumbers. The median pay for these jobs was nearly $50,000 in 2012, according to the BLS.
It might be time to convince your kids to go into blue-collar work that could set them up with a decent living. Then, if the toilet backs up, you'll probably know someone who could come by and fix it.