The Market for College Grads Keeps Changing


Indebted college graduates have recently begun
to ask whether a four-year college education is worth what it costs.  According to an article in the Wall Street Journal on February 11, for
example, 23-year-old Bryce Harrison, who graduated last May from Goucher
College with a political-science degree and about $100,000 in student loans to
repay, is now unemployed and is considering joining the National Guard.  He had spent the summer working for his father,
power-washing houses. “Was college worth getting in the amount of debt I’m
in?” he asked. “At this point, I can’t answer that.”

In a front-page article on February 19, the
New York Times reported that “The college degree is becoming the new high
school diploma: the new minimum requirement, albeit an expensive one, for
getting even the lowest-level job.” This kind of doubt about the value of
college is not new. Even in the middle of the 20th century,
economists expressed skepticism about the economic payoff of a college
education.  In 1949, Seymour Harris, a
distinguished professor of economics at Harvard, published The Market for
College Graduates
, a book that
questioned the alleged financial payoff of going to college. It argued that the United States was
sending more young people to college than the number of professional and
business occupations likely to open up for them  in the decades ahead. He admitted that his was
a purely economic analysis and that the cultural and psychological benefits of
a college education might well justify the investment of time and resources.
Professor Harris’s pessimistic assessment of college education as an investment
was almost unanimously pooh-poohed at the time, although some distinguished
educators agreed with him. Harvard president James Bryant Conant even opposed
the G.I. Bill because he did not believe that the United States needed more
college graduates.

Some Don’t Expect a
Lot of Money


course, getting high salaries are not the only reason for going to college. “College
graduates” are an extremely heterogeneous group, including liberal arts majors
in philosophy, English, music, and Icelandic literature; prospective social
workers, actors, and ministers; career military officers; technically trained
chemists, physicists, engineers, and computer scientists; and hundreds of other
interests and majors. Long before grade inflation muddied the waters, studies
of college graduates showed that those employed in some fields –and received
high grades — made more money than those employed in some other fields. Some
college graduates find it easy to secure entry-level jobs in fields that offer
prospects of career development, although perhaps not much in the way of money.
 College students who wished to become
primary school teachers or social workers probably did not expect high
salaries.  Others discover that little or
no market demand exists for the college curriculum that they have pursued.  Nevertheless, the economic payoff of a college
education is a consideration for most students. 
How does the increasing number of college enrollments affect that

A Forgotten


In 1949-1950, 432,058 bachelor’s degrees were
awarded, three-quarters of them to men. In 1949, the 17 to 24 population of the
U.S. was 18,381,654, with males accounting for 9,153,410 and females accounting
for 9,228,244.Veterans of World War II, most of them male, returned to the
colleges they had left for military service, thereby swelling postwar college
enrollments, as did veterans who had not been to college before their military


At first, the glut of college graduates that
Professor Harris had worried about seemed unlikely to materialize.  The number of college graduates declined as
veterans passed through the system of higher education. By 1959-1960, only
392,440 bachelor’s degrees were awarded; the proportion awarded to males
dropped to 65 percent. However, by 1969-1970 the number of bachelor’s degrees
awarded rose again–to 792,656, while the proportion earned by males dropped to
57 percent. The main reason for the increase was, of course, the baby boom of 1946-1964,
but another factor was the rising number of females who wanted to attend
college. By 1979-1980 bachelor’s degrees had climbed to 929,417, and women
received 49 percent of them.

Professor Harris’s gloomy prediction was
largely forgotten. College administrators feared a decline in college
enrollments. Demographers predicted that with the ebbing of the baby boom, the
number of high school graduates would peak at about three million in 1976-1977
and would probably decline thereafter. Had this predicted decline in high
school graduates occurred, resulting in a decrease in college enrollments, a
scarcity rather than a glut of college graduates would have soon showed
Professor Harris’s assessment to have been spectacularly wrong.  But this decline did not continue.


The Sharp Rise in College Enrollment


proportions of high school graduates enrolled in college in the 1980s than had
enrolled in past decades. In addition, sizable numbers of older persons in the
work force who had missed out on college decided to enroll even if it meant continuing
to work full-time and becoming part-time students. By 1989-1990 bachelor’s
degrees exceeded a million and continued to climb. By 2006-2007, 1,524,092
bachelor’s degrees were awarded.


Harris’s prediction was based on extrapolation of the future needs of a
relatively static American economy
for professional, technical, and managerial employees, as well as on his
assumption that education is subject to the law of diminishing returns. But far
from being a static economy, the American economy grew enormously after World
War II ended so that the job market was easily able to absorb most college
graduates–contrary to the fears of Professor Harris and President Conant.  Consequently, investment in higher education
paid off, both for the individual and for society.


The Current Job
Prospects for College Graduates


about the job prospects of current
college graduates? What has happened that explains why, like Mr. Hamilton, many
college graduates cannot find positions that enable them to pay off their
student loans? Is it simply a sluggish economy that is not generating enough
jobs?  As is well known, unemployment
continues to hover around 9 percent despite stimulus programs undertaken by the
Federal Reserve and the U.S. Treasury. Congress cannot repeal the law of supply
and demand.


the job market of modern industrial society like the United States is extremely
heterogeneous. The market for labor services includes the market for the
services of college graduates; at the same time, a seller’s market can exist for
plumbers and pharmacists and there can be a glut of naval architects and
sociologists. This is inevitable in a dynamic system in which young people are
free to prepare for any career that interests them and in which schools and colleges
are free to enroll as many students as they wish regardless of whether or not
jobs exist for their graduates. Eventually, the lessons of the labor market are
heeded. If too many naval architects are being trained in American engineering
schools to get jobs in a field that is declining in the United States, fewer
engineering students will specialize in naval architecture. But this lesson
takes time to sink in; moreover, for those passionately interested in a field,
hope trumps market considerations.


besides the vicissitudes of the labor market, an additional factor contributes
to the poor employment prospects of many college graduates. Too many have
enrolled in college believing they could have four years of fun and graduate
from any four-year college after
majoring in any field  — gender studies, sociology, ethnic
studies– and obtain well-paying jobs easily. 
In fact, the market for college graduates has changed. Except for
graduates of pre-professional curricula like engineering or pharmacy, employers
can afford to be choosey, even for entry-level jobs. For young, inexperienced
graduates who majored in liberal arts fields, prospective employers can afford
to look nowadays for graduates who have taken difficult courses, have internships
on their resumes, and have gotten top grades. As a result, some college
graduates find jobs quickly and others drift for months and even years,
unemployed or employed in jobs that do not require a college education, earning
so little that they are compelled to move back with their parents and extend
their adolescence. In short, too many students enroll in college without
realizing that learning is difficult and that recruiters are sophisticated
enough to distinguish graduates who majored in fun from graduates who took
education seriously and had the ability to profit from diligent study.


statistical fact supports the widespread belief that attending college is still
worth it financially. The earnings of college graduates are, on average, twice
the earnings of  high school
graduates.  On the other hand, there have
always been some college graduates who worked, at least temporarily, at jobs
that did not require a college education and who earned less than the average
high school graduate. Statistical studies conducted by labor economists at the
Bureau of Labor Statistics, Daniel Hecker and Kristina Shelley, documented this
phenomenon. In the late 1960s one in ten college graduates worked at jobs not
requiring a college education: typists, file clerks, sales clerks, phone
answerers; in the 1980s one in five college graduates held jobs usually
performed by those with only a high school education. Furthermore, a decade ago
the Bureau of Labor Statistics projected that the mismatch would get worse
because the number of college graduates entering the labor force would grow to
about 1,380,000 per year between 1996 and 2006 but the annual number of
college-level jobs available during that period would be only 1,130,000.


The Wide-ranging
Consequences of Unpaid Student Loans


third of the graduates of four-year colleges have no student loans to
repay.  Some were lucky enough to have
had parents or other relatives who financed their higher educations; others
went to low-cost community colleges for their first two years before
transferring to senior colleges, worked at low-paying jobs, and saved for
college expenses.  But two-thirds of
recent four-year college graduates have sizeable student loans to repay, and as
the cost of college keeps going up, the proportion of graduating seniors with
student-loan debt has gradually been increasing. One possible effect of these
loans is to trap graduates without good jobs in a prolonged adolescent limbo,
including burdening their parents economically and discouraging the graduates
themselves from assuming the responsibilities of marriage and children.  Another paradoxical effect is to encourage
graduates to undertake additional professional studies, whether interested in
them or not, because repayment of existing loans is not due while students are
still in school.  It is a paradoxical
effect because more student loans would probably be needed, enmeshing them
deeper into debt.


get back to college graduates like Mr. Hamilton, the unemployed graduate with
$100,000 in student-loan debt: it seems obvious that, before making a student
loan, someone should have considered this student’s prospects in the job
market.  Failure to carefully scrutinize
employment income was one of the factors that led to the housing bubble.  The student-loan program began in 1965, too
early for the lessons of the recent mortgage crisis to give forewarning.
Congress might have required some relationship between the education the
student was asking for help to obtain and the size of grants and loans.  Congress considered instead only the
financial need of students.


change.  President Obama and the Congress
are dealing with enormous annual deficits and a growing national debt.  Both Democrats and Republicans are asking
questions about the billion and a half dollars that the Department of Education
spends each year on student grants and loans. 
Desirable though higher education is, it must compete with other
desirable activities for which there is not enough money.


  • Jackson Toby

    Jackson Toby is professor of sociology emeritus at Rutgers University, where he was director of the Institute for Criminological Research. He is an Adjunct Scholar at the American Enterprise Institute.

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