|Indentured Student (Image from Flickr, by DonkeyHotey)|
Half of all recent college graduates are currently unemployed or underemployed in low wage jobs unrelated to their training, the San Jose Mercury News reported this week. Roughly 1.5 million, or 53.6%, of those under the age of 25 with bachelor's degrees were jobless or underemployed. This is the highest rate in more than a decade.
While it is true that average wages are higher and unemployment lower overall for those with college degrees, the type of degree and its cost are becoming more and more significant, particularly for recent graduates who are facing a dismal job market and skyrocketing debt. With average student debt of more than $20,000 and the dearth of decent-paying jobs, college has become a big financial gamble for young people. Graduates with degrees in zoology, anthropology, art history and philosophy, for example, were among the least likely to find jobs in their fields, while many recent college grads are accepting low wage jobs as bartenders, baristas and retail clerks.
Government projections released last month indicate that only three of the 30 fields with the largest number of projected job openings by 2020 will require a bachelor's degree: teachers, college professors and accountants. The majority of projected new jobs will be in retail, fast food and truck driving. According to the Mercury News report, close to 95% of the jobs lost during the recession and “recovery” were middle-income occupations like bank tellers, and many of these are not expected to return due to technological advances.
Considering the job prospects and the potential debt after four years of college, young people need to carefully weigh the risks and benefits of investing in a degree program. For example, if one is earning only $24,000 per year after taxes, or $2,000 per month, and spending half of that on rent, how can they afford to pay back any of their debt and still afford to eat? Even with an after-tax income of $36,000 per year, people living in high cost cities like New York, San Francisco or Los Angeles would have a difficult time surviving and paying back their debts.
Deliberately choosing a college major in one of the few growth industries (e.g., K-12 or college educator or accountant) might seem like a prudent move. However, even this is a huge risk. 50% of all teachers leave the profession within the first 5 years, at which point, they may still be saddled with a large college debt and lack the skills for a more appropriate and adequately paying job. At the same time, the working conditions for both K-12 teachers and college professors have been deteriorating rapidly, with increasing teaching loads and student to teacher ratios, longer hours, increased responsibilities, and decreased opportunities for tenure and job security. Thus, even for those with the interest and desire to stay in the field, they could still find themselves jobless within their first few years.
Do I even need to say anything about the absurdity of becoming an accountant just to be able to pay off one’s student debt?