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The college graduation ceremony is an expression of joy, but also reassuring. As the photos were taken, Tassel turned around and hugged and exchanged, hoping that all the hard work and money would be worth it.
But many Americans don't believe it is. Confidence in higher education institutions has dropped dramatically over the past decade, and among political groups, Republicans have shown the most skeptical of theism. A 2024 Pew Research Center report noted that only one in four Americans said, “It is very important to have a four-year college degree to get a high-paying job in today’s economy.” The recent fact that graduates have become increasingly difficult to find jobs has not played much inspiring belief in higher education. The Federal Reserve Bank of New York reported in late April that the unemployment rate for recent graduates was 5.8% (total unemployment rate of 4.2% compared to the highest rate since July 2021).
Some of the challenges of finding a job after graduation are more about the economic model of the past few years than the flaws of college. In 2021, the United States is undergoing a "big resignation" when many people are resigning to find better salaries or better working conditions. However, after a sharp drop in inflation in the same year, the U.S. Federal Reserve raised interest rates in 2022, so demand for white-collar industry jobs such as technology and consulting firms cooled. Now, my colleague Derek Thompson told me, “The big resignation has become what some people call 'great accommodation'.” “We are still adding to work, but for the music chairs before, there aren't that many vacancies."
The years after the pandemic are also a period of major wage growth for traditional low-paying industries such as retail and hospitality These employ large numbers of workers with less education. However, this growth may not continue throughout the worker's life: Overall, the income of low-paying jobs that do not require a college degree tends to stagnate over time. "Wages grow faster for educated workers because colleges are the gateway to professional careers such as business and engineering, where workers learn new skills, advance and gain management experience." Atlantic In 2023.
If we get recent unemployment statistics due to specific pandemic trends, they don’t have to make people give up on college. But the question about the benefits of college degrees is far away before the pandemic. Research by the Federal Reserve Bank of San Francisco estimates that the income gap between college and high school graduates stopped widening around 2010 and has been quite stable since then. The experts I talk to have a clear idea: College wage premiums are still high - in other words, college graduates make more money on average than non-members. In fact, the latest data show that the median salary of college graduates aged 22-27 is 50% higher than that of high school graduates of the same age. But this premium does not seem to rise.
Part of this story is a fact that employers have found it has been easy to hire high school graduates to do the same entry-level jobs as college graduates. As San Francisco Bank researchers have pointed out, this may be because we have seen a relatively slowdown in the invention of new technologies that prefer college graduates who use them, like desktop computers in the 1980s. And, while it is too early to illustrate the impact of generative AI on the job market for new graduates, the technology seems likely to introduce the opposite dynamic: rather than giving college graduates an advantage, but reducing the number of entry-level jobs that require more formal education.
The salary premium at universities is still high, which means getting a degree is still beneficial. But who is it? A new working paper by Zachary Bleemer, assistant professor of economics at Princeton, Sarah Quincy, assistant professor of economics at Vanderbilt, found that in the first half of the 20th century, universities offered the same wage value to students from high-income backgrounds. Things changed after the 1960s: Since then, the total returns for colleges have grown, and the relative value of low-income children has steadily declined.
Some of these are because low-income students are less likely to enroll in traditional four-year colleges than high-income students, and instead choose community or for-profit colleges. Another reason, Bleemer told me, is that in recent decades, many states have chosen to invest more in their flagship schools than in local public universities, where there is a large percentage of students recruiting. As the gap between these schools widens, Bremer said, “The relative value of colleges to low-income kids who mainly go to these local public institutions has declined.” It is also important for students to choose majors: in recent years, high-income students are more likely to earn degrees in computer science and engineering. He said that as colleges become increasingly selective about which students in these degree programs are becoming, “low-income kids are increasingly excluded from these very high-paying subjects,” he said.
Bleemer has the same caution with other experts I have spoken to: Although the relative value of low-income students has dropped, “it is still larger than zero.” He noted that I have conducted research from several states that demonstrate the long-term outcomes of college values for students who have just been allowed to enter the state’s public higher education system, especially those with lower incomes. Research shows that going to college is valuable to these children, “more valuable than the tuition fees they incur.”
Even if the numbers provide a reason for colleges, Americans’ distrust of higher education has nothing to do with the return on investment. Some of their doubts stem from the reality of a tough job market, but the other part is rooted in broader political views and abstract ideas about the dangers of academia. These questions may also have a basis for the lack of confidence among Americans in institutions and between them.
Colleges cannot solve these problems alone. But schools and the governments that fund them do play a role in earning this trust – strengthening the reputation of universities is a place to learn, discover yourself and find a wealth of opportunities. More state and federal investment in higher education may help. But as the Trump administration tries to strip schools of federal funding, it’s clear that building universities to better benefit students is not a national priority.
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Isabel Fattal contributed to the newsletter.
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