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Rising Cost of Not Going to College
October 1, 2014, 1:29 pm
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For those who question the value of college in this era of soaring student debt and high unemployment, the attitudes and experiences of today’s young adults — members of the so-called Millennial generation — provide a compelling answer. A new report from Pew report found that college grads have a bigger lead on non-grads than in previous generations: "On virtually every measure of economic well-being and career attainment — from personal earnings to job satisfaction to the share employed full time — young college graduates are outperforming their peers with less education," said the report. And when today’s young adults are compared with previous generations, the disparity in economic outcomes between college graduates and those with a high school diploma or less formal schooling has never been greater in the modern era as per the Pew Research Centre survey.

The economic analysis finds that Millennial college graduates ages 25 to 32 who are working full time earn about $17,500 more annually than employed young adults holding only a high school diploma. The pay gap was significantly smaller in previous generations. College-educated Millennials also are more likely to be employed full time than their less-educated counterparts (89% vs. 82%) and significantly less likely to be unemployed (3.8% vs. 12.2%).

Pew also noted that the income gap was significantly smaller in previous generations. Today, Millennials with only a high school diploma earn 62 percent of what the typical college graduate earns, as opposed to the typical high school graduate earned who about 77 percent of what a college graduate made previously. Today’s young adults are the best-educated generation in history and as a result are more likely to be paid more. Millennials with a bachelor’s degree earn a median income of $45,500 compared with $28,000 for a high school graduate. 

One way to interpret the college edge is that young people learn stuff in college that increases their value to employers, thus enhancing earning power and satisfaction. But even if people learned nothing useful in college, employers might still prefer college graduates. Why? Because they do not have the time or energy to evaluate each applicant on their individual merit; so grad/no-grad becomes a convenient sorting mechanism.

A cynic might say that the right play is to go to college even if you have no interest in getting a college education. That is probably true for some young people, but not all. Someone who really is not cut out for college is not going to get the same leg up from it. Strong people own barbells, but buying barbells would not make you strong.

 

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