Friday, October 28, 2011

Tough times for college graduates (Michael Mandel)

Actually, for some time now the economic situation for almost everyone outside the top 20% has, generally speaking, been stagnant or increasingly insecure (often both), and for significant sectors it has been declining, while the top 1% have been making out like bandits. There have been winners as well as losers, of course, but the losers outnumber the winners.

Some data provided by Michael Mandel (at Mandel on Innovation and Growth) bring out one more aspect of this overall picture. On average, college graduates do considerably better in terms of lifetime earnings than people without college degrees (leaving aside some famous exceptions like Bill Gates and Steve Jobs). But if we look at college graduates alone, their economic prospects have also been declining. And this trend goes back before the current recession.

That's true for both young men and young women with college degrees. But the gender differences remain striking. As Mandel sums it up:
I started writing about tough times for young college grads in 2006, when I was at Business Week. Seems like a different day and age, doesn’t it? Since then things have only gotten much much worse. By my latest calculations:
  • Real earnings for young male college grads are down 19% since their peak in 2000.
  • Real earnings for young female college grads are down 16% since their peak in 2003.
[JW: And the peak for recent female graduates was significantly lower than the peak for males.] These figures are for full-time workers, ages 25-34, with a bachelor’s degree only. See the charts below.

I want to ask an economic question, a political question, and a policy question. First, no one has given me a good explanation yet of why young American college grads should have been hit so hard. Is there increased competition with young college grads around the world? Are new college grads lower quality than their predecessors? Has information technology reduced the need for young grads? I really would like to know. [....]
Me, too. The rest is here. You can click on the graphs below to expand them.

Tyler Cowen notes that this pattern of declining economic prospects for college graduates coincides with increasingly high costs for going to college. If both of those trends continue, that probably means trouble ahead.

--Jeff Weintraub