The Death of Higher Education – Episode 2
In my last “episode” (click HERE for that one) on the Death of Higher Education, I touched mainly on the unsustainability of the financial model – basically costs doubling 15-17X and average incomes only doubling 5X. And those statistics are over 40 years, so it’s more than just a 2-3 year trend.
I’ll step away from the ridiculous cost side of things for this episode. For this round let’s talk a bit about the whole supply vs demand side of things.
Basic economics would tell you that some combination of low supply and/or high demand are going to drive the costs of something up. I pray that nobody is going to argue with me on that concept.
So, if that is the case, which is happening with higher education – low supply of college grads or a high demand for degrees?
Hmmmm….good question. So let’s dive into that.
Here’s some data to chew on:
- The National Center for Education Statistics (NCES) projects 1,830,000 students at the bachelor’s degree level will graduate as the Class of 2018. (source: National Association of Colleges and Employers)
- The US unemployment rate is hovering around 4% and if you believe the numbers, around 160,000 (give or take) jobs are being added every month (source: NY Times)
Just looking at those numbers, if I do some simple math here (160K per month times 12 months, carry the 2) that means the US is adding about 1,920,000 jobs annually.
Hey – 1.83M grads and 1.92M jobs – everybody wins right? Ummmm…nope.
So what are all those jobs being created anyway?
Our friends at CNN cited the following statistics in an article in March (click HERE for that article):
- 313,000 jobs added in February (yes, a very big number)
- 92,000 of those jobs were in construction and manufacturing
- 50,000 were from hiring retailers
- 50,000 came from “professional and business services)
- 28,000 came from financial services
(No, those numbers don’t total 313,000 – those were just the most significant numbers cited in the article, not a full audit.)
So, of those 313,000, about 25% of them were “white collar” jobs, or ones I would say historically require a college degree.
Now, since I realize that 93,000 jobs were not accounted for in those cited statistics, I’ll be generous and give half of those to the white collar category. Doing the math, that says that 124,500 of those 313,000 jobs would be “white collar” – or about 40%.
Again, being generous with my numbers I’ll say the economy is adding 200,000 jobs per month, and we agreed that 40% of those would be white collar, so that means 80,000 of those monthly or 960,000 annually.
Going back to the number cited by the National Center for Education Statistics, with 1,830,000 grads in 2018 arguably fighting for 960,000 jobs, if my generous math is even close to correct, that means there are TWO GRADUATES FIGHTING FOR EVERY ONE JOB.
That does not include people already in the workforce looking for those jobs.
That data would imply that there is an ample supply of college grads – at least that is my perspective. I would even argue an “over supply”. (Gasp, I just suggested we need less college grads – Good Lord what will I suggest next!?)
What that doesn’t explain then is this: Talk to just about any hiring manager or employer and their #1 issue is almost always finding qualified candidates.
I’ll address that in the next episode.
In the meantime, feel free to rant away at me. 🙂