So Much For The Benefits Of College In America's "New Normal"?
Continuing with the theme of the secular shift in the labor pool (not cyclical, as the Fed still mistakenly believes: it will take it at least one more year to understand it has been wrong about this aspect of the New Normal economy too, just as it was wrong for decades about the Flow vs Stock debate), it is not only men who are fresh out of luck. As a reminder, we observed earlier that the labor force participation rate for men has just dropped to an all time low. It turns out there is another class of workers whose participation rate is at the lowest in series history: that of "25 year olds with a Bachelor's degree and higher", i.e. college grads. At 75.5%, it is the lowest since this data has been kept by the BLS. But not all is abysmal in America's labor force. While the share of workers with a college degree has plunged to all time lows, a bright spot can be found when observing the labor force participation rate of those who never bothered with college, and for whom high school was their last known degree-granting institution. At 59.9%, the participation rate is well of its 2012 lows of 59.0% and steadily rising, in fact, to borrow a term from the housing bulls, it may well have "bottomed". Now there is some truly great news for the future of America's highly educated workforce.
None of the above, however, matters to hordes of young, impressionable wannabe college grads for whom college is the only hope out there, no matter the cost. Sadly, the cost is rising exponentially, and as we showed recently, total Federally-funded student loan debt outstanding is now at all time highs.
Luckily, the cost of the debt is at record lows. Sadly, the principal will still need repayment, as cohort after cohort of unemployed students will soon find out, and also find out that there is no discharge of student debt in bankruptcy: it is, indeed, the proverbial gift that keeps on taking.