With everyone focused on what is undisputedly the next mega credit bubble in the form of student loans, which in the most recent quarter hit a record high of over $1.1 trillion, the topic of college education, and specifically its utility, has gotten much press coverage over the past month. As we summarized most recently two days ago [6], the key variables involved when calculating the costs and benefits revolve around whether one uses (generous amounts) of student loans and what area of specialization one picks. But according to a recent report published by the Center for Economic and Policy Research titled "A College Degree is No Guarantee [7]", there is another, perhaps more important variable when it comes to getting the most out of one's college education: race.
As the WSJ reports [8], "among those with a job in 2013, more than half of black recent college graduates—56%–were in an occupation that typically doesn’t require a college degree, according to a report Tuesday by the Center for Economic and Policy Research, a left-leaning Washington think tank."
[9]
But while one may be inclined to accuse the authors of pandering or, gasp, racism, the reality is almost just as bad for all races:
Among all recent college grads with a job, the rate still was a very high 45%. (The report defines a recent college grad as someone between the ages of 22 and 27 with a four-year degree.)
The follow through from here is logical: upon graduation some 56% of blacks fall into a state defined as "underemployment", not to be confused with the same term used by the BLS, "in which college-educated workers aren’t getting high enough salaries to pay off their student debt and achieve a middle-class lifestyle."
An additional variable, although far less important, is experience: "experience makes a difference, with workers further out of school tending to hold better jobs than recent college graduates. Among all employed black college graduates—regardless of when they earned their degree—about 42% were in a job that didn’t require a degree in 2013. Among all employed college graduates regardless of race, the figure was 35%. The weak labor market comes at a time when young college graduates also are carrying higher debt loads than previous generations to cover rising college costs."
The punchline, by the CEPR report's author Janelle Jones (who incidentally is also black [10], which has no bearing on this topic... which is why we note it):
“Black workers have been told for a generation that the way for you to do better is go to college. These are people who go to college in the face of rising tuition, needing to work to support themselves, not having a family structure. They finish college and then they end up finding a job that job doesn’t end up requiring a degree and pays less than those that do require a degree."
Well, to be honest Janelle, all workers have been told for a generation, and actually much longer than that, that the way to do better is go to college.
So while we appreciate the study's conclusion, which is what we expected, namely that nearly half of college graduates end up in jobs that do not require a college education (and certainly do not pay well enough to repay the student loans) and as such the delinquencies on student loans are guaranteed to skyrocket in the coming years, we are amused by yet another attempt to make this into a black, non-black i.e., "race" issue, although we have a very distinct feeling that when the topic of student loan forgiveness (and its monetization by the Fed) becomes the pressing political issue in a couple of years, along racial lines is precisely just how this latest government hand out will be approached.