Friday, March 20, 2015

It's a Jungle Out There...Move Back With Your Parents!

Rodney Dangerfield said it best in his Back to School graduation address:
I have only one thing to say to you today …It’s a jungle out there. You gotta look out for number one. But don’t step in number two. And so, to all you graduates, as you go out into the world, my advice to you is …Don’t go! It’s rough out there! Move back with your parents…let them worry about it!
Thornton Melon, Back to School - 1986
 
It is a jungle out there. The world’s economy is complex. America’s job market is changing day-to-day. It is more important than ever for young people to make good career decisions yet the career decision making process is more convoluted than it ever was in the past. Young people and their parents face many tough questions. Is college worth the cost and debt? Is there a job market for college graduates? What educational alternatives are available? There are no simple answers, but at least we can measure the Pros and Cons of some potential choices. While there are many vocational choices a young person can make, let us begin with an examination of the three most common. Most young people choose to either immediately enter the workforce, go to a four-year university, or attend a two-year college/technical school upon graduation from high school. So, let’s use these for further examination.

Straight to Work
In 2006, The University of Pittsburgh’s Institute of Politics released a report titled, “New Thinking on Career Success.” The report projected that by 2014 approximately 46% of the nation’s jobs would only require a high school diploma and up to 3 months of on-the-job training. In February of 2014, Citrus College in Los Angeles produced Kevin Fleming’s, “Success in the New Economy,” which indicated, based on a Harvard study, that 57% of America’s jobs actually require specific skill training. The bottom line is that almost two thirds of the nation’s job market does not require a college degree. So, perhaps there is a definite benefit for those young people who decide to go straight into employment. Here are some of the Pros & Cons.

The Pros
Only about 8% of young people anticipate going directly to work following high school graduation. Those who follow this plan experience specific benefits. First, there is the benefit of immediate earnings; those who choose this route begin to earn money versus those who decide to enroll in college or a technical training program. In addition, young people who immediately enter the workforce gain valuable work experience and on-the-job training. This experience and skill development is critical in today’s job market where smart employers are seeking employee stability and employee ability to make an impact. In addition to work experience and on-the-job training, young people who enter the workforce also have the opportunity to network and make contacts that will be invaluable throughout their careers.

The Cons
The major problem is that the benefits of short-term gains are often replaced by long-term losses. This is especially true when young people do not take advantage of training and education opportunities that may be offered by an employer. The reality is that a high school education alone can lead to entry level jobs, but these tend to be low-skill/low-wage jobs that offer few advancement opportunities without additional education. The data shows that over a lifetime, those who do not seek out additional education and/or training, are also at a higher risk for unemployment. These individuals will also experience lower lifetime earnings.

Straight to Work Summary
McDonald’s Corporation is one of only 12 Fortune 500 companies to receive college credit recommendations for their training programs. Plus they have a McDonald’s USA National Employee Scholarship Program to be applied for by employees at company-owned restaurants and many franchises. Every union or apprenticeship program has outlined career ladders which include continuing education, college reimbursement and skill development programs. Within a good apprenticeship model, an electrician who also has good management skills can take advantage of continuing education to secure a manager’s position – schooling will be 100% paid. The point is that whether it is McDonald’s or an apprenticeship program, young people should research companies to which they apply and make certain to take advantage of all of a company’s education and training programs. Under many circumstances, a worker can be trained and educated without incurring loans or expenses. When properly planned, these workers can take advantage of the Pros of going straight to work while avoiding the Cons.

A Four-Year Degree
Recent data indicates that 66% of high school graduates enroll in higher learning immediately after high school graduation. Only 1 out of every 4 students who begins college will complete a bachelors. More than 50% of those who begin will drop out within the first year. However, those who do graduate tend to have broader career choices and more opportunity for advancement. Here are the Pros and Cons for those seeking a four-year degree.

The Pros
A New York Federal Reserve study from June of 2014 showed that there is a growing wage gap between degree holders and their peers with just a high school diploma. In 2012, degree holders earned an average of $17,000.00 per year more than those without a college degree. Many reports indicate that bachelor’s degree holders, over the course of a lifetime, will earn $1 million more than those workers without a degree. In addition to earning potential, college graduates tend to have broader career choices and are more likely to advance in the workplace. A college degree demonstrates accomplishment to would-be employers; employers reward this accomplishment through hiring and promotion. This is clearly demonstrated in the nation’s jobless rate reports. The 2014 unemployment rate for those at least age 25 with a college degree was just 3.2%, while the United States unemployment rate for 2014 ended at just under 7%.

The Cons
The wage and employment data are unfortunately skewed, so this may not be the best indicator of an advantage for a four-year degree holder. The Pew Research Center showed that the wage gap for degree holders versus non degree holders has grown from approximately $9,000 per year in the 1970’s to over $17,000 per year by 2014. This is in large part because wages for those without a college degree have steadily declined. Also, the unemployment rate for a 25 year old with just a high school diploma is currently higher than the nation’s average unemployment rate. The ‘falling behind’ of non-degree holders often creates the impression that those with a bachelor’s degree are doing better. In reality, it is comparative thinking. In addition, the sticker cost of one year of a bachelor’s degree in 2013 was an average of $15,000 compared to just $4,600 in the 1970’s. Combine all of this with the dropout rates, and there are serious Cons to consider.

A Four-Year Degree Summary
Rising tuition costs, wage disparities and questionable unemployment data make it difficult to predict a return on investment. High dropout rates make it almost impossible to predict the likelihood of success. Still, there are extraordinary benefits to a college education. Stephanie DeMaro, Job & Internship Coordinator at Penn State University says, “College is not just about vocational training. College gives young people a well-rounded experience and exposure to the world.” Education broadens a young person’s horizons and world view, so the value of higher education can never really be determined in dollars and cents. Plus, college graduates have a unique opportunity to network with other alumni, which increases job and business prospects. In conclusion, college is serious business. Students should enroll if and when they are ready to complete so as not to waste time and money. Do some research and carefully choose a major before committing to the college experience.

Two-Year College/Technical School
In 2006, the US Department of Labor predicted that jobs requiring two-year degrees and/or technical training would make up the fastest growing segment of the job market. DOL’s data indicated that by 2014 approximately 27% of America’s jobs would require this level of education and training. The Department of Labor was correct in citing this as the fastest growing segment of the job market, but they fell well short of their expectations. Today, approximately 57% of America’s job market requires technical skills that can be acquired through a two-year school or certificate based program.

The Pros
There is a shortage of workers who possess the technical skills needed to fill the majority of jobs. The true ratio of jobs in the United States of America is 1:2:7. For every 1 job that requires an advanced degree (masters or higher), there are 2 jobs that require a bachelor’s degree…and 7 that require an associate’s degree or technical training. As 66% of America’s high school students enroll in a four-year university or college, just 20% pursue a two year degree. Community colleges, which are far more affordable than four-year schools and many technical schools, are in a position to supply as much as 70% of the labor force. By the way, the 1:2:7 ratio is not new. According to Citrus College, it was the same in 1950…the same in 1990…and will be the same in 2030.

In addition to job opportunities, many two-year degree holders will out earn their four-year degree holding counterparts. The energy industry is producing high end salaries for trained Computer Aided Drafters and IT Professionals while the medical field is providing high end salaries for nurses and technicians. According to O*Net Online, radiologic and/or nuclear medicine technicians earn an average of $30-35 per hour. Part-time workers in these fields often out earn full-time teachers, social workers and business professionals.

The Cons
Two-year degree holders, particularly those with specific technical training, often have less flexibility than a four-year degree holder. Without getting into the data and statistics of it all, the very premise makes sense. If a person goes to school to be trained as a paralegal, then they are a paralegal. If they go to community college and become a nuclear medicine technician, then they are a nuclear medicine technician. The technician is typically not going to leave their field to become a counselor at a social service agency. On the other hand, a high school teacher having a tough time finding a full-time job in a public school can often obtain work in social service, adult education or a related field.
Two-year degree holders and those with a specific technical skill often find themselves in need of additional education for advancement. The electrician, for example, who desires to become a manager will often have to advance his or her education in order to obtain this level. Students with an associates in the field of Criminal Justice would have to advance a degree if interested in pursuing a career in probation or parole.

Two-Year College/Technical School Summary
Two-year colleges and technical schools are extremely affordable and in some cases free. And, graduates of these programs have the potential to earn as much or more as those with a bachelor’s degree or higher. Still, data suggest that over the course of a working lifetime, more education will always lead to higher wages and less chance of unemployment. Young people should choose their first step with the second step already in mind. A two-year college or technical school can be the stepping stone to a great job or the first step towards achievement in higher education. Earn while you learn – that is the thought process related to this route.

In Conclusion
High impact work is in-demand, but the supply of high impact workers is at an all-time low. The college for everyone mentality does not match the labor market. It is critical that young people and parents begin to think about careers according to the European perspective: It’s not just about having a college degree…it’s about having a post high school credential. In Europe, the post high school credential is desired, achieved and respected. For some reason, in America, only those who go to a four-year college are considered successful. The reality is that the job market is no longer blue and white….blue and white collar that is. A specific segment of jobs requiring a specific set of skills has emerged. Young people targeting this segment with a plan in mind will be amongst the respected and successful. Those with a plan to combine training with education with work experience will be amongst the most successful.

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