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A four-year college degree, seen for generations as a ticket to a better life, is no longer enough to guarantee a steadily rising paycheck.
A college degree may not take you as far as you’d expect. However, WSJ’s Jennifer Merritt reports on a few fields where a bachelor’s degree still remains a worthy investment.
Just ask Bea Dewing. After she earned a bachelor’s degree—her second—in computer science from Maryland’s Frostburg State University in 1986, she enjoyed almost unbroken advances in wages, eventually earning $89,000 a year as a data modeler for Sprint Corp. in Lawrence, Kan. Then, in 2002, Sprint laid her off.
“I thought I might be looking a few weeks or months at the most,” says Ms. Dewing, now 56 years old. Instead she spent the next six years in a career wilderness, starting an Internet café that didn’t succeed, working temporary jobs and low-end positions in data processing, and fruitlessly responding to hundreds of job postings.
The low point came around 2004 when a recruiter for Sprint—now known as Sprint Nextel Corp.—called seeking to fill a job similar to the one she lost two years earlier, but paying barely a third of her old salary.
In April, Ms. Dewing finally landed a job similar to her old one in the information technology department of Wal-Mart Stores Inc.’s headquarters in Bentonville, Ark., where she relocated. She earns about 20% less than she did in 2002, adjusted for inflation, but considers herself fortunate, and wiser.
A degree, she says, “isn’t any big guarantee of employment, it’s a basic requirement, a step you have to take to even be considered for many professional jobs.”
Trends in Education, SalariesFor decades, the typical college graduate’s wage rose well above inflation. But no longer. In the economic expansion that began in 2001 and now appears to be ending, the inflation-adjusted wages of the majority of U.S. workers didn’t grow, even among those who went to college. The government’s statistical snapshots show the typical weekly salary of a worker with a bachelor’s degree, adjusted for inflation, didn’t rise last year from 2006 and was 1.7% below the 2001 level.
College-educated workers are more plentiful, more commoditized and more subject to the downsizings that used to be the purview of blue-collar workers only. What employers want from workers nowadays is more narrow, more abstract and less easily learned in college.
To be sure, the average American with a college diploma still earns about 75% more than a worker with a high-school diploma and is less likely to be unemployed. Yet while that so-called college premium is up from 40% in 1979, it is little changed from 2001, according to data compiled by Jared Bernstein of the Economic Policy Institute, a liberal Washington think tank.
• Ms. Goldin and Mr. Katz have a new book, “The Race between Education and Technology,” that provides a historical analysis of the co-evolution of educational attainment and the wage structure in the United States through the twentieth century.
• Jared Bernstein is an economist at the Economic Policy Institute. For more of his writings, visit the institute’s Web site.
• Real Time Econ: College Grads, Incomes Stagnant, Turn Against GlobalizationMost statistics he and other economists use don’t track individual workers over time, but compare annual snapshots of the work force. That said, this trend doesn’t appear due to an influx of lower-paid young workers or falling starting salaries; Mr. Bernstein says when differences in age, race, marital status and place of residence are accounted for, the trend remains the same.
A variety of economic forces are at work here. Globalization and technology have altered the types of skills that earn workers a premium wage; in many cases, those skills aren’t learned in college classrooms. And compared with previous generations, today’s college graduates are far more likely to be competing against educated immigrants and educated workers employed overseas.
The issue isn’t a lack of economic growth, which was solid for most of the 2000s. Rather, it’s that the fruits of growth are flowing largely to “a relatively small group of people who have a particular set of skills and assets that lots of other people don’t,” says Mr. Bernstein. And that “doesn’t necessarily have that much to do with your education.” In short, a college degree is often necessary, but not sufficient, to get a paycheck that beats inflation.
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• ‘Old Age’ on HoldEconomists chiefly cite globalization and technology, which have prompted employers to put the highest value on abstract skills possessed by a relatively small group, for this state of affairs. Harvard University economists Lawrence Katz and Claudia Goldin argue that in the 1990s, it became easier for firms to do overseas, or with computers at home, the work once done by “lower-end college graduates in middle management and certain professional positions.” This depressed these workers’ wages, but made college graduates whose work was more abstract and creative more productive, driving their salaries up.
Indeed, salaries have seen extraordinary growth among a small number of highly paid individuals in the financial sector—such as fund management, investment banking and corporate law—which, until the credit crisis hit a year ago, had benefited both from the buoyant financial environment and the globalization of finance, in which the U.S. remains a leader.
Richard Spitzer is one of those beneficiaries. *CLICK HERE TO VIEW THE REST OF THE ARTICLE http://online.wsj.com/article_email/SB121623686919059307.html?mod=djem_jiesww&reflink=djem_jiesww
