Even Some College Education is of Value (Continued)
Last week I began sharing the results of a study entitled, “Is Starting College and Not Finishing Really That Bad?” This research was released by the Hamilton Project which is part of the Brookings Institution. The goal of this study was to analyze the effect of starting, but not finishing, a two-year or a four-year college degree. Here is what they found.
Those who started college but did not complete a degree had lifetime earnings of approximately $100,000 more (in present value) than their peers who only completed high school. If analyzed in terms of rate of return rather than actual dollars, the study concluded that some college is a far better investment than any “conventional investment including stocks, bonds, and real estate.” Of course the study also points out that the return on some college is far less than completing a degree.
The study also finds that there is a correlation between education and employment opportunities. For example, the unemployment rates in April 2013 (based on Bureau of Labor Statistics data) were as follows:
- Age 25 or older without a high school diploma – 11.4%
- Age 25 or older with a high school diploma – 7.2%
- Age 25 or older with an associate’s degree – 5.0%%
- Age 25 or older with a bachelor’s degree or higher – 3.6%
These disparities are even greater when an analysis is done on the employment-to-population ratio. These data reflect that only 39.9% of all individuals without a high school diploma hold a job; only 54.5% of all individuals with only a high school diploma hold a job; only 68.6% of all individuals with an associate’s degree hold a job; and, 73.2% of all individuals with a bachelor’s degree or higher hold a job.
What is most interesting and unique to this report is the evidence that of those with only some college, 60.9% hold a job. Clearly, some college improves employment opportunities as well as income potential.
The final area addressed by this study is the jobs gap in this country. Since the Great Recession in December 2007, this country has experienced a jobs gap of 9.9 million jobs. Even if job creation reaches the highest levels during the pre-recession years, this gap will not be closed until 2017-2020.
The point made by this study is that with limited job opportunities and a slow recovery, those entering or in the workforce will need the necessary skills and every competitive advantage. Education is definitely a key.
Some people continue to question whether or not college is a good investment. But the data is clear. It is a good investment in terms of job opportunity. It is a good investment in terms of lifetime earnings. And it is a better investment than other conventional investment opportunities. And we haven’t even mentioned the value of a liberal education!
(As always, your comments and questions are welcome.)