We’re talking about serious costs. Even in-state tuition at public colleges, supposedly the most affordable of all, is rising at more than twice the rate of inflation. The average cost for four years for in-state residents adds up to more money than most households earn in a year. Almost a third of American households have less than $10,000 in net savings to pay for at least $30,000 in college tuition. Even if students take Mitt Romney’s advice and “shop around” for the cheapest schools, they’re still going to have trouble making ends meet.
That’s why approximately 3 million households owe $50,000 or more in student loans.
At the same time, the rate of unemployment for 20-to-24-year-olds is twice the rate for 45-to-54 year-olds. Can it be that a college degree no longer buys what it used to?
Ask this question often enough, and you’re bound to find someone blaming it on “kids these days.” As if the jobs are out there, we’re just not willing to work for them.
The more sophisticated critics suggest that we’re experiencing a “labor mismatch,” where the skills of the workforce don’t meet the needs of the employers. Supposedly, colleges don’t teach us what we need to know to make a living anymore.
There are several ways to test this theory.
One measure is the “mismatch index” created by economists for specifically this purpose. The mismatch index compares the number of vacancies to the number of unemployed workers. If there really is a labor mismatch, vacancies should rise, but unemployment shouldn’t fall because the unemployed workers don’t have the skills to fill the vacant jobs.
But the mismatch index has not increased in the last decade. In fact, it was higher in 2003 than it is now.
Another measure is inflation. When the economy grows, companies should expand, but during a labor mismatch, they can’t. There aren’t enough skilled workers. So they raise prices instead. It’s the only way to keep revenues growing.
But inflation has been very steady and low throughout the past decade. In fact, it is now lower than it was five years ago.
Yet another measure is disparities in unemployment between different industries. For example, manufacturing jobs have been declining, and service jobs have been taking their place. If there’s a labor mismatch, we might see a recent rise in unemployment in manufacturing that outpaces the rise in other industries.
But that’s not the case. In fact, manufacturing has been one of the bright spots in this weak recovery. After losing jobs every year since 1997, the manufacturing industry has actually been increasing employment in the last two years.
Maybe we’re looking at the wrong industry. After all, the recession was caused by the bursting of the housing bubble. All those construction workers lost their jobs, and they don’t have the skills to become engineers or accountants or whatever the modern economy demands. Are they suffering from this mismatch?
Not really. While their unemployment rate is higher than most other industries’, it’s also declining faster than average. About 10 percent of unemployed workers used to work in the construction industry, the same as in 2005. Construction workers are actually finding new jobs at a faster rate than the rest of the unemployed, and they’re less likely to drop out of the workforce because they get discouraged at the lack of jobs. When they do get new jobs, over 70 percent of them return to the construction industry.
So what’s really causing high unemployment among today’s young adults? Probably a deadly combination of the weak economy and their lack of work experience. The most experienced workers are the first to be re-hired when the economy recovers. Unfortunately, the longer it takes the economy to return to health, the longer those young adults will lack work experience, and the harder it will be for them to catch up in the future.
Don’t blame the victims — or the colleges they attended, for that matter. Blame the people who wrecked the economy and sabotaged our children’s future.
This op-ed was published in today’s South Florida Sun-Sentinel.