With the surging cost of college tuition, debate has raged among parents and policy makers about whether earning that piece of parchment is really worth it.
No doubt about it, according to new research from the Federal Reserve Bank of New York. While the recession was tough on recent college graduates, young Americans with bachelor's degrees are increasingly pulling away from their peers with only high school diplomas, the research finds.
Even when the economy was at its rockiest, young college-educated workers were better off than their less educated cohort, said Richard Dietz, assistant vice president at the New York Fed. Parents and students are increasingly asking whether investing in a college degree makes as much sense as it did in the past, given that tuition has been surging at a far faster rate than inflation, leaving recent grads with an average of debt of $35,000.
But the data suggests that students and their families may be looking at the issue the wrong way, Dietz said.
"The real question is, what would your prospects be without a degree?" he said. "The prospects for people without a degree have been falling further and further behind. People with college degrees, even during and after the recession, tended to see higher wages."
Wages for college graduates have recently started to pull even farther ahead of those without bachelor's degrees, the New York Fed report shows. Dietz and his fellow researchers have been studying the outcomes of college graduates, such as dispelling the myth of the college-educated barista. Their new interactive site will add fresh data about the labor market for recent college grads on a quarterly basis.
The median wage among recent college graduates rose 7.5 percent to $43,000 last year, while the median wage for high school graduates failed to budge, sitting at $25,000.
That's helping recent college grads make up for the ground they lost during the recession. The high point for recent college grads was in 2002, when the median income hit $44,737, on an inflation-adjusted basis. But wages for high school graduates have continued to drift downward since they reached a recent high of $29,409 in 2001.
"Those with just a high school diploma are having more and more difficulty in the labor market," Dietz said. "The demand for skills for the past few decades has been rising and outstripping supply. That's why the college wage premium has been rising."
Not every college major is equal in the harsh gaze of the labor market, however. In terms of job opportunities, the worst majors are geography and anthropology, where recent graduates face an unemployment rate of 8.8 percent. Not surprisingly, many of the college majors whose graduates have higher jobless rates are in the liberal arts, such as art history and English language majors, at 7.8 percent and 7.5, respectively.
By comparison, the overall unemployment rate for all college graduates over the age of 25 stood at just 2.5 percent in December.
"Majors with quantitative skills, STEM-type [science, technology, engineering, math] majors, tend to have better outcomes than those that are less analytical," Dietz said. "Majors that provide occupation-specific training tend to do better than non-specific majors."
Recent graduates with nursing degrees, for instance, enjoy a 2 percent unemployment rate, even lower than aerospace engineering majors, at 2.4 percent. Incomes for highly analytical professions, such as engineers, tend to be higher, however. Median mid-career wages for nurses stand at $65,000, compared with $90,000 for aerospace engineers.
"Majors that are growing parts of the economy, like education and health care, their graduates are much less likely to be unemployed," Deitz said.
Of course, not every student has the aptitude or interest to study aerospace engineering. But the New York Fed wants to provide information to students and their families on what outcomes they may be likely to experience once out in the job market. Income and career opportunities can vary dramatically even in fields where demand for workers is high, Dietz said.
"While around 45 percent of recent college graduates are working in non-college jobs, these range from close to 75 percent for those with a criminal justice degree to about 13 percent for a nursing degree," he said. "Those are big differences."