For some reason, last month the Orlando Advocate published the White House’s response to the petition drive to forgive student loan debt to stimulate the economy. I say “for some reason” because the administration’s response first appeared in October 2011, not December 2013.
Nevertheless, one of the administration’s factoids stuck out:
Over the past three decades college tuition has grown 10 times faster than a typical family’s income, making higher education unattainable for many; however, more than 60% of jobs in the next decade will require more than a high school diploma. It is more important than ever for Americans to get a good education to stay ahead in an increasingly global economy. [Emphasis LSTB]
President Obama parroted this line a few weeks later:
Now, I mentioned that we live in a global economy, where businesses can set up shop anywhere where there’s an Internet connection. So we live in a time when, over the next decade, 60 percent of new jobs will require more than a high school diploma. And other countries are hustling to out-educate us today, so they can out-compete us tomorrow. They want the jobs of the future. I want you to have those jobs. (Applause.) I want America to have those jobs. (Applause.) I want America to have the most highly skilled workers doing the most advanced work. I want us to win the future. (Applause.) [Empasis LSTB]
I love this line because it’s so absurd while scoring points on America’s trade paranoia. In Obama’s worldview high-paying jobs are a zero-sum game (but don’t worry “free trade” agreements are good for some reason).
Interestingly, the 60 percent figure is possibly an upward revision from the president’s 2011 State of the Union Address, where he said that more than half the jobs over the next decade would require a college degree of some kind. He emphasized the importance of having the highest proportion of college-educated workers in the country compared to others, as though that metric alone is a measure of “competitiveness,” whatever that means.
The 50%-60%+ figure raises an eyebrow, and I was curious where the president got it from. My best guess, and one confirmed by jurisdebtor’s comments here, is the LSTB’s old friend, the Georgetown Center for Education and the Workforce. In a paper titled, “Help Wanted: Projections of Jobs and Education Requirements Through 2018,” authors Anthony P. Carnevale, Nicole Smith, and Jeff Strohl argue that the BLS’s employment projections systematically underestimate the future demand for educated workers. So great will the demand for college education be that by 2018, the U.S. will be short 300,000 college graduates annually. Holy cow!
How does the GCEW arrive at such alarming conclusions? Well, you’ll have to turn to Appendix 4 for that. Really, did you expect such a crucial methodological disagreement that forms the backbone of the paper to be discussed up front?
BLS’ educational and training requirement data undercount postsecondary degrees by 22 million in 2008. This implies that 22 million workers are overeducated. The overwhelming consensus in the literature contradicts this. (127)
The primary cause of this discrepancy, according to GCEW, is that the BLS misses “upskilling,” e.g. auto mechanics today require more training than they did 30 years ago, but the BLS still classifies the occupation as one requiring only a high school diploma.
The problem with GCEW’s analysis is that the issue is not how much upskilling is going on in each occupation; rather, it’s the distribution of overqualified workers in each occupation. In other words, what occupations do the 22 million overqualified people work in?
Thanks to the BLS’s update of its employment projections, we have an answer. Here’re the top 20 occupations held by the 12.8 million underemployed bachelor’s degree holders that require a high school education and less. These 20 account for more than half of the 12.8 million workers.
Not seeing any auto mechanics here, but in fairness I can see some managers benefiting from a college education. However, Carnevale et al. are going to have to show why we should believe retail salespeople who have a bachelor’s degree are more productive than their high school graduate counterparts.
To give you some more bare numbers, for those with a bachelor’s degree and higher, 15.9 million people are working in high school and less jobs. The overall underemployment rate for those with any kind of college degree (including, e.g. PhDs working in jobs that require only a BA) is 36.7 million. By contrast the number of college-educated workers in jobs for which they are qualified or underqualified is only 20.5 million.
As for the future, of the 55.7 million jobs that the BLS now predicts will be created by growth and replacement by 2022, only 30 percent will require anything more than a high school diploma. 23.4 percent will require a bachelor’s degree or more.
In short, the GCEW has four years for 15.9 million Americans aged 25 and over with a bachelor’s degree or more to find jobs that fully use their credentials, to say nothing of everyone else who is still underutilized like well-educated nurses. The Obama administration, though it ends in 2017, has until 2020 for the prediction to come true.
Happy New Year. The college jobs clock is ticking.
The Last Gen X American 
Excellent stat lines and a reasoned approach to economics is the bogeyman of politicians today.
There is another way the numbers can meet Employers can start demanding superfluous credentials from new hires. Some of this is already happening. Secretary openings requiring bachelor degrees. Health aides/nurses requiring bachelor’s degrees. CPAs requiring master’s degrees. Physical therapists requiring doctoral degrees. Etc.
Matt, there is another source for the “60% of jobs of the future will require college degrees.” It is the goal for The Lumina Foundation, which is the nation’s biggest higher ed foundation (Gates is bigger, but focuses its attention on many problems beyond higher ed). If you go to Lumina’s website – which I try not to leave too many fingerprints on – you will see that their public mission statement is to create an America where 60% of adults have college degrees by 2025. Lumina also happens to be the majority funder of Anthony Carnevale’s Georgetown Center on Education and the Workforce, as you can see in the acknowledgements page of any of their studies.
So, how does Lumina want to go about this, given how hard we are currently struggling to get from 30% to 35% Americans as college grads? Reduced academic standards, credit-granting MOOCs, a change from the credit-hour to “competency-based” education, more vocational training, etc. All the usual suspects in the watering down of a traditional higher education.
And what about the negative impacts of more college graduates, such as declining salaries (see any number of EPI studies), credential inflation, ballooning student debt, etc? These are topics that are, quite frankly, ignored by Lumina. And by ignored, I mean you will not find one mention of them anywhere.
So, who is Lumina? Well, it is a $1.5 billion foundation with a large revolving door into/out of the Department of Education that was created… by erstwhile student loan guarantor USA Group and none other than Sallie Mae. The machinations are complicated, of course, but in basic terms, USA Group was finding that its business practices vis a vis loan guaranteeing ‘no longer were comfortable in the non-profit model,’ according to Lumina’s history PDF on their website. So, Sallie bought USA Group’s assets (i.e. loan guaranteeing business) for $700 million, the two groups waved the wand of corporate reorganization, and USA Group became Lumina, and the $700 million became Lumina’s endowment. The entire original board were student loan executives – 60% from Sallie, and 40% from USA Group. That’s who Lumina is. Even today, the board includes luminaries like the erstwhile leader of Sallie and the president emeritus of the University of Phoenix.
Not to belabor the obvious, but it bears noting that Lumina’s goals and worldview also just so happen to represent 15 years more growth and profit for Sallie Mae via federal student loan administration, collection, SLABS originations, and indeed private lending. A new report from Mark Kantrowitz reveals that nearly half of graduate/professional students who owe more than $100,000 have taken out private loans, even though every single one of them was eligible for GradPLUS.
By Jove, you’re right! It’s had that goal since 2009.
I didn’t know about that Kantrowitz study. Does it include undergraduate debt? I’m pretty sure private lending has cratered in recent years; they’re demanding all kinds of co-signers, etc. The default rate for them is much lower than the FFELP/DLP, low single-digits last year.
I have not been able to actually find the study online as of yet. While private lending has cratered of late, that does not mean it has stopped. Sallie Mae, for example, originated a few billion in new SLABS last year. Since there is no more FFEL lending, those SLABS must be comprised of private loans. And a confidant involved in university-side FA tells me that other groups expect that private lending will come back – most notably Access, with whom my source said s/he was surprised wasn’t winding down, but instead ‘lying in wait’ for greener days.
Speaking of Access, here’s an interesting tidbit I saw last year. http://www.businesswire.com/news/home/20130815005759/en/Fitch-Downgrades-Access-Group-Floating-Rate-Student#.UtWlKjiA0dU It’s a Fitch downgrade of a group of Access’s SLABS offerings, called the Access Group 2001 Group II. From the note, “The collateral supporting Access Group 2001 (Group II) notes consists entirely of private student loans originated by Access Group.”
The reason for the downgrade? An increase in the default rate to 12% and change, with an eventual default rate in the neighborhood of 14-16%. More interesting: the recovery rate is only expected to be 30%. Campos does not appear to have been incorrect when he wrote “What can’t be paid back, won’t be” in regards to law school loans.
Since Access has historically made half of its loans to law students, this info is a fairly decent barometer for the welfare of those poor souls who matriculated pre-GradPLUS.
Did you know Access Group, though a non-profit, is a “membership corporation” (or something to that extent) jointly owned by all the accredited law schools? And here it is, bundling securities to sell on Wall Street. Meanwhile, law school tuition increased at unparalleled rates in higher education, law schools pushed years of optimistic-to-fraudulent salary data for their graduates, and from what I recall and have not been able to refute in researching, were completely silent when Congress made private student loans retroactively nondischargeable in the fall of 2005. The SLABS market grew almost exponentially from that point until the crash in 2008. It’s all very circumstantial and shadowy, but the unseemliness of it has been noted by a few other law school observers in their conversations with me.
Interesting.
There’re a lot of finance terms thrown around in that release, so I’m not sure if I understand it properly (like “projected defaults” vs. “remaining defaults”). I think it’s saying that Access Group expects to recover 30% of the 12-16% of the loans that default. Still, that’s a pretty nasty downgrade for a half-percent-point upticks in defaults.
It’d be interesting to know how much of AG’s portfolio is law school debt. Back in 2001, only 45 law schools (all private) charged more than $5,000 over the Stafford Loan limit ($18,500 at the time). As it stands, these numbers imply that contrary to our favorite econometrics paper, law school debtors aren’t so unlikely to default on their debts after all.
The reason Access Group was probably not too concerned by the bankruptcy law in 2005 was that it was already protected. I’m fairly sure the law applied only to private loans made by for-profit lenders. Non-profits were already shielded in 1998. Nevertheless, whenever I think of Lawrence Mitchell’s statement that “We’re acting in good faith,” I think of just how little they’ve paid attention to the workings of the student loan system. It’s astonishing that people like us figured the system out before the deans did—years after the crash. But yeah, it is unusual that Access Group isn’t discussed more often.
Also, point of pride: I was the one who discovered the “debts that can’t be repaid, won’t be” line, not Campos. He started using it shortly after I did in one of my Am Law Daily articles, but we both properly attribute it to economist Michael Hudson.
Yeah, I’m not 100% on all of the finance terms either. Liberal arts major for undergrad, and Northeastern Law School, being “public-interest oriented,” had a lamentable dearth of classes pertaining to career paths in anything that might justify the cost of Northeastern Law School tuition.
I do not recall where offhand, but I have definitely seen a bar graph of Access’s loans going back to the mid-late 1990’s. Between 45% and 60% in any given year were to law school students, and the remainder were to various other sorts of grad and professional students (Access does not lend to undergrads).
I wasn’t aware that there was a 1998 – 2005 split in how for-profit v. non-profit private loans were treated in bankruptcy. I’m just glad I never took anything from Sallie, but of course, Sallie may still become my federal student loan administrator someday – they seem to be grabbing a bigger and bigger piece of that business – so at the end of the day, uh, what’s the difference?
I’ll be sure to attribute the quote to you from now on;-)