Many young people chose to weather the recession by hiding out within the confines of a classroom, hoping the economy would improve by the time they graduated. College enrollment jumped 6% between fall 2007 and fall 2008 (the largest increase in 40 years), driven primarily by increased enrollment among minority students and at two-year community colleges.
Flash forward a few years and unemployment is still high, especially among young people. So did these college students make the right choice? According to a new Brookings Institution analysis of employment and earnings among 23 and 24 year olds in 2010, they did. Despite the fact that recent college graduates are earning less and are more likely to be unemployed than they were in 2007, those with a college education are still faring much better than those without. Among young adults, more education continues to translate into significantly higher earnings and employment rates, as can be seen in the graph above, suggesting that it may not take long for college grads to make up any earnings they sacrificed by choosing to focus on their education.
While the economic benefit of a college degree is significant, I think the authors of this analysis overstate it slightly. They present two advantages of a college degree: the employment advantage (college graduates are more likely to be employed) and the earnings advantage (college graduates earn higher wages). But because their earnings figures include the entire population of 23 and 24 year olds, even those who don’t have a job, the employment advantage also gets folded into the earnings advantage. If you extrapolate from their data and look only at 23 and 24 year olds who are employed, those with a college degree make $660 a week and those with a high school degree make $477 a week. The earnings of employed college graduates are 40% higher than those of employed high school graduates, a slightly smaller figure than the 90% earnings advantage we see with Greenstone and Looney’s numbers.
How Do Recent College Grads Really Stack Up? Employment and Earnings for Graduates of the Great Recession
The Brookings Institution // Michael Greenstone & Adam Looney // June 3, 2011