As we ring in 2018, college seniors around the U.S. are returning to school, focusing more on the frantic job search than on their last semester of classes. Sadly, however, many will find themselves underprepared when they graduate.
Even though the overall U.S. job market is growing at a fair pace, we still see persistent trends of millennials struggling to find a job after college; living with their parents far more and for far longer; and generally being more risk-averse than previous generations. Two disconcerting statistics dubbed by A.T. Kearney the “millennial double whammy” — steadily increasing student loan debt and stagnant wage growth — paint the concerning picture of the present state of the macroeconomic impact of higher education.
The dual burdens of loan debt and low wage growth do not affect everyone in a uniform fashion. Other factor being equal, the average undergraduate degree does not vary greatly in cost because of the concentration chosen: A degree in math is not disproportionately more expensive than a degree in art history. So although the debt levels are fairly degree-neutral, the same cannot be said of the problem of stagnant wage growth.
Because of market dislocations of supply and demand in highly technical sectors, wage growth and total real wages are markedly higher in jobs that require advanced technical and analytical skills, such as in the roles of business systems analyst, research scientist, software engineer, and network engineer.
Graduates who secure jobs like these will be better positioned to withstand the millennial double whammy. Unfortunately, the demand for the skills required to enter such fields far outpaces supply — a phenomenon commonly referred to as the “skills gap.” Far from insignificant, this mismatch is growing, and a real threat to economic growth labeled a “crisis” by JPMorgan's Jamie Dimon. Reducing the skills gap would drastically reduce the impact of the millennial double whammy, and would reinvigorate both millennials and the job market.
Most universities are concerned about this and have made efforts to add more technical skills to their course options. However, given the size of the disconnect, provision alone does not appear to be sufficient.
Not enough students seem to grasp the severity of the problem, and demand for these courses is still weak. This is particularly true for those in the arts and communication fields.
Where does the fault lie? Unprepared or idealistic students who feel they will be one of the lucky ones to score a high paying job with a less-in-demand degree?
University administrators designing degree streams that do not place enough attention on high wage skills? Liberal arts professors who are ardent believers in teaching only for the joy of learning regardless of the debt burden accumulated?
The U.S. federal and private loan systems that do not offer enough nuance/ incentives to steer students into prudent career and schooling choices?
All of these contributing factors play a role and in the past were perhaps less malignant. Unfortunately, the rapid pace of technological change (and the requisite skill sets to cope with it) necessitates a rapid response on the part of universities and other institutions.
Furthermore, many suggested solutions may only aggravate the problem. For example, an early idea of the Trump administration was to tie interest rates on student loans to employability. By making technical degrees more expensive, however, this would have the perverse effect of discouraging exactly the kind of graduates we need more of.
The only real solution then is for all players to reinforce/ repeat the importance of skills until undergraduate students pursue them in greater numbers. This message also needs to be received earlier, “hammered home” by schools and parents. And it is not that a particular skill is the “answer.”
Every student does not need to learn coding, fund raising or data analysis. They merely need to explore enough to display their learning potential to future employers. This would also help build up their confidence in their ability to learn such skills, vitally important when negotiating their worth in the job/ wage market.
The National Association of Colleges and Employers (NACE) recent student survey noted that 85 percent of the Class of 2016 graduates deem themselves very or extremely proficient in terms of professionalism/ work ethic and teamwork.
However, they are least sure about their competency in IT applications. Employers will always value critical thinking, collaboration, and a host of other so-called “soft skills,” but it is clear that when it comes to the preparedness of college graduates, soft skills are not the problem. Additional emphasis on technical skills would benefit students, their future employers, and the economy writ large.
Krista Tuomi is a professor in International Economic Policy at American University.
Paul Jeffries is a financial analyst in Washington, DC.