Members of the Class of 2012,
As a former secretary of labor and current professor, I feel I owe it to you to tell you the truth about the pieces of parchment you're picking up today.
You're f*cked.
Well, not exactly. But you won't have it easy.
First, you're going to have a hell of a hard time finding a job. The job market you're heading into is still bad. Fewer than half of the graduates from last year's class have as yet found full-time jobs. Most are still looking.
That's been the pattern over the last three graduating classes: It's been taking them more than a year to land the first job. And those who still haven't found a job will be competing with you, making your job search even harder.
Contrast this with the class of 2008, whose members were lucky enough to get out of here and into the job market before the Great Recession really hit. Almost three-quarters of them found jobs within the year.
You're still better off than your friends who didn't graduate. Overall, the unemployment rate among young people (21 to 24 years old) with four-year college degrees is now 6.4 percent. With just a high school degree, the rate is double that.
But even when you get a job, it's likely to pay peanuts.
Last year's young college graduates lucky enough to land jobs had an average hourly wage of only $16.81, according to a new study by the Economic Policy Institute. That's about $35,000 a year -- lower than the yearly earnings of young college graduates in 2007, before the Great Recession. The typical wage of young college graduates dropped 4.6 percent between 2007 and 2011, adjusted for inflation.
Presumably this means that when we come out of the gravitational pull of the recession your wages will improve. But there's a longer-term trend that should concern you.
The decline in the earnings of college grads really began more than a decade ago. Young college grads with jobs are earnings 5.4 percent less than they did in the year 2000, adjusted for inflation.
Don't get me wrong. A four-year college degree is still valuable. Over your lifetimes, you'll earn about 70 percent more than people who don't have the pieces of parchment you're picking up today.
But this parchment isn't as valuable as it once was. So much of what was once considered "knowledge work" -- the kind that college graduates specialize in -- can now be done more cheaply by software. Or by workers with college degrees in India or East Asia, linked up by Internet.
For many of you, your immediate problem is that pile of debt on your shoulders. In a few moments, when you march out of here, those of you who have taken out college loans will owe more than $25,000 on average. Last year, ten percent of college grads with loans owed more than $54,000. Your parents have also taken out loans to help you. Loans to parents for the college educations of their children have soared 75 percent since the academic year 2005-2006.
Outstanding student debt now totals over $1 trillion. That's more than the nation's total credit-card debt.
The extraordinary rise in student debt is due to two related facts: the cost of a college education continues to increase faster than inflation, and state and local spending per college student continues to drop -- this year reaching a 25-year low.
But this can't go on. If unemployment stays high for many years, if the wages of young college grads continue to fall, if the costs of college continue to rise and state and local spending per college student continues to drop, and if the college debt burden therefore continues to explode -- well, you do the math.
At some point in the not-too-distant future these lines cross. College is no longer a good investment.
That's a problem for you and for those who will follow you into these hallowed halls, but it's also a problem for America as a whole.
You see, a college education isn't just a private investment. It's also a public good. This nation can't be competitive globally, nor can we have a vibrant and responsible democracy, without a large number of well-educated people.
So it's not just you who are burdened by these trends. If they continue, we're all f*cked.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
My son is in the class of 2012. I tell him that it may be tough but others have faced worse and done just fine. If it can be done - then you can do it and don't let anyone tell you you can't.
This is not a tinfoil-hat conspiracy theory, you can see and hear this scenario spoken just about every time a Republican opens his mouth. In Canada, Harper has recently lowered wage rates for migrant workers by 15%. You see the intent?
I have worked for 30 years with a large number of manufacturing companies. Out of hundreds of senior execs I have worked with I can only think of one that was exploitative and perhaps evil.
The typical manufacturing CEO cares deeply for their people and feels personally responsible for them.
On the other hand the financial sector does attract some of the most greedy and unscrupulous people in the world. I doubt there is a conspiracy to lower wages but I'm sure their is one to skim as much "personal money" as possible via bonuses etc.
Being well educated but jobless doesn't really do anyone any good, does it?
We are crossing a line where the efforts to dig ourselves out of the recession are not paying off, and college is no longer a good investment - either publicly or privately.
Those people in other countries that are well educated and doing the work of Americans? I'll bet they have some REAL wage issues. And that's why they are getting the jobs - jobs that Americans don't want because they pay less than peanuts.
The reason that parents may tell their children to avoid education in the future may be because the costs are prohibitive. Having a good job isn't nearly as rewarding if you owe so much that you aren't earning what a manual laborer earns.
The Venus Project. Do take some time and try to understand it. There are tons of videos on You Tube about it. I wonder if this one will be posted, as my last post to this blog failed to see the light of day. I wonder why?
Not sure what Dr. Reich is advocating here, but I would have to assume that he thinks college should be free. In other words, he'd like to destroy one of the few remaining functional aspects of our society.
If the college of your dreams is outside your price range, go somewhere cheaper. I did. A lot of successful people did as well. The only thing you get out of college is practice in critical thinking anyway. You don't have to go to Harvard for that.
By ignoring the problem of sky-rocketing costs in higher education you are also ignoring the great disadvantage that this places American graduates in comparison to their foreign counterparts receiving affordable education. It is to the point now where only the wealthy can afford a good school in the US, so any Einsteins from poor communities - forget about their potential contributions. Not to mention we're MUCH more strapped w/debt between paying off school and paying equally exhorbitant healthcare costs than our neighbors to the North and must of the industrialized world, where they believe education and health care should be available to all.
As a result, we also have more high tech industries than europe, nearly three times the venture capital financing of out European peers, and over ten times that of Asia. In the Phd market, they value US Phd's more than others.
The idea that poor kids can't go to college is absurd. Anyone can go to college, and there are more colleges in the US at a wide range of prices than anywhere else in the world. The fact that it costs money encourages discipline, something the real estate market has found out the hard way.
Of the two U.S. parties of course fiscal largess is more linked to Democrats who play more of the "something for nothing" culture associated to their brand. Plenty in either party abused and became rich. What we need now is a bi-partisan approach to solutions something this administration and its base isn't capable of.
"We're screwed. There's gonna be a fight. Let's win! "
I hope all of you statists have lots of the "6 B's." We individualists do. Be prepared for a total socioeconomic collapse. A paradigm shift that will probably involve decades of recovery.
Well, so much for my achieving that doctorate in medicine in 2014. Barring a MAJOR change in the way Obamney et al conduct business?
It appears that the fecal matter will impact the oscillating impeller before then.
Good luck to all...
(No, I'm not overly pessimistic or a fatalist. I'm just a realist.)
Stem degrees are NOT easy to get, further you may have to prepare yourselves to work in other countries ( innovation and incentive are being ripped from this country by Demoscocialists ) so study up on your Hindi & Chinese. My eldest plans on becoming a Chemical Engineer and is becoming fluent in Chinese...staying ahead of the curve !