+

Cookies on the Business Insider India website

Business Insider India has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings, we\'ll assume that you are happy to receive all cookies on the Business Insider India website. However, you can change your cookie setting at any time by clicking on our Cookie Policy at any time. You can also see our Privacy Policy.

Close
HomeQuizzoneWhatsappShare Flash Reads
 

CHART OF THE DAY: The College Bubble Has Popped

May 11, 2013, 00:35 IST

With the cost of tuition exploding higher, student loan delinquency rates on the rise, and wages for college grads going nowhere, young people are increasingly asking themselves if higher education is really worth it.

Advertisement

While it's true that the unemployment rate is lower for the those with college degrees, data shows that labor market conditions are rapidly deteriorating for this demographic.

Yesterday, we reported on a new eye-opening report from Goldman Sachs' Jan Hatzius who noted that the labor force participation rate for college-grads was tumbling. This has been giving the appearence that the unemployment rate has been relatively stable.

Hatzius took the employment rate as a percentage of the population for college grads and then for those with less than a high school diploma. This provided a picture of the employment rate without having to address the changes in labor force participation rate.

"The statement that college graduates are the only group to have seen employment gains also requires qualification," said Hatzius. "It is technically correct, but nevertheless misleading. As shown in Exhibit 3, the employment/population ratio has fallen just as sharply among college graduates as among high school dropouts since 2007; in other words, the growth in the absolute number of employed college graduates has been nowhere near enough to offset the increase in the size of the college-educated population."

Advertisement

While Hatzius is mainly concerned with trends since 2007, the chart he provided goes farther back.

As you can see since the early 1990's, the employment rate for college graduates has been tumbling while the employment rate for those with less than a high school diploma has trended higher.

"The college bubble has popped," tweeted CNBC's John Carney in response to Hatzius' report.

Goldman Sachs

You are subscribed to notifications!
Looks like you've blocked notifications!
Next Article