By on September 21, 2012

This episode of Generation Why is brought to you by some numbers, not essays on product or marketing efforts. The chart above shows the mean earnings of college graduates with a Bachelor’s degree and full-time employment ages 25-34.

The Atlantic, which published the graph, claims that

“Real earnings for young grads with a college degree have now declined for six straight years. “Real average earnings for young grads have fallen by over 15% since 2000, or by about $10,000 in constant 2011 dollars,” PPI reports.”

Couple that with 14 percent unemployment for those aged 20-24 (compared to a national average of 8.1 percent), and no wonder kids aren’t buying cars anymore.

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39 Comments on “Generation Why: Data, Not Prognostications...”


  • avatar
    drewtam

    While earnings were falling, the price of college was rising much faster than inflation.
    http://inflationdata.com/Inflation/images/charts/Education/Education_inflation_chart.htm

    Commensurately, average student debt burden upon graduation increased.
    http://www.npr.org/news/graphics/2011/05/gr-avg-student-debt-300.gif

    • 0 avatar
      stuntmonkey

      I think that the widely quoted college increases are list prices, the average price paid per student isn’t going up as fast. College is an arms race where price signals quality, if you’re a mid market state college, it’s in your interest to jack the list prices up to signal that you are a serious institution, but to keep average prices (which aren’t advertised) on a low boil so as to not unset enrollment.

  • avatar
    05lgt

    Throw the average debt load of recent grads on the same axes and I’m sure it gets even clearer.

  • avatar
    tikki50

    yep its not hard to see why. Companies and not just auto companies are all starting to look and say WTF. Well I hope the look in the mirror. When a majority of companies across america stop hiring and start driving the wages down, overall sales drop. Boy I’d like to see a few CEO’s try to explain this to the board, LOL….

    • 0 avatar
      redav

      We’ve been trying to hire people for well over a year now, but we’ve found nearly all the candidates have that special combination of irrationally high confidence and utter lack of ability to find their way out of a phone booth.

      So, your resume says you have experience designing valves. Tell us about that.
      - I used our catalog to put the pieces together.

      But what did you design?
      - I put the pieces together.

      How do you determine what the capacity of the valve is?
      - That’s listed in the catalog.

      OK, let’s assume you just have a pipe. How would you *calculate* its pressure capacity?
      - (clearly frustrated by the interviewer’s ineptitude) It’s. In. The. Book.

      • 0 avatar
        Athos Nobile

        Seriously?. I mean, are they really that dumb?

      • 0 avatar
        28-Cars-Later

        “utter lack of ability to find their way out of a phone booth.”
        +1

        I am 31 and I was recently asked to assist with the hiring of a very junior developer we could hope to someday grow into more… review the resumes, do the phone screens, etc… my God graduates seem to have gotten worse just in the past few years. Between the lackluster attitude and inability to focus (ADHD?) most we brought in exhibited, I was simply taken aback of the 2010+ college graduate. It would also seem some of them may have snacked on lead paint chips as children. This is what $40K+ of debt buys you? You want to occupy somebody… Occupy Big Education, kids.

      • 0 avatar
        danio3834

        Over the last few years I have conducted hundreds of inverview for entry level positions at a large carmaker, and I can echo this sentiment completely.

        I am a technical person, not HR. My job in the interview is to evaluate competency, attitiude and ability to learn. I find the biggest obstacle in hiring quality people is HR policy itself.

        I can’t tell you how many very skilled people with great attitudes and a ton of experience we turned away because they didn’t have the bachelor’s degree that HR specified.

        Nevermind the guy was a walk in and had years of quality work experience that could never be learned in a lecture hall. Sure he has an assoiciates and very clearly reads, comprehends and writes well as evidenced by our assessment, but he doesn’t have the yuppie union card, so he’s out. How frustrating.

  • avatar
    Secret Hi5

    My little brother dropped out of college and using his smarts, is now earning more than the current numbers on that graph. Not only that, he isn’t saddled with college loans. I think part of the problem is that, up until recently, some people think that a college degree is all that’s needed to find a good job.

    [Against my advice, unfortunately, he bought himself a new luxury car. /smacks forehead. And then . . . he traded it in for ANOTHER luxury car. /double smack.]

    • 0 avatar
      ajla

      College is getting to be a major scam.

      • 0 avatar
        Marko

        As a current college student, I reluctantly have to agree with you. Today it’s assumed that one is going to go straight from high school to college much like one goes from elementary to middle to high school. When I went to the “college counselors” at my high school, they never asked me what I wanted to study or what notable skills I could perhaps hone in those next four years.

        No. They just sat down with me in a room full of “liberal arts” college posters, and tossed me some brochures to more “liberal arts” colleges I had neither heard of nor had any interest in. “All great fits for you.”

        Yeah…such great fits for me that exactly the same five or so brochures filled every trash can in the hallways.

        I fortunately did the legwork on my own and am relatively satisfied with where I chose to go and what I’m (hopefully) heading towards, but I certainly couldn’t have been alone dealing with the apathy of these so-called “counselors”.

        Make no mistake – I’m not saying an education is worthless. In fact, it’s probably the opposite. But it seems like all too many are looking at higher education as “super (expensive) high school you can bumble through drunkenly”, which it has never been and never will be.

        (College isn’t necessarily a trade school, either…but you do have to work hard to earn something meaningful. It’s where you hone your best skills, maybe discover a few skills you can apply, and meet interesting people along the way.)

        * Actually, speaking of technical programs, we don’t seem to emphasize those enough. There is no “one size fits all” approach to one’s education, no matter what “college counselors” say…

      • 0 avatar
        asapuntz

        http://www.smbc-comics.com/index.php?db=comics&id=2729#comic

    • 0 avatar
      28-Cars-Later

      [Against my advice, unfortunately, he bought himself a new luxury car. /smacks forehead. And then . . . he traded it in for ANOTHER luxury car. /double smack.]

      My suggestion is obtain one of those little yellow stickers they put on old textbooks at the campus bookstore, ‘USED SAVES’ I believe… and staple it to his forehead.

  • avatar
    dts187

    As a somewhat recent college grad (2009), I think one of the problems with this is the unrealistic degrees a lot of colleges offer and a lot of students receive. I can’t tell you how many people I know have some sort of an Arts degree that doesn’t translate into a career. All through my life people told me and my classmates that “a college degree is the best way to a good job”. It was beaten into our heads by parents, teachers, employers, and random old people. It’s anecdotal, but most unemployed college grads I know have a degree in graphic design, photography, music, etc. They were following what they were told. They found what they loved, went to college, and got a degree. Along the way, somebody forgot to tell them that demand for professional musicians and photographers isn’t very high. Someone forgot to mention that the job base for these careers is very low and they have a slim chance of landing a good paying job out of college.

    I’m not saying there isn’t any personal responsibility to this. Before they chose their major they could have done some research. You can hit the job boards, find industry forecasts, etc. Either way, we end up with a bunch of engineering job openings and a slew of photographers who can’t fill them.

    • 0 avatar
      Secret Hi5

      I think the ugly truth is that many HS grads aren’t cut out for the “math/science” programs, so they go to college anyway and get an arts degree. Nothing wrong with that, except for those who can’t afford it and fall into debt!

    • 0 avatar

      Yep.

      One might argue that curve’s declining due to an increase in unemployable degreed students.

      I always operated under the assumption that the purpose of going to college was to learn a skillset applicable to a future job (I’m an engineer).

      It amazes me that people go just to go.

      • 0 avatar
        dts187

        @mad_science

        It amazes me as well. So many go just because it’s what they think they’re supposed to do. No clear goals or idea of what they want.

        It seems if you want a job when you get out of college you need to major in health care, engineering(most any flavor), or IT.

      • 0 avatar
        azmtbkr81

        It used to be that you learned skills for a job on the job and a college degree was simply a way to get your foot in the door. This is still the case for the rich whose children have no problem finding jobs even with a degree in comparative diversity studies due to an extensive network of contacts and cronies.

        For the rest of us college has become a glorified trade school now that traditional trade schools have fallen out of favor with the changing economy. These days more and more employers expect a level of basic technical competency from new graduates on day 1. The sooner we recognize this the sooner we can make higher education more efficient and cost effective.

        The first step is to force anyone who takes federal loans, grants, etc to study practical subjects like teaching, medicine, IT, engineering etc.

      • 0 avatar
        28-Cars-Later

        @azmtbkr81

        Regulating majors where gov’t funding is involved? Hit the nail on the head old boy!

        Our Chinese friends/enemies/masters are actually eliminating unproductive college majors, my hat is off to them (although how Art History, Mayan Studies, and Basketweaving are superior to US History degrees is beyond me).

        “The WSJ reports that China’s Ministry of Education plans to phase out majors producing unemployable graduates. The government will soon start evaluating college majors by their employment rates, downsizing or cutting those studies in which more than 60% of graduates fail for two consecutive years to find work. What if the U.S. government were to adopt China’s approach? According to the most recent U.S. census data, among the first majors to go: psychology, U.S. history and military technologies. Lest you computer programmers get too smug, consider this.”

        http://news.slashdot.org/story/11/11/26/206252/china-to-cancel-college-majors-that-dont-pay

      • 0 avatar
        danio3834

        @azmtbkr81

        Not to mention how the easy money made available to the education market by the Federal Government is fueling the education bubble.

        Similarly to the housing bubble created by easy money unrealistic sub-prime lending, it creates artificial demand for these worthless degrees.

    • 0 avatar
      Dan

      +10.

      Liberal arts isn’t a key to gainful employment for regular people. It’s a hobby for the spoiled kids of the filthy rich, who network and get hired by each other’s dad’s businesses. That networking has neither ability nor interest in employing a million new plebe communications majors every year.

      I blame the idiot box. 500 channels have made the lifestyles of the filthy rich more visible than ever before. Human nature being what it is, we imitate them in hopes of joining them. The materialism, the promiscuity, the 4 year vacations of beer pong and coeds.

      But you can’t imitate the wealth that lets those idols skip the actual consequences of that behavior.

      • 0 avatar
        tnk479

        So true for the most part and I agree.

        Perhaps a small percentage of Liberal Arts students are truly talented and should be there on scholarships but the wide majority are kidding themselves.

        That said, this may be changing somewhat. New technologies are allowing for entrepreneurs to manufacture small runs of goods and artists to sell their crafts online. This is not enough to justify the mountain of debt incurred at a typical 4-year school mind you, but, I hear there are some new ways to make a living besides being a medical professional, accountant, engineer or IT professional.

    • 0 avatar
      racer-esq.

      Without a doubt an arts degree is not that marketable. And someone getting one from a for-profit college like The Art Institutes is particularly screwing themselves in my view.

      But it’s not like there is a lot of demand for second rate engineers either. And the top engineering schools in the US are highly competitive – they have no shortage of applicants.

      From a pure job security standpoint things like nursing and physical therapy seem to be the way to go. They cannot be offshored to India. Or to South Korea, where GM seems to be engineering and developing many of its new cars.

      • 0 avatar
        Adamatari

        Here’s a news flash for you guys: the economy fell across the board, and new workers in every sector suffered. The current “wisdom” is that STEM fields make money and non-STEM means you’re working at starbucks, but that is far from the truth. While there are a few degrees that give you a very good chance to make money (chemical engineering), most of those have very heavy competition so even they are far from a safe bet – IT is a perfect example of this.

        The arts are still an important part of our society (despite the best work of everyone to denigrate and marginalize them), and there are still people working as artists. Having spent time in a music conservatory, I knew these people. It was a cutthroat environment, and every single one of us was well aware that jobs were limited. It required tremendous amounts of work to do well, and at the exams the teachers were not sparing if you didn’t measure up. Nobody was just coasting. If you think the fine arts are easy, you are an idiot.

        I moved into another field (Japanese), which turned out to be much, much easier. No comparison.

        The thing is, the job market is in flux. Petroleum geologists may now be in demand at one time, but at other times there has been a glut of them. No degree is a guarantee of a good paycheck. Universities are not trade schools, either. If that’s the way we intend to go, we should probably rethink the system entirely and make it more like trade schools, with apprenticeships and such. As it is, we have unpaid internships… which still lead nowhere far too often, and of course are espeically hard for those with little money to take advantage of.

        But more than anything, I think we should ask if the only purpose in life is for everyone to be a worker bee or businessman. Because that’s the basic assumption here – that the only thing important in life is the size of your paycheck, and that we should all be trying our best to please the holy “job creators”.

        40 years ago, just having a degree was likely to get you a job. Not anymore. Think about that before you blame young people for choosing the “wrong” major.

      • 0 avatar
        28-Cars-Later

        Incidentally the parent corporation of the Art Institute is based in my city and is in hot water over their practices… hit the wiki for more info.

        In August 2011 Education Management Corporation was investigated and sued by the United States Department of Justice and four states for illegal recruitment practices and fraudulent receipt of $11 billion in federal and state financial aid money.[1

        “Or to South Korea, where GM seems to be engineering and developing many of its new cars.”

        See the USA in your Daeworolet!

  • avatar

    Derek – I’d love to see the stats on “young people” new car purchases over time.

    Was there ever a time where young folks actually purchased new cars in significant numbers? Is the myth of the late 60s kid buying a Mustang or muscle car reality or myth?

    Also, I’d assume the purchase data for young folks is a mess, given how much co-signing goes on. Even if Junior can pay for it, often times Dad will, just to get the better rates.

    • 0 avatar
      56BelAire

      mad_science,

      In 1963 at age 20 without a college degree, I went down to the local Pontiac dealer and factory ordered a new LeMans Convertible, 326CuIn V-8, took delivery about 6 weeks later. I still remember the OTD cost, $2,652.00.

  • avatar
    NormSV650

    Suffocate public sector and let gov jobs slowly grow, Obummer. They’ll still vote for him.

  • avatar
    redmondjp

    Well, this graph may be true overall, but in the tech sector, starting salaries are now approaching the 6-figure mark. Is this sustainable in the long term? Stay tuned . . .

    When you have an engineering degree and 20+ years’ of experience, and college graduates are coming right out of school making more than you are, it can be a bit depressing. Even moreso when thousands of couples of said tech grads live in your area and keep real estate prices in the stratosphere (the 1970s 1700sf split-level next door to me just sold for $370K, with baseboard electric heat and everything). Sorry for veering OT . . .

  • avatar
    Felix Hoenikker

    This graph shows the onset of wage deflation. According to the demographic economic theory of HS Dent, price deflation isn’t far behind.

    • 0 avatar
      Advo

      Funny you should mention that. I’m halfway through Gary Shilling’s “The Age of Deleveraging”. The way Europe, the U.S., and now China are going, it looks like we’re going to get either lots of deflation or inflation soon enough.

  • avatar
    el scotto

    As usual, anytime college education is brought on TTAC; liberal arts majors get piled on. My job requires critical thinking and analysis of data and having the ability to present my analysis in written and oral forms. Most engineers can do the first two, some can put out a good report, and most would pee their pants if they had to speak in front of 600 people or their company’s CEO. Different jobs require different skill sets.

    • 0 avatar
      28-Cars-Later

      Communication is so very important I agree, the engineers I work with usually lack the proper oral/written skill. I didn’t study liberal arts but I was fortunate to have been given a classical education in high school, I attended a Catholic academy who at the time had the second best academic ranking in the tri-state area. Perhaps future scientists and other technical minded students should be reminded of the importance of effective writing and communication skills, and be encouraged to develop them earlier than college.

  • avatar
    Glen.H

    I have to second that, el scotto. When I worked in the mining industry some years ago, I was shocked by the lack of basic communication skills of some of the engineers I worked with. A decent liberal arts degree combined with a more technical degree would go a long way to help with this problem.

  • avatar
    Landcrusher

    As a liberal arts major who first couldn’t get the job he wanted without a engineering or computer science degree, then excelled at it, then round rings around fellow engineers, then when the bubble burst couldn’t get employed again due to wrong degree, I have to say screw liberal arts. All it taught me was that I just wrote a terrible sentence that everyone understood anyway.

    PS if you are a young man who doesnt mind tough conditions, there are unlimited jobs in the Eagle Ford (Texas) and Bakken (North Dakota) shale plays. College is no real advantage, but any practical knowledge usually translates.

  • avatar
    28-Cars-Later

    So on average when I graduated in 2005 at the age of 24, people 25-34 were making on average $64K salary in 2011 money?

    I was about half that but still.

    Geez… no wonder there was a BMW craze…

  • avatar
    AJ

    I’m not surprised at the lack of interest in young people to buy cars, let alone the lower earnings. I use to think college graduates use to have more drive, but I’m not so sure that is still true? There is a lot of entitlement out there wherever you look, and it’s easy to hide out in academia when someone else is paying for it (even if it is a loan).

    I hire on occasion and it’s tough to find someone that doesn’t think they’re entitled to a job. Currently my favorite age range is just under 40 as they seem to be in that mindset of working for the American dream. (Me too!)

  • avatar
    Mike Kelley

    Stuff like this may explain why employers are not as impressed with college degrees as they used to be:

    http://pjmedia.com/instapundit/151120/


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