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Degrees of Value
In 1975, college graduates earned an average of 60 percent more per year than workers with high-school diplomas only, according to the 2006 Economic Report of the President. A college degree seemed to only increase in value over the next quarter century. In the year 2000, the average earnings of a worker with a college degree was roughly double what workers with high-school diplomas were making, according to the most recent Census Bureau income data. In recent years, however, the gap appears to have narrowed somewhat. In 2004, for example, workers with college diplomas were earning about 80 percent more, on average, than high-school graduates. A college diploma is still valuable, of course. In 2007, the last year for which Census data is available, the median income for those with a bachelor's degree was still about two-thirds more than for those with only a high-school diploma. And individuals with master's degrees earned 20 percent more than those with a bachelor's degree. A college education doesn't necessarily mean less today than it did in years past, says Jason Kovac, practice leader with WorldatWork, a Scottsdale, Ariz.-headquartered professional association. But he acknowledges that "the compression of pay between high-school-educated individuals and college-educated individuals has been happening for several years now." Factors such as the globalization of the workforce, which could be moving some of the higher-paying, college-educated jobs outside of the United States, and the creation of information technology and computer-based professions are likely two of the largest contributors to the trend, Kovac says. "Information technology is a fast-moving, ever-changing environment," he says. "Jobs such as Java programmer, webmaster, graphic designer [and] database administrator are jobs that might not specifically need a college degree. "The new generation of workers has grown up with HTML and Java language; thus they are experienced with creating Web pages using social networking and Web 2.0, and their vast experience might outweigh a college education," he says. Such experience has become increasingly valuable, and, from a hiring standpoint, companies may not be looking at education as closely when evaluating candidates today compared to, say, 10 years ago, Kovac says. "There are some jobs where education is a must -- CPA, engineer, doctor, teacher, etc. -- but as a whole, the main focus is, 'Can this applicant do the job and are they a good cultural fit?' The education or experience might help with the job knowledge, but in some cases experience could mean as much as a college education, or potentially more," Kovac says. Bachelor's degrees are probably looked at more skeptically in 2008, says James Brennan, senior associate at Redmond, Wash.-based ERI Economic Research Institute. "A 'non-trade' degree now merely signifies [an applicant] has passed academic tests with little relevance to the working world," he says, adding that "aggressively-marketed" trade schools have become more effective than four-year universities at tracking and responding to employers' needs. He questions the overall picture presented by the Census Bureau data, however, noting that the comparisons are based on cash compensation only and exclude healthcare benefits, which have seen double-digit cost raises in recent years, while pay increases "have languished in tiny single-digits." At the same time, he says the value of college degrees has clearly depreciated in recent years. "Today's [bachelor's degree] is yesterday's high-school diploma," says Brennan. "In an average family, anyone can get one." If there is indeed a trend toward closing the pay gap between the college-educated and high-school graduates, "it has [a] profound impact on HR," Brennan says, as it affects recruiting, succession planning, employee-assessment plans and staffing planning, among other areas. Kovac says it will require HR to take an even larger role in finding and developing talent in the future. He says, however, that HR professionals have felt these effects for as long as 15 years ago. "The initial impact came in the early 1990s with the Americans with Disabilities Act, which forced HR to become more of a strategic partner -- providing counsel (and pushback) on educational requirements and experience requirements. HR will need to continue this trend." The de-emphasis of college degrees and inclusion of high-school graduates may also deepen the talent pool in years to come, Brennan says. More candidates may mean a more arduous selection process, but it will also allow HR to an opportunity to focus on skill needs and assessments on an organizational level, and "ensure the right education and knowledge" throughout the company, he says. "By custom-creating educational opportunities within each organization, HR can help ensure a well-rounded workforce."
September 30, 2008 Copyright 2008© LRP Publications |
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