Despite the low current unemployment rate, most people know that there?s something wrong in the job market. Jobs are not as abundant as they should be at this point in an economic recovery, and the salaries don?t seem to be there. For young people, college is typically seen as the answer to the problem. But it might be time for young people to give up on college, and to consider taking some different paths.
The problem is that traditional full-time jobs are under assault. It?s not just offshoring jobs either. Technology is rapidly replacing a lot of jobs, and promises to take more. Getting more education isn?t necessarily the answer. For one thing, the educational curve is perpetually behind the economic reality. And for another, employers aren?t always willing to pay for more education.
How can you adjust to the new economic reality, if the usual solution will no longer get the job done?
Let?s start by addressing education considerations specifically.
Minimize Higher Education Costs
While it?s still possible to say that a young person?s earning potential will be greater with a college degree than without it, we can?t ignore the cost to obtain said degree. That cost has exploded, and it?s no longer certain that the cost justifies the benefits.
According to data available on CollegeData.com, average annual tuition and fees for 2017 are:
- Private colleges, $33,480, or $133,920 for four years
- Out-of-state public colleges, $24,930, or $99,720 for four years
- In-state public colleges, $9,650, or $38,600 for four years
That?s just tuition and fees. If you live away at school, the costs for room and board average $10,440 per year at four-year public schools and $11,890 at private colleges. Meanwhile, books and supplies average more than $1,200 per year at both public and private schools.
From a cost standpoint, attending an in-state public college will be the least expensive route. But even that flying-on-the-cheap route will come to about $85,000 over four years.
At the opposite end, four years at a private college will run more than $186,000.
As high as those numbers are, they may even be understated. We haven?t factored in soft costs, such as traveling to and from school, having spending money, or other incidental expenses. Nor have we considered the fact that the average student takes 5-6 years to earn a four-year degree.
For most middle income students and families, attending college requires an unhealthy amount of student loan debt. But is it worth bankrupting yourself or your family for that education?
Commute to an in-state school or attend a two-year community college. That will at least lower the cost (dramatically) of getting the education you want.
Minimize the Amount of Time Spent in School
One of the worst ironies of getting a college degree is spending four or more years earning a degree that isn?t relevant in today?s job market. It might be far better to instead aim for an Associate?s degree in an in-demand field. You can earn such a degree inexpensively by attending a community college.
There are 19 careers where you can earn $45,000 to more than $125,000 with a two-year degree. There are a lot of jobs requiring a four-year degree that don?t pay that much.
Would you rather have a $50,000 job that cost you $150,000 to get, or $75,000 job that cost you only $15,000 to get?
It?s basic economics.
Choose Your Major CAREFULLY(!)
I suspect that a lot of people choose soft majors because their overriding goal is to go to college and have a stress-free experience. Let?s face it, studying to be a nurse or an engineer takes serious commitment. Not everyone wants to make that commitment.
The distortion is that in years past, you could get a degree in English literature or cultural studies and still land a high-paying job on graduation. But those days are gone. Today?s employers want to know what you can do for them now. Soft majors may be interesting to study, and relatively unchallenging, but they?re not in demand in the real world.
If the ultimate reason to go to college is to get a well-paying career, then you will have to choose a major that will make you uncomfortable. If this is something that you don?t want to do, you?ll be far better off choosing a non-college career path.
The time that you spend gaining real-world job experience will probably be worth more than earning a soft degree.
Now let?s shift over to noneducational considerations.
Emphasize Skills Over Credentials
In many career fields, college represent more of a credential than anything else. It?s that thing that you get in order to open up the door that lets you into the field. But a credential has limited value. It may get you in, but it may not be enough to keep you there, or to advance your position.
Employers today are looking for skills, and usually very specific ones at that. Computer, internet and marketing skills are high on the list. And creative skills can be very important in building a lot of different business ideas. You can often develop the skills on your own, or even through self-study. The Internet is a wellspring of information on skills, as is YouTube for visual learners.
Both represent a twin advantage that the current crop of young people have, that no generation before it ever enjoyed. If you?re not taking advantage of this, you?re missing something earth shatteringly important.
What?s more, you should be well aware of the trend toward larger employers finding ways to operate with smaller staffs. Good skill sets will enable you to find employment and contracting opportunities in small businesses.
Sure, everyone wants the higher salaries and rich benefits that big companies pay. But if those doors are closing, working for smaller employers may be your best shot.
Prepare to Have Two or Three Income Sources
Everyone wants to continue living by the narrative of one man/one job. That?s what?s worked up to this point. But that dynamic may be shifting. Technology is relentlessly reducing jobs, and even ?good? jobs are increasingly becoming temporary. (The is evidence is the increased frequency of contract ?jobs? over permanent ones.)
But that arrangement is becoming a dinosaur. If you?re young and just starting out, you may have to embrace the idea of creating multiple income sources.
You?ve probably heard of the ?slash worker?. If you haven?t, it?s someone who juggles two (or more) occupations at the same time. It might be a teacher/blogger, or an accountant/online entrepreneur. But it?s becoming increasingly common as millions of young workers in particular look for solutions to chronic under-employment.
It may even be a virtue. In recent years I was a slash worker, juggling careers as a part-time accountant or banking contract worker, while building my blog and freelance blog writing business.
A mobile creative is someone who develops multiple skill sets, particularly creative ones. But don?t get the wrong idea about the word ?creative?. It doesn?t mean becoming an artist (though that?s a possibility), but rather someone who earns a living with creativity. For example, blogging and blog writing are creative capacities because the blogger or writer creates both the content and the business itself.
This can involve many different skill sets. You can balance a business with a part-time job, or a full-time job with a side business. But the basic idea is always to have more than one income source at any time.
You may have to accept the fact that you will need to become a mobile creative in order to survive and thrive in a fast-changing economy and job market. It may be the best way to deal with an increasingly difficult-to-maintain full-time job.
Self-employment Has to Be on Your Radar Screen – Even if You Don’t Give Up on College
Unless you?re going to be doctor or some other highly specialized technician, a rigid career plan probably won?t serve you well. Underemployment has become the new normal in the job market. As a result, you may need to look seriously at becoming self-employed.
This is particularly true for new college graduates. There may not be a job waiting for you upon graduation. You may even lose a job fairly quickly if the economy turns sour, consistent with the last hired/first fired doctrine. As a new or recent college graduate, you may have to create your own job by becoming self-employed.
Self-employment is the ultimate career solution, since once you learn how to earn a living without a job, you?ll have an income for life.
Unfortunately, as important as self-employment is, college doesn?t prepare students for it. It mostly prepares you to get a job in the organizational worlds of government and Corporate America. And those are the very jobs most vulnerable to replacement by technology.
Learn to Save and Invest Early ? and Stay Out of Debt Too
One of the major problems with the whole college regime is its heavy reliance on debt. In modern America, people borrow to pay for what they can?t afford. In recent decades, that?s what?s driving the higher education price spiral.
But it?s doing something less obvious, and probably more destructive. It?s creating a rising class of adults who are a) dependent on debt, and b) believe that debt is their friend.
That attitude toward debt is completely counter-productive. Borrowing to finance college sets off a chain reaction of borrowing. And not just a little bit, but in most cases, something close to the full purchase price of whatever is being bought. It?s become common for people to borrow close to 100% of the cost of a house or car.
When you start with a large base of student loans, and then add a fat car payment and, eventually, a crushing mortgage payment to the mix, the road to bankruptcy has been fully paved.
Most people recognize the pattern too late. Once they do, not only do they already owe an unmanageable level of debt, but debt has become a lifestyle for them.
Given the increasingly limited opportunities that are available, it behooves a young person to adopt the work-save-invest pattern early in life.
Plan to start saving money as soon as possible. Today isn?t too soon. It?s not just a matter of building up a basic grub steak, but also of turning saving money into lifestyle. The earlier that you do, and the more money that you can save up, the easier everything else in your life will be.
Please don?t take this recommendation lightly. A recent survey shows that
69% of American households have less than $1,000 in savings for an emergency. That?s a majority that you don?t want to be part of. But it?s exactly what will happen if you take a very casual or nonexistent attitude toward saving money.
Once you get enough money saved up for an emergency fund ? which is sufficient liquid assets to cover at least three months of lost income ? you should take a serious look at investing.
I don?t want to venture into providing any kind of investment advice here. The major financial markets ? stocks, bonds and real estate ? are all at bubble levels, which means that investing now has more than the average amount of risk. But on the next major pullback, you should want to begin investing.
An investment portfolio is one of the best insurance plans for the future. And that?s not just for retirement either. You should plan to invest for more immediate needs. Just having savings and investments set aside can lower the pressure that you’ll feel on the career side of your life.
Keep Your Consumer Identity Under Tight Control
One of the big picture attitudes that dominates our time is the emphasis on consumption. It?s as if people define themselves not by who they are, or what they do ? but by what they buy.
This can mean the type of car they drive, the brands of food that they buy, the restaurants that they eat in, and where they take their vacations.
If income is less certain than it has been in the past, there won?t be any room for high-end consumption patterns. This is especially important with basic living expenses. They should be kept as low as possible, particularly early in life. (Barring a financial epiphany – or a financial disaster – high spending in youth only mushrooms with age.)
Rather than getting an apartment of your own, look to share space with one or two friends. Better yet, don?t be so anxious to leave your parent?s home. Better off to hang around the nest for a few years and save up some money and pay off some debts first. That will also give you valuable time to build up your occupations/income streams.
Also, don?t be in such a hurry to buy a house. House prices are at record levels in a lot of markets. It’s no longer certain that they?ll hold their value through the next recession. The same goes for a car. Buy a used car rather than a new one. Not only will the payment be lower (or non-existent if you can pay cash), but they hold their value better.
Youthful optimism aside, a more conservative attitude toward consumption needs to be the order of the day. Not only will it help to keep your expenses low, but it will also help to keep you out of debt. And that should always be a goal.
What advice would you give to a young person coming up into the adult world? College, careers, saving money, debt, spending money ? feel free to weigh in.