Since the economic collapse of 2008, many people have struggled to recover. The Great Recession obliterated the job market for baby boomers and millennials. Even more alarming, by 2015 the employment rates for young people still hadn’t recovered to precession levels. In a post-recession universe, Americans may need to consider the possibility that the economy may never see that level of employment ever again. Up until 2008, a college degree was considered essential to increasing earning potential. However, with 1.2 trillion dollars in outstanding student loan debt, escalating college tuition, and a shrinking job market it is time to seriously reconsider a college degree.
In 1965, Lynden Bayens Johnson signed the Higher Education Act providing federal financial assistance to students whom couldn’t previously afford it. An estimated 20 million new college students had access to an affordable college degree, and the opportunity to improved their socioeconomic circumstances. Since 1980, the average tuition and fees of public institutions have tripled since 1975; an alarming rate even considering the time value of money. Even though the evidence indicates that people with college degrees earn more over their career than those without, the job pool for college educated adults has been drained by economic erosion from overgrown payrolls. American companies have shed millions of jobs since the recession, and there is no indication they will ever return. Even after we were promised that a college degree and hard work would open doors to socioeconomic mobility, it seems those doors have been slammed shut by crippling debt market meltdowns.
The idea and fantasy of college is so deeply engrained into our culture that more and more students are entering the gilded gates ignorant to what awaits them. And with federal student lending at a strong hum, universities are adjusting admission standards to allow more and more students onto their balance sheets. After all, you don’t make money by rejecting students. The reality after college is a dizzying and frustrating cycle of underemployment. A recent report by the Pew Charitable Trusts indicated that besides the dim outlook for recent grads landing the high paying job they dreamed of, there is a subcategory of graduates that are underemployed. Surprising enough as this revelation is, a deeper analysis of social trends among millennials sheds light on where 20 somethings are finding work/life balance.
It isn’t that youngsters aren’t willing to work; more so that recent college graduates are increasingly recalibrating the risk/reward balance. A Newsweek article from 2014 points out how millennials accounted for 40% of the unemployed working population. However, millennials are exposing the risk/reward balance to new variables, taking charge of their destinies and starting new small businesses. Evidently, it appears that working in a post Great Recession world has inspired a new generation of small business owners intent on providing quality services and products. This is a paradigm shift from the common vocational arithmetic that includes college degree = good paying job opportunities. My view is that such shifts in thinking is due to a cyclical flow of wealth. Tech start-ups notwithstanding, the universe of new products reaching markets is shrinking, and rather than search for these elusive grains of fortune, millennials have focused on refining and improving simple products.
For example, Annheuser Bush, Miller Coors and SABMiller control 74.3% of market share for beer. Smaller brewing companies, commonly known as micro-brews, have popped up as quality alternatives to mass produced suds. Most of these shops have started in garages with five gallon buckets, obscure yeasts and esoteric hops that produce delicious beers in several styles. Ballast Point is one such story and had incredible success with their Sculpin IPA (India Pale Ale). Since 2007, Sculpin has received a host of awards capped off by a Beer Advocate rating of 97. After Ballast Point established itself as a quality brewery, a large corporation swooped in to swallow up the competition. Late in 2015, Constellation brands acquired Ballast Point brewery for a reported one billion dollars, illustrating the value in providing a better product on a small scale in hopes of being bought out. It is a common tale in the tech universe, and becoming a business model in other industries.
Besides the intent to sell your garage start-up for billions of dollars, the work/life balance controlled from answering only to yourself makes small business very attractive. Add the glamour of modest lifestyles in far-off locations and you have a recipe for success. The question isn’t one of success, it’s more about failure. How can you fail if you enjoy what you are doing while living within your means, and working under your own parameters? Millennial understand this well.
So, Is a college degree necessary to brew beer? Certainly not, although an understanding of chemistry would certainly enhance your ability to create something worth drinking. But balancing out the rising cost of higher education with the probability of landing a job that will pay enough to avoid defaulting on those loans is becoming more clear. With financial stability being pushed deeper into our professional lives, simply getting a degree just to have options seems an expensive option.
Additionally, consider how wealth continues to flow to highest one percent of earners, their positions within overgrown corporations and how those entities wield their capital to consume competition. In 1970, 29% of aggregate U.S. income went to the upper-income tier. By 2014, a staggering 49% of U.S. aggregate income went to the wealthiest households. With so much capital at the top, some of it has to trickle down in some form. The trick for millennials, and subsequent generations, is to anticipate how the wealthy spend their money, and capitalize on those opportunities. In a sense, it’s a return to the fundamental American dream.
So, the one industry that seems to be seeing extraordinary growth are the trade jobs. The bureau of Labor Statistics reports that pipe fitters will be one of the highest growth professions for the next eight years, with a growth rate of 12%. This figure dwarfs all other categories. Moreover, training takes place on the job through apprenticeships or minor tuition bills in technical school. Even more attractive is that the average salary is $50k with the latitude to freelance and acquire overtime. Pipe fitters are not the only vocation seeing this kind of grown; electricians and HVAC technicians are also benefiting from this type of trickle-down economics while lawn care professionals are doing a wonderful job of claiming their share of 78 billion dollar market.
In each American generation, immigrants ventured across oceans for opportunity. We are at pivotal moment as a nation. It seems we have reached the pinnacle of our strength, and we must adapt to a shrinking world. The U.S. still maintains 39% of the worlds wealth, but there are two edifying lessons we have learned from history. First, is that empires fall; and second, is that history repeats itself.