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College Dropouts and College Grads: Completing a Degree Means Getting a Better Job

By Neeta Fogg and Paul Harrington

If you decide to go to college, stick with it. That’s the message of a story just published in the Wall Street Journal, entitled “A Bit of College Can Be Worse Than None at All.” Melissa Korn reports that young college students (age 20-24) who leave school before earning a degree don’t do much better in the labor market than high school graduates. College dropouts’ unemployment remains in the double digit level and is only modestly below the unemployment rate of high school grads who never enrolled in college. Those college dropouts who do find work have annual earnings that are about the same as their counterparts who never enrolled. In contrast, young students who complete an associate’s or bachelor’s program are much less likely to be unemployed and have very large annual earnings advantages compared to college dropouts.

We’ve dug just a bit deeper on this topic and found that much of the difference in earnings between young people who earn a college degree and those who don’t can be explained by the kinds of jobs they get after leaving school. Analyzing data from the Current Population Survey, we found that young degree holders were only half as likely as college dropouts to work in the lower wage retail trade and accommodation and food services industries. Instead young grad employment was very heavily concentrated in the professional, scientific and technical industries and in education.

Distribution of Employed Non-Enrolled Persons Aged 20-29, by Major Industry of Employment, 2012-2013

College dropouts worked in different occupations than college graduates. College leavers were most likely to work in clerical (including cashier), food preparation and service occupations, including as food prep workers and servers and health care support workers. Young graduates were heavily concentrated in professional technical and managerial occupations that offer much higher hourly wages and more steady work over the course of the year.

Distribution of Employed Non-Enrolled Persons Aged 20-29, by Major Occupation of Employment, 2012-2013

Earning a college diploma seems to open a set of doors in the labor market that is often not available to those who may have made a considerable investment in post-secondary schooling, but failed to earn a degree. It appears that employers use a degree to figure out two distinct traits: first, it can provide some insight into the abilities and knowledge acquired by the course of study undertaken by the graduate. But a degree is also used as a signal of some very important building blocks of success in the labor market including persistence, self-discipline and reliability.

Last week, Drexel University saw several hundred employers come to campus to recruit our engineering students who will graduate this year. These employers are searching to fill their entry level jobs at Drexel and other colleges and universities across the country, because this is where the nation develops and tests not just knowledge and abilities, but also character and grit.

While some observers cite Bill Gates, Mark Zuckerberg and other exceptionally successful Ivy League college dropouts as examples of success without completing college, we find no labor market evidence to support this claim, making them exceptions that prove the rule. For most students, completing some college without earning a credential could produce some small labor market benefits compared to high school graduates who never went to college. However, the cost of even a few semesters of college can negate these small benefits, placing these young adults in a worse financial position than if they had never enrolled in college. But if they stay the course and complete college, the labor market advantages increase sharply.

Fogg and Harrington are labor economists in Drexel University’s Center for Labor Markets and Policy. News media who are interested in speaking with them should contact Alex McKechnie at 215-895-2705 or ahm62@drexel.edu.

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