The Potential Dark Side of a White-Hot Labor Market

Shana Jackson, president of Nashville State Community College, suffers from a dilemma that reads like good news. Her students take on jobs from employers who are enthusiastic about hiring and pay them good wages.

The problem is that students often drop their plans to earn a degree in order to gain the attractive status offered by these desperate employers. Jackson said that when the labor market cools (almost certainly as the Federal Reserve raises interest rates and slows the economy in an attempt to curb rapid inflation), incomplete education plagues these students. I’m worried that I’ll be back.

“If housing costs go up, gas prices go up, and food prices go up, the short-term decision is: Make money now. Go back to school later,” says Jackson. I did. Anecdotally, this issue is the most serious in hospitality-related training programs, and qualifications are often evaluated, but not technically necessary.

Strong labor markets often encourage people to stop training, but this economic moment presents very difficult trade-offs for families and other financially responsible students. Reducing working hours to go to class now means giving up the benefits of significantly higher wages at the moment of rising fuel, food and housing costs.

There are benefits to taking advantage of the abundant employment opportunities currently available. Employment can create resumes and provide people with valuable experience and skills. However, labor economists say that deciding to skip school and training today could come at a cost in the future.research Consistently suggests Bachelor and skill trained people can earn more income and have a more stable job in the long run.

“It’s really great to have an income, but I also want to look to the future,” Mary C. Daly, president of the Federal Reserve Bank of San Francisco, said in an interview last week. “Higher skill workers have higher wages and more upside potential.”

Daily speaks from his personal experience.She is herself Dropped out of high school At the age of 15 to make money. She eventually achieved the same grade as her graduation and enrolled in a semester at a local college, but while she was studying, she helped herself in targeting, donut shops, and deli. I had to do three part-time jobs. She earned her degree full-time and later earned her PhD. In economics.

“That hard work was the best choice I’ve ever made,” she said. She uses her experience and data analyzed as her labor economist to train young people to improve their future opportunities, even if they need to balance her work. Often you are encouraged to continue.

“Currently hot jobs—restaurants, warehouses—these don’t last forever,” Daly said.

Many sectors are undoubtedly booming. In today’s labor market, there are 1.9 open jobs for all available workers, Rank and file worker Since the early 1980s.This is especially true Low wage profession In fields such as leisure and hospitality.

Against this background, fewer students are choosing to continue their education. The Latest number of registrantsThe number of enrollments in this spring’s undergraduate program, announced by the National Student Clearinghouse Research Center in May, was 662,000 less than the previous year, down 4.7%.

Enrollment in community colleges has also declined significantly, with 827,000 students declining since the outbreak of the pandemic. The decline may be partly demographic and partly the result of choices made during the pandemic.

The transition to online learning was difficult for many students, and the job market was hot and there were suddenly many opportunities, just as schools allowed students to return to the classroom. At the same time, inflation began to accelerate and making money became more important as rent, gas and food costs rose. The confluence of that factor can prevent many students from continuing to pursue their education.

18-year-old Gabby Carbo has left Nashville’s business administration program this year. She didn’t know what she wanted to do with her degree, and as a front-end manager for a Kroger grocery store, she said she started making $ 21 an hour. It was a rare job for someone of her age to land.

“They gave me a chance because they really weren’t there,” she said.

Teens are often aware that businesses are stretching to find talent and can land in positions that may not be available otherwise. Near the lowest level From the 1950s.

Carbo wants to rise to the level of assistant store manager, which she believes has put her in the position of office worker and made a wise choice when leaving school without the consent of her parents.

“They think it’s a bad idea-they think I should have quit my job and go to college,” she said. But she earned enough money to lease her name. She recently signed with her boyfriend at the age of 19 working at a local Nordstrom restaurant.

“I feel like I have a lot of experience, and I have a lot more to gain,” said Carbo.

The question is how people like Mr. Carbo will work in a weaker labor market, as today’s remarkable economic power is unlikely to continue.

The Federal Reserve is raising rates to slow consumer demand, which will slow employment and wage growth. Monetary policy is a blunt instrument. Central banks are at risk of boosting unemployment and even hitting the recession as they try to curb today’s rapid inflation.

This can be bad news for those without a qualification or degree. Historically, rising unemployment and weakening economies have led to poorly educated and recently hired workers losing their jobs.In the extreme case of a pandemic, high school-educated adults are unemployed Jumped to 17.6 percentAlthough it peaked at an educated university 8.4 percent.

Today, the same people who are benefiting from extraordinary opportunities and rapid wage increases may be suffering from the recession. That’s one of the reasons why economists and educators like Jackson encourage people to continue training.

“We are worried about their long-term future. If this doesn’t send them to college, it’s a $ 17- $ 19 goal job. It’s a loss,” says Labor Economics and Youth Development. Said Alicia Sasser Modestinoh, an associate professor at the University of Northeastern who is studying.

Still, Sasser Modestino said that taking on high-paying jobs today and pursuing training later does not have to be mutually exclusive. Some people find employment in places that provide tuition assistance, while others can work and study at the same time.

Other students like Mr. Carbo may spend time understanding what they want to do in their future in a way that makes them better in the long run.

In addition, the economy can change in ways that keep workers in high demand. The baby boomer generation continues to age, and immigrants have declined sharply during the pandemic. This can allow employers to compete for employees for years. If that happens, you may find that the degree and certificate (the currency of the labor market for the last 20 years) are less important.

Anthony Carnebert, director of the Georgetown University Center for Education and Labor, said: In addition, Carnebert said economic policy from Washington could increase the need for high school-educated workers for some time. President Biden’s infrastructure bill passed last year Create a job In construction and other areas, we are investing in bridge reconstruction and airport and port upgrades.

“We are about to enter an era where you don’t have to graduate from college. That will be a popular story,” he said.

Even before the pandemic People were asking more and more The value of college education. Many people do not complete their degree or certificate programs, their work prospects are not improved, and their student loan burden is often overwhelmed.And higher education isn’t the only panacea: some certificates and qualifications Much bigger There are labor market benefits, but others offer lower wage premiums.

However, data and research continue to suggest that staying in school benefits workers in the long run. Unemployment rate is consistently low For people with a college degree and wages Significantly increase As the education level goes up. A typical worker with only a high school diploma earned $ 809 a week in 2021, and a worker with a bachelor’s degree earned $ 1,334.

“The high school job market has been declining since 1983,” Carnevale said. According to his research, since the early 1980s, degree holders have begun to expand their lifetime earnings advantage.

The financial resilience of education relies on Luemettorea Williams. Williams, 34, recently transferred to Nashville as a nursing student.

She worked as a medical assistant in the clinic for many years, but got a job because she already knew a doctor. She did not have the relevant qualifications.

Early in the pandemic, the doctor asked her what to do if she retired, and she realized it was time to return to school. She has three jobs to pay her tuition, and gas and grocery costs are rising. She and her 9-year-old daughter have moved with her aunt, but Williams is convinced she will end up with her solid career at the end of her two-year program.

“That’s number one. You can stabilize your income and you don’t have to do three jobs to earn it,” Williams said. “I have to get over the last two years, and that will change my life.”