Latest Employment Report Shows College Still Counts
Mom and Dad were right about staying in school.
There's always attention on billionaires like Bill Gates who dropped out of college and made it big. There are programs like Peter Thiel's 20 Under 20 Fellows, which encourages students to leave school to become entrepreneurs.
But, what's lost in that red herring is the most important benefit of being true to your school: You are more likely to actually have a job right now.
The disparity in employment of those with sheepskins and those without is striking. Overall, the unemployment rate in America, as of the September jobs report, is 7.2 percent. If you only have a high school diploma, that ticks higher to 7.6 percent, according to the Bureau of Labor Statistics. Attend some college, and that rate goes down to 6 percent.
But the poles are more striking. If you drop out of high school, it is a 10.3 percent rate.
If you complete college, the unemployment rate is just 3.7 percent. Statistically, that's full employment.
Truth is, if dropping out of school were the path to success, we would be a nation of billionaires. There are a little north of 15 million college students in this country, yet our completion rate, as measured by the Organization for Economic Co-operation and Development, is just 46 percent. For those keeping score, that puts us dead last in the developed world.
On the other hand, there are 442 billionaires in the U.S, as of the last Forbes ranking. As if you needed proof, that makes the Gateses and Jobses of the world the much-publicized exceptions to the less-sexy rule.
Does that mean that the only way to financial success or security is through college? Hardly. Those who argue that life is filled with experiences which are of equal and even more importance than what you learn in the classroom are not off-base.
But schools have a benefit, beyond what is taught in books. That's true especially for entrepreneurs. Take networking opportunities. Colleges provide a ready-made network of people who can help anyone start or grow a business. Stanford professors are regulars are startup boards in Silicon Valley. Alumni networks can yield both mentors and customers. While business graduate schools are the best example of the strength of networking, the same opportunities happen on the undergrad level at schools of all sizes.
And then there is the philosophical benefit. America was founded as a nation of doers, of people who created and innovated. That took hard work. Whether it was forming a new government, or settling a vast land, or building the first assembly line or even putting a man on the moon, there was an underlying work ethic involved that is becoming sadly absent today.
Just look at the continued weakness in the labor-force participation rate. The percentage of people who could be working, but aren't, is at 63.2 percent, according to BLS. The only silver lining is that the percentage didn't get worse from August to September. It stayed the same.
People who drop out of school are more likely to drop out of the workforce. That presents a business and a policy challenge – and a business one. Someone has to support the people who don't work, which is why there are so many people on state unemployment assistance or disability. To pay for that, governments need revenue, which comes from taxation. And businesses are the target of taxation.
That tax burden will only get worse. If trends in school dropouts and labor participation continue in this direction, fewer people will be working to support a greater group that isn't. That isn't sustainable.
Victor Hugo famously remarked that he who opens a school door closes a prison. For Americans, he who stays in school just might save an economy.