Why It Makes Sense to Go to College Now

Earlier this year, a headline from the Harvard Business Review suggested that "You Don't Need a College Degree to Land a Great Job."

Companies are increasingly waiving college diploma requirements for employment. Even states such as Virginia, Pennsylvania, Maryland, Colorado and Utah are shunning college degree requirements for state jobs.

This comes at a time when the high cost of a university education—which has been rising over the last two decades, according to U.S. News and World Report—has made the prospect of incurring debt to attend college unattractive even as some institutions are trying to entice students with grants.

But recent data suggests that having a college degree still gives workers a better chance of landing a job.

In October, employers added 150,000 jobs and the unemployment rate ticked up to 3.9 percent. For those with a bachelor's degree or higher, the unemployment rate was at 2.1 percent while it was at 3.1 percent for workers with some college or an associate's degree. The jobless rate for high school graduates was at 4 percent and for those with less than a high school diploma, the rate hit 5.8 percent.

This dynamic is unsurprising, experts say.

"If you look at unemployment by education, the lower the rate of education, the higher the unemployment rate. So unemployment is inversely correlated with education," Sarah House, senior economist at Wells Fargo, told Newsweek.

This tends to shift, though, when the labor market is strong. Over the last three years, the U.S. economy saw one of the strongest labor market in history as the country re-opened following the pandemic-induced lockdowns. Consumers, stuck inside, unable to dine out, attend concerts and travel, emerged when the lockdowns lifted and spent with a vengeance, forcing businesses to hire in droves to serve their demands. This led to the unemployment rate to fall from its pandemic highs of nearly 15 percent to under 4 percent in October.

"What we tend to see is when you are in a very strong jobs market, that disproportionately helps your less educated workers, because employers don't have their pick of the litter when it comes to to applicants," House said. "So they're willing to accept applications and hire people that maybe don't have as much formal education."

Over the last few weeks, analysts have been pointing out that the labor market may be softening, on the back of elevated interest rates induced by the Federal Reserve to battle historic levels of inflation. The 150,000 jobs created in October was less than the nearly 340,000 workers that were hired in September.

The hike of rates has pushed up borrowing costs, such as the cost of capital for small businesses. While that has not triggered layoffs, it may have slowed hiring for some companies. Leisure and hospitality, which drove the hiring boom of the post-pandemic period, saw a slower pace of recruitment in October, according to data from the ADP Research Institute in collaboration with Stanford Digital Economy Lab.

A slowing labor market is unwelcome news for non-college educated workers.

"It's going to put more pressure on workers with less education," House said.

But the type of sectors for workers will come into play, House pointed out. Over the recent weeks, some industries where the profile of workers tends to be on the more educated side has seen some layoffs, such as the information sector.

"Whereas if you look at the construction industry, for example, it's still adding jobs at a very impressive clip," she told Newsweek.

Data does show that the unemployment rate for construction workers actually fell slightly to 4 percent from 4.1 percent a year ago, while the information industry saw its rate jump to 3.7 percent compared to 3.3 percent a year ago.

"There's still a lot of demand out there for skilled workers that's separate from your traditional high school or college education. So there's still avenues out there for those types of workers," House said. "But when when you think about just kind of the broader education levels, again, it is inversely correlated with unemployment as employers slow down during times of a softer labor market."