What to do and where to live? Intersecting education, earnings, purchasing power, and return on investment: Part I

Few would debate that there will be an abundance of attractive employment opportunities in health-related industries for the foreseeable future. Chmura Economics & Analytics forecasts an average annual employment growth rate of 1.9% through 2026 for the healthcare and social assistance sector, which is more than three times the average annual growth rate of all industries (0.6%) in the nation. The ambulatory healthcare services industry alone is forecast to grow at an annual rate of 3.1%!

Internal Rate of Return (IRR) Tends to Overstate Education Return on Investment (ROI)

With dwindling government appropriations for higher education and elevated student loan default rates, more colleges and universities are conducting Return on Investment (ROI) analysis to demonstrate that higher education is a sound investment for students, taxpayers, and society at large. Those institutions include for-profit colleges, community colleges, and public and private not-for-profit four-year colleges.

May is Graduation Month

Employment is brighter for some graduating students than for others, depending on the degree earned. Registered nurses (RNs) top the list for most in demand in the nation over the next decade with an expected 1,110,841 openings. About 60% of the job openings are expected because RNs are either retiring or changing occupations (called replacement demand in the table). A bachelor’s degree is typically required to be an RN and it pays an entry wage of around $48,500. According to the latest data (fourth quarter of 2015), there are 2.9 million employed RNs in the nation. The annual average wage for all RNs is $69,800.

Other occupations in high demand over the next decade include general and operations managers, accountants and auditors, and computer systems analysts.

Top 10 Occupations in the Nation with Most Openings that Typically Require a Bachelor's Degree, 2015-2025
CurrentForecast
Four Quarters Ending with 2015q4 Over the Next 10 Years
OccupationEmployment Avg. Annual Wages(1) Total Replacement Demand Total Growth Demand Total Openings Entry-Level Wages(1)
Registered Nurses 2,855,420 $69,800 674,656 436,185 1,110,841 $48,500
General and Operations Managers 2,153,362 $117,200 578,853 160,090 738,943 $51,900
Managers, All Other 956,533 $110,200 581,923 69,310 651,233 $61,100
Accountants and Auditors 1,329,500 $73,700 395,893 157,410 553,303 $43,900
Elementary School Teachers, Except Special Education 1,304,861 $56,800 278,301 68,513 346,814 $38,200
Software Developers, Applications 761,466 $99,500 128,545 156,726 285,271 $61,700
Secondary School Teachers, Except Special and Career/Technical Education 915,675 $59,300 218,530 48,529 267,059 $39,700
Management Analysts 737,144 $90,900 136,669 108,926 245,595 $49,800
Computer Systems Analysts 572,220 $87,300 82,653 125,941 208,594 $54,900
Financial Managers 548,319 $130,200 141,656 39,332 180,988 $68,600
1. Occupation wages are as of 2014.
Source: JobsEQ

Preschool teachers top the list of in-demand occupations for jobs that typically require an associate’s degree. Openings in the nation are expected to total 151,181 over the next decade with entry-level wages of $20,000.

Entry-level wages for some jobs that require an associate’s degree pay better than those requiring a bachelor’s degree.  For example, the entry-level wage for the average dental hygienist in the nation is $52,600 and the education required is an associate’s degree compared to a registered nurse requiring a bachelor’s degree who has an entry wage of $48,500.

When determining a major for post-secondary degrees, the forecasted number of openings and entry-level wages is important to both the employer and the new hires coming out of the education pipeline.

Top 10 Occupations in the Nation with Most Openings that Typically Require an Associate's Degree, 2015-2025
CurrentForecast
Four Quarters Ending with 2015q4Over the Next 10 Years
OccupationEmployment Avg. Annual Wages(1) Total Replace-ment Demand Total Growth Demand Total Openings Entry-Level Wages(1)
Preschool Teachers, Except Special Education 427,081 $32,000 121,808 29,373 151,181 $20,000
Paralegals and Legal Assistants 268,735 $51,800 58,260 21,671 79,931 $32,500
Web Developers 154,910 $68,700 28,230 44,016 72,246 $37,500
Dental Hygienists 202,937 $72,000 32,322 37,769 70,091 $52,600
Medical and Clinical Laboratory Technicians 169,257 $40,800 38,609 29,661 68,270 $27,200
Physical Therapist Assistants 81,908 $54,300 26,249 33,001 59,250 $35,800
Radiologic Technologists 205,569 $57,500 36,532 17,181 53,713 $39,900
Respiratory Therapists 127,245 $58,500 29,213 14,499 43,712 $43,300
Life, Physical, and Social Science Technicians, All Other 69,799 $47,900 35,992 5,391 41,383 $28,300
Computer Network Support Specialists 180,776 $66,100 24,555 15,431 39,986 $39,000
1. Occupation wages are as of 2014.
Source: JobsEQ

The Highest Paying Jobs that Don’t Require a College Degree or Significant Training

There are plenty of lists identifying the top 10 high-paying jobs that don’t require a college degree, but it is misleading to suggest a recent high school graduate can easily step into most of those occupations. Many of the jobs that top these lists are supervisory roles that require years of experience in the industry, while others such as elevator installer and repairer may require a lengthy apprenticeship.

The graphic below (based on data from the BLS) shows that lower education requirements for an occupation are often offset by on-the-job training. Seventy-seven percent of occupations that typically need an associate’s degree or higher don’t require on-the-job training, and the same is true for 55% of those that require some college but not a 2-year degree. Only 8% of occupations that typically need a high school diploma or less also don’t require on-the-job training. Instead, 37% require some short-term training, and 41% require moderate-term training.

Typical On-the-Job Training Needed for Competency in Occupations, by Typical Education Needed for EntryTypical On-the-Job Training Needed for Competency in Occupations, by Typical Education Needed for Entry

There are high-paying jobs for workers without a college degree, but most of them require experience or other training. Postal service mail carriers top the list of occupations requiring short-term on the job training along with a high school diploma or less.  First-line supervisors of police and detectives is the highest paid occupation with moderate-term on-the-job training.

Top 10 Occupations That Require a High School Diploma or Less and Short-Term On-The-Job Training
SOC code Occupation Title Median Annual Wage, 2012
43-5052 Postal service mail carriers $56,490
33-3052 Transit and railroad police $55,210
43-5051 Postal service clerks $53,090
43-5053 Postal service mail sorters, processors, and processing machine operators $53,090
53-7111 Mine shuttle car operators $52,110
53-7033 Loading machine operators, underground mining $48,420
33-3031 Fish and game wardens $48,070
47-5011 Derrick operators, oil and gas $46,900
53-6011 Bridge and lock tenders $45,940
53-7121 Tank car, truck, and ship loaders $44,100
Source: BLS

 

Top 10 Occupations That Require a High School Diploma or Less and Moderate-Term On-The-Job Training
SOC code Occupation Title Median Annual Wage, 2012
33-1012 First-line supervisors of police and detectives $78,270
33-3021 Detectives and criminal investigators $74,300
53-2012 Commercial pilots $73,280
53-6051 Transportation inspectors $63,680
11-9131 Postmasters and mail superintendents $63,050
53-4041 Subway and streetcar operators $62,730
33-1011 First-line supervisors of correctional officers $57,840
49-9097 Signal and track switch repairers $55,450
33-3051 Police and sheriff's patrol officers $55,270
53-4031 Railroad conductors and yardmasters $54,700
Source: BLS

When it comes to jobs that require no college degree and no on-the-job training, BLS has identified only 35 jobs (out of 820 detailed occupations) that fall in that category. However, recent high school graduates cannot easily step into most of those jobs, as they typically require a few years of related work experience in a different occupation. The list is even smaller for occupations that require no college degree, no on-the-job training, and no related work experience—only eight occupations fit those criteria. Of those eight, five fall under an “all other” title, a bucket for occupations that don’t easily fit into one of the Standard Occupational Classification codes.  The highest paid of those occupations, business operations specialists, all other, earned a median annual wage of $65,120 in 2012—much higher than the $34,750 national median wage in 2012.

Occupations That Don’t Require a College Degree or On-The-Job Training
SOC code Occupation Title Median Annual Wage, 2012
13-1199 Business operations specialists, all other $65,120
29-2092 Hearing aid specialists $41,430
29-2099 Health technologists and technicians, all other $40,700
31-9099 Healthcare support workers, all other $32,800
41-9099 Sales and related workers, all other $25,800
41-9012 Models $18,750
35-9031 Hosts and hostesses, restaurant, lounge, and coffee shop $18,580
27-2099 Entertainers and performers, sports and related workers, all other
Source: BLS

Research support provided by Patrick Clapp.

Growing Student Loan Debt and Its Impact on Housing

A recent report by the Brookings Institution has stirred up the debate about whether there is a looming student loan crisis. But there is no question that with a growing number of people in college and rising tuition costs, more and more students are taking on loans and face years of paying down that debt— whether they successfully graduate or not. To illustrate a simple measure of the growing debt from student loans, Chmura built the maps below from Federal Reserve Bank of New York (“FRBNY”) Consumer Credit Panel data to show the balance of student loan debt per capita in each state between 1999 and 2012.