by Barry Waldman
No one knows for sure whether a recession is coming, or what shape it might take, but many U.S. recessions have followed inflationary periods during which government attempted to reign in business and consumer spending, as the Federal Reserve is now doing by raising interest rates. Moreover, as of this writing, the U.S. economy has slowed considerably, though corporate profits remain strong and unemployment is near record lows.
That said, the prospect of a recession is real, and with it the potential for job losses, layoffs and unemployment. How that might work following a significant labor shortage, when 10.7 million U.S. jobs went unfilled in June 2022, and what a recession without a contracted labor market even means, remain to be seen.
But if a recession emerges, and if a reshuffling labor market results, this could have a serious impact on education. Past recessions have seen an increase in the number of Americans returning to school for retraining or further education, when the opportunity cost of forgoing a god job is low and repositioning or reinforcing skills for the coming rebound has enhanced value.
A 2003 study in Oxford University Press found that ability-to-pay considerations during a recession made prospective students more discerning about finding value and return on investment in their studies. But cost considerations were swamped by reduced opportunity cost, leading to increases in applications and enrollment in trade schools, colleges and graduate programs during economic downturns.
For potential students, the factors to consider are many when determining to update or upgrade skills. For example, are you in the right career in the first place? For many, job loss leads to career reassessment. A new career often requires a new set of skills. Educational programs that lead directly to careers benefit most from recessions. Enrollments in nursing programs and coding schools, for example, swell when the labor market gets tight.
A 2013 Forbes article cites author Laura Vanderkamp, author of What the Most Successful People Do at Work, who noted that many people return to school believing “additional education will help them achieve their career goals, like making more money, advancing in their current occupation, or starting in a different one.”
What is the ROI of returning to school? During economic uncertainty, those returning to school need to ask themselves what the end game is. Leaving a paying job to earn a graduate degree in English or early childhood education is unlikely to enhance earning potential the way a degree in accounting or computer science will. If seeking further education in their chosen field, it is wise to ask yourself how much the new credential bolsters your employability and value.
Can you afford the investment? Costs vary widely, but the average tuition for one year of graduate school is $12,171 for public institutions, $14,208 for private, for-profit institutions and $27,776 at public, non-profit institutions, according to the National Center for Education Statistics. Adding in room and board could boost the cost of a two-year graduate degree to the $100,000 range. Remaining employed while attending a local school can reduce costs considerably and spread them over more years. Whichever route you take, cost is an important factor. The average life of a student loan, according to a 2019 New York Life study, is 18.5 years. You can use the Department of Education’s Net Cost Calculator to help make your decision.
Are the added skills attainable without a full graduate program? CofC, MUSC and The Citadel all offer certificate programs in a wide variety of fields that dig deeper into the discipline without entailing a full graduate program. Employers appreciate these certificates because they are bestowed by credible institutions and represent serious curricula. Additionally, the certificate programs represent a head start on a full graduate degree, which many certificate holders eventually complete. Among the roughly 130 certificate programs offered locally by these three institutions are health administration, project management and literacy education.
Is school more valuable than added experience? It is worth asking yourself whether more schooling increases your marketability. For example, is the relative value of an MBA greater than another two years of experience in your current job, or some other job you could attain? Most employers like both education and experience, so an MBA may be more valuable to someone with a few years of work experience under their belt than for someone right out of college. The answer to this question also varies by field of study and your particular circumstances.
Going back to school is a big decision that requires weighing all the pros and cons. Recessions have in the past helped tip the balance in favor of more education. It’s something to consider if we begin slipping into an economic downturn soon.