Go to college, earn a degree, and get a job: this has been the prescribed journey for every generation in the US since World War II. In China, there has been an explosion in the past ten years in the number of college grads. But for many young people, it’s become clear that degrees aren’t automatically traded in for good jobs after graduation. The causes of this are different in the US and China, but the result is the same — the path to the middle class and beyond is not so straightforward to navigate.
This deficit in jobs, or surplus in graduates, is especially troublesome for unemployed and underemployed young people that need lower levels of debt and higher salaries to make it in the new normal economy.
Jobless graduates: China and the US
After experiencing a higher education revolution, joblessness among Chinese college graduates has hovered around 10 percent since 2009, though some claim it’s been as high as 30 percent. With enrollment numbers peaking and many millions graduating, between one and eight million alienated, educated young people have been shut outside of the workforce.
Unemployed graduates in China have been referred to as “the ant tribe” by sociologist Lian Si in his 2010 book of the same name. Since publication, the so-called tribe has only grown. According to the BBC, there are 160,000 “members” in Beijing alone, about a third of which graduated from prestigious universities.
American graduates have been in a similar boat for a while now. Unemployment for US graduates was at its worst following the Great Recession in 2008, but has improved only minimally since then. Unemployment and underemployment translates to lower pay, which coupled with higher tuition can be crippling financially. American millennials are currently earning 20 percent less than the generation before them in real terms, and face a 12 percent underemployment rate.
In 2015, the millennial generation accounted for 40 percent of America’s unemployed. That’s because they are the first generation that needs a college degree and tangible experience to even enter a highly competitive workforce.
Slow growth, changing economies
In China, about a third of young people rely fully on their parents, earning them the name “Boomerang Kids.” Even more troublesome is the fact that once they do find jobs, the average starting salary for a university graduate is similar or less as that of a migrant worker with no formal education. Starting salaries for college grads were $390 a month vs $457 for migrant workers, according to a recent study.
The nation’s transformation from a manufacturing economy into a knowledge-based one isn’t happening quite fast enough to ensure jobs for skilled graduates. As a result, excess degrees are creating vulnerabilities instead of assets. In an economy that’s growing at the slowest pace in a generation, young Chinese people qualified to be biologists, engineers and lawyers are hitting a wall instead of scaling it.
In America, the situation is similar, as more millennials live with their parents than live on their own or have other living arrangements. Underemployed US college graduates have even been labeled a national crisis, as about one in eight college graduates work at a job for which they don’t need their degree.
And while the educated certainly have an edge over the uneducated in America, more degrees do not guarantee success — in fact, we’ve witnessed an oversupply of PhD students, law students, and even STEM graduates. The barriers to entry keep rising, but the positions and pay aren’t following.
Solutions ahead
There may be a light at the end of the tunnel: according to an analysis by FiveThirtyEight, 2016’s US graduates face the best economic climate since before the recession, with just a six percent unemployment rate predicted.
In China, however, graduates’ unemployment rate remains stable at 9 percent with little signs of improvement. The Chinese government has even considered eliminating majors associated with lower rates of employment.
Looking forward, we must ask ourselves whether this trend is a failure of the economy to produce jobs, a failure of the higher education system, or just a product of circumstance and demographics.
In an ideal world, schools would equip students with the tools to succeed in their respective industries; the workforce would be robust enough to employ new graduates, and not everyone would need a degree to make a decent wage.
This may mean that fewer people should go to college in the US or in China, with more people focusing on vocational education or shorter-term post-high school courses with a job at the end of the training program. These systems have worked well in Germany and other countries and can potentially be adapted for the US and China. Moreover, with the rise in MOOCs and universities allowing credentials to be earned online, part-time online degrees are another valid path for many would be full-time in person university students.
The key will be to allow the creativity and personal choice that students seek whether they are Chinese or American, while marrying up education with the economy and ensuring there is a good match between skills and needs.
For education, government and private sector leaders in the US, China and beyond, one of the critical activities in determining each country’s medium-term success will be how quickly and how well we help the up and coming generation develop strong career paths and grow into leaders. Let’s hope these decisions pave the path to a stronger middle class and world.