Many colleges across the country boast of a small-town atmosphere or a peaceful, bucolic setting. But those things could actually impede your hunt for a good job once you graduate.
New research from the Federal Reserve Bank of New York helps confirm what many recent college grads already know: Big cities (along with a big-city education) can provide better job opportunities than smaller ones.
Fed researchers specifically wanted to find out if big cities offer recent grads two types of advantages: The ability to land a job that actually requires a college degree, along with one that’s related to the field they studied in school. The answer to both questions is yes. The Fed’s research shows that recent grads are about 6% more likely to get a college-level job in a metropolis such as New York than in a medium-size city such as Syracuse or Dayton. And they’re about 9% more likely to get a job in a field they majored in.
A quality increase
“The larger and thicker labor markets of big cities appear to help college graduates find better jobs by increasing both the likelihood and the quality of a job match,” Fed researchers wrote.
The edge provided by big cities isn’t huge, but the market for many recent grads is so challenging that they’ll do just about anything to raise the odds of landing a decent job. The unemployment rate for 20- to 24-year-olds is 13.1%, nearly twice the 7.5% national average. A college degree still raises your lifetime earning potential but the economy currently isn’t creating enough entry-level professional positions to provide decent jobs for every grad who wants one.
That has left a lot of grads working as baristas, burger-flippers or retail clerks while wondering whether college was worth it. This “skills gap” can become an acute problem for grads with a lot of student-loan debt they can’t repay on a skimpy paycheck. The percentage of 25-year-olds carrying student loans has risen from 25% to 43% during the past decade, according to the New York Fed. The typical 25-year-old borrower owes about $20,000, nearly twice as much as 10 years ago.
The startling rise in student debt wouldn’t necessarily be a problem if 22-year-olds were graduating into good jobs that allowed them to pay down their loans and build a rewarding career. But too many grads are floundering and falling behind on their debt payments. A recent survey by Fidelity found that 12% of students in the class of 2013 regretted going to college, saying the cost wasn’t worth it. Some economists have even argued that too many people attend college, since as many as 22 million college grads have jobs they’re overqualified for.
That hasn’t dimmed the allure of a college education, but students and their families are becoming more pragmatic about how to get the most bang for the buck. The new Fed research doesn’t address college financing per se, but it does suggest that big-city schools may provide a better return on investment than those in more remote areas. Anybody can move to New York, Chicago, Los Angeles or Houston to look for a job, but actually going to school in one of those cities might better connect you to well-placed alumnae and other boosters who can lend an important hand in landing that first breakthrough job. Perhaps college students ought to adopt the mantra of real-estate agents: Location, location, location.
The Daily Ticker Presents: Generation I.O.U.
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Are you burdened by student loan debt? Have you moved back home? Are you having trouble finding a job?
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.