Economic Recessions Can Impact the Majors College Students Choose
Posted By Donna Fuscaldo on September 11, 2015 at 10:15 am
Recessions aren’t good for anyone. But it turns out that economic downturns can actually have a positive impact on the college degrees students pursue, according to new research.
Economic downtimes have a lasting impact on everything from the way people view debt to how they approach homeownership. And as it turns out, economic hardship also influences the degrees students choose to pursue in college, according to new research by Benjamin Keys at the University of Chicago, Brian Cadena at the University of Colorado Boulder and Erica Blom from Edgeworth Economics.
Researchers analyzed data collected by the American Community Survey on the degrees graduates chose dating back from 1962. Theyfound that in times of economic trouble, students tend to choose higher earning degrees.
Men pursued degrees in engineering, accounting, business and the natural sciences, while women favored nursing, accounting and computer-related fields. When the unemployment rate increases by one percentage point, the number of women pursuing degrees in business rose close to two-thirds of a percentage point, while the number of women taking nursing courses increased close to a third of a percentage point. Interest in sociology and education-related fields waned during economic downturns. Overall, the researchers’ estimate that a one percentage point increase in the unemployment rate leads to a 3.2 percent total reallocation of majors for men and a 4.1 percent reallocation for women.
It’s not surprising that people might change what career they want to pursue in a tight job market. After all, the more specialized and in-demand the degree, the higher wages you’ll earn. Consider this: According to data from PayScale’s College Salary Report for 2014-2015, the top earning degrees were all in math and science. The lowest earning fields were in education and human services. Get a job as a petroleum engineer, actuarial mathematician or a nuclear engineer, and you’ll be making six figures by the middle of your career. Pursue an education, human services or child development degree, and expect to earn in the low $30,000s to the mid $40,000s by the middle of your career.
Degree choice can cushion the blow from recessions
Students’ decision to choose higher earning degrees in times of recession also positively impacted the cost of earning a degree in an economic downturn. Graduating from college in a recessionary period is undoubtedly going to be more costly than in good economic times. After all, with few job prospects, many people pay for college and don’t end up using their degree at all. While that is the case today, even as the economy is in recovery, the degrees students choose can minimize some of the impact. Had students not shifted their majors, the hit from the recession would have been more severe. How bad? In the absence of choosing a high-earning major, the average estimated costs of graduating in a recession would be about ten percent higher.
A higher tendency toward degrees in applied sciences isn’t the only change that happens during recessionary periods. Researchers found that students tend to choose challenging fields that require more math, and fields that in general are more difficult. While there is no clear cut reason for this, researchers speculated that students who expect to graduate in a weak labor market want to differentiate themselves with potential employers and think tougher course work is the way to achieve that.
Women benefit the most as pursuit of STEM degrees increases
For women, the benefit of earning a degree in a recession was even greater. That’s because they tend to choose male-dominated, more difficult and career-orientedmajors in bad economic times more so than when times are good. That’s particularly telling, because across the board in the United States there is a dearth of women in STEM fields. According to the National Science Foundation, 66 percent of fourth grade girls are interested in studying and pursuing a STEM degree. However, only 18 percent of all college engineering majors are women. What’s more, the U.S. Department of Commerce and Economic Statistics found that although women hold close to half of all jobs in the U.S., they account for less than 25 percent of STEM jobs – even though women with STEM jobs earn 33 percent more than women in non-STEM jobs. A rise in the unemployment rate, however encourages more students – particularly women – to pursue STEM majors.
No one wants to be in a recession. But students about to enter college or choose a major can learn from the behaviors of students of the past, even if the economy is on the rebound. The lesson? Don’t wait for a recession to go after a high-paying or in-demand degree. Doing so sooner rather than later could position you to succeed, no matter the economic landscape.