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Higher education competes against hot job market

Washington has gone all out on whipping up bad news for higher education. I’m not talking about the Supreme Court ruling that gutted Affirmative Action, or even the broadside it delivered to President Biden’s plan to cancel some student loan debt. I’m talking about yesterday’s Labor Department report that showed that new unemployment claims were the lowest they’ve been in the last 20 months.

That means colleges and universities will be working extra hard to enroll students for the fall semester. Twelve metropolitan areas reported unemployment rates of 2.0% or less. And among metropolitan areas with populations of at least one million, more than half of those areas experienced unemployment decreases. Overall, seventy-eight percent of metropolitan areas in the survey experienced no change in joblessness.

The number of new hires in April outpaced separations by about 400,000. About 5.7 million workers separated from their employers. Of those separations, two-thirds were voluntary. And the number of separations decreased from the month before.

In short, people are going to work in large numbers. There was a bright spot for higher education: nearly 60% of high school seniors filled out the FAFSA for 2023-24. That’s a slight increase (about 90,000 applications) over last year. Despite the increases, more than 4 in 10 recent high school graduates have signaled that they don’t plan to enroll in post-secondary classes.

Although many people harbor fears of a recession, the reality is that the United States is at near full employment. Virtually, everyone who wants a job has one, and employers are making only small strides in hiring to fill more than 10 million open positions.

Few bright spots right now for higher education

It doesn’t help higher education that the student loan interest rate will jump to 5.5% starting tomorrow. Although this comes as no surprise, the higher education sector will need to compete hard to maintain student enrollment, for at least the near future.

The hot job market also means that the Federal Reserve Board is likely to resume interest rate increases in an effort to slow down inflation. It also means that post-secondary education providers will need to come up with some really good reasons for recent high school graduates to choose to go to college rather than snag a job from the extra hot job market.

So, this probably isn’t the time for $4 per credit hour tuition increases and $5 per credit hour fee increases. Historically, tuition and fee increases of that magnitude at Washtenaw Community College have produced a drop in enrollment. Raising the cost of a product you literally can’t give away doesn’t seem to be solid growth strategy under these circumstances.

Photo Credit: Alan Levine , via Flickr