Title: Recess from Recession
Subtitle: Should You Reinvest In Education?
In November, unemployment hit 6.4% in Washington State. An untold number of people face layoffs as a tech-heavy region suppresses growth in the name of prudence. The cataclysmic collapse of much of the financial sector in the United States in October and the current automotive crisis feed record unemployment rates nationwide: 6.7% in November 2008 – the highest rate in 15 years according to the Bureau of Labor Statistics.
The National Bureau of Economic Research reports that we’ve been in a recession since December 2007, but most of us didn’t need an official announcement. While much has been said about the challenging economy and unexpected job searches, a topic frequently missing from the headlines is a potential reinvestment in higher education. Is it more worthwhile to reinvest in your own education than trying to find a new job in this economy? Should you ride out the storm in the classroom, rather than on the proverbial job-hunting pavement? Here are two things to consider:
1. Return On Investment
One of the greatest expenses of an advanced degree is the opportunity cost of lost wages during your time in school. From a financial perspective, there is no better time to invest in your education than during a period of reduced wages and employment opportunities.
According to data from the U.S. Census Bureau’s Current Population Survey, individuals with a Master’s degree earn roughly 29% more annually on average than those with only a bachelors degree, and 129% more annually than someone with only a high school education. If you factor in a modest annual wage increase of 4% annually over a 40-year career, a Master’s degree will help you accumulate roughly $4.9 million in lifetime earnings (in absolute, non-inflation adjusted dollars) versus $3.8 million for bachelor’s degrees and less than $1.8 million for high school education only. If you also factor in the investment potential of these higher earnings, it is evident that the two-year investment in yourself and your education will pay off handsomely.
Your return on investment can be even greater if you leverage opportunities to lower the upfront expenses associated with obtaining a graduate degree. For Hispanics, there are two exceptional opportunities I’d like to highlight for financing a higher education in business. The Consortium for Graduate Study in Management (CGSM) provides a full two-year fellowship to diverse individuals seeking an MBA at one of 14 sponsor universities. (http://www.cgsm.org ).
My own organization, the National Society of Hispanic MBAs (NSHMBA) offers scholarships between $2,500 and $10,000 per year to Hispanics pursuing graduate management education from accredited schools. (http://www.nshmba.org) Considering that there were less than eight applicants for this scholarship from the state of Washington last year, odds of receiving a scholarship are high for those in the area with demonstrable academic achievement.
2. More Opportunities
It may be difficult to consider making a career change when you are in a stable job that makes ends meet. The jolt of unemployment or potential unemployment might be the wakeup call you need to evaluate whether your current career is what you really want, long term. If it is not, consider expanding your education credentials at this juncture to help you achieve your ultimate career goals.
Returning to school could help increase the range of positions for which you are eligible in your current company or industry, or even give you greater access to completely new industries and positions. Post-graduate degrees, such as a Master’s degree, can also help widen your geographical reach. For example, for those in the auto industry, escaping Detroit might be a significant long-term career goal.
I entered the MBA program at the University of California Berkeley in an attempt to switch from the automotive industry into the tech industry when the economy was thriving. I graduated from 2003 to face a dot-com bubble that had burst. Even though my tuition was covered entirely through CGSM, there were few employment opportunities.
With a great deal of time and effort, I managed to secure a position with P&G in Puerto Rico. When the recession was over, and I began my career search anew at the NSHMBA National Conference, I received five job offers in five different industries, something that would have been impossible for me to do without an advanced degree.
While my timing to get my MBA was not ideal, the end results reinforced the argument for education as a means to ride out the economic storm, reinvest in oneself, and create more opportunity long term. My story demonstrates that while recessions are temporary situations, higher education is a lifelong asset.
Richard Velazquez is the President of the National Society of Hispanic MBAs (NSHMBA) Seattle Chapter and a Sr. Product Planning Manager for the Xbox group at Microsoft. For more information about NSHMBA Seattle, visit http://seattle.nshmba.org