By David Harrison
Federal Reserve Chairwoman Janet Yellen on Monday defended the value of higher education as a protection against the twin pressures of technological change and globalization.
The Fed chief said a college degree will be increasingly important to help workers compete in a labor market that crosses national borders and is constantly inventing ways to replace people with machines, in a speech to the graduating class of the University of Baltimore.
"While globalization will likely continue and technology will continue to advance, we don't know how fast the economy will grow, what new technologies will be developed, or how quickly and consistently employment will expand," she told the graduates. "What is considerably more certain, however, is that success will continue to be tied to education, in part because a good education enhances one's ability to adapt to a changing economy."
President-elect Donald Trump has vowed to bring back some of the lower-skilled jobs that have left for other countries in recent decades. While Ms. Yellen didn't address Mr. Trump's promises, she made a case for the need to prepare workers for a world of increased global pressures.
"Like technological change, globalization has reinforced the shift away from lower-skilled jobs that require less education to higher-skilled jobs that require college and advanced degrees," she said. "The jobs that globalization creates in the United States, serving a global economy of billions of people, are more likely to be filled by those who, like you, have secured the advantage of higher education."
Ms.Yellen didn't discuss monetary policy in her remarks, which came less than a week after the Fed voted to raise short-term interest rates for the first time this year and penciled in three more interest rates in 2017. Instead, the Fed leader stuck to a theme she has been vocal about in recent weeks: the need to properly educate and prepare workers for the jobs of the future.
The rising costs of higher education and skyrocketing levels of college debt have raised questions about the value of a college degree. As of the third quarter of 2016, borrowers had amassed $1.28 trillion in student debt, more than car loans and credit-card balances, according to a study by the Federal Reserve Bank of New York.
But a separate New York Fed report found that college graduates over the past 40 years have tended to earn 56% more than high school graduates. Wages for college graduates rose sharply during the 1980s and 1990s, as the increased use of computers raised the demand for a skilled workforce, the report found.
College graduates also are more likely to be employed. The unemployment rate for college graduates was 2.3% in November, as opposed to 4.9% for high school graduates who had never attended college, according to the Labor Department.
Even as she acknowledged higher debt levels, Ms. Yellen said the benefits of a college degree outweigh the costs.
"Some of you may be worried about paying off loans you have taken out to pay for your education," she said. "The good news is that the vast majority of student borrowers who complete their degrees find work that allows them to keep up with their payments and pay off their loans."
Ms. Yellen also cited more intangible benefits, saying a degree leads to "a happier, healthier and longer life."
The Fed chief also pointed to improvements in the labor market that has pushed the unemployment rate down to 4.6% andboosted wage growth.
Ms. Yellen spoke hours after the Fed released results of a survey conducted in December 2015 that found that young people were more optimistic about their job prospects. The survey found that 61% had a positive outlook about their employment prospects, up from 45% in 2013.
But there are still significant obstacles. Ms. Yellen pointed to an economy that is growing more slowly than in earlier expansions and a disappointing rate of productivity growth.
She also said she was concerned about how workers who don't attend college would fare in an increasingly interconnected world.
"It concerns me, as it should concern all of us, that many are falling behind," she said. "Improvements in elementary and secondary education can help prepare more people for college and the opportunities college makes available, but for those who do not attend college, we must find other ways to extend economic opportunity to everyone in America."
The University of Baltimore, a public undergraduate and graduate university, serves many students who are juggling jobs and families while attending school. Almost half the students attend part time, and the average age among undergraduates is 27.
In her speech, Ms. Yellen singled out some of the graduates, recognizing them for meeting the demands of work and school and raising the necessary funds to complete their degrees.
"Based on what I have learned, you did not have all of the advantages that can pave the way to college and graduate school," she said.
"The challenges you have overcome are the challenges faced by many people in Baltimore and in communities throughout America," she added. "The degrees you have worked so hard to earn and the opportunities now opening up to you represent the stubborn, earnest hope that anyone and everyone who strives to succeed still can succeed."
Write to David Harrison at email@example.com
(END) Dow Jones Newswires
December 19, 2016 14:59 ET (19:59 GMT)
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