How Much Does Knowledge of Labor Market Outcomes Affect a Student’s Choice of Major? A Lot.

The National Bureau of Economic Research recently published a fascinating study examining the way what a community college student knows about the labor market affects their degree choice.

A significant impact? Yes, indeed. Here’s an overview of the study, plus a few takeaways.

Intro & Background

“An important goal of community colleges is to prepare students for the labor market. But are students aware of the labor market outcomes in different majors? And how much do students weigh labor market outcomes when choosing a major?”

These are the opening questions posed by the report, which goes on to reveal that by and large, community college students don’t know which majors are more likely to lead to successful careers. They also overestimate and underestimate certain things like salaries and employment probabilities (respectively) in ways we might not expect.

The study, which interviewed nearly 400 college students at two community colleges in California’s Bay Area at the end of 2014, is the first report to examine major choices for students in community colleges.

Results & Takeaways

Stat: Less than 40% of the students correctly ranked majors according to employment outcomes. Takeaway: They don’t intuitively know which degrees are in greater demand and hence more likely to lead to successful careers.

Stat: Students believed salaries are 13% higher than they really are. Takeaway: They’re too optimistic about money.

Stat: They underestimated the probability of employment by as much as 25%. Interestingly, they far more significantly underguessed the likelihood of getting a job in STEM and business than they underguessed liberal arts. (They estimated almost the same probability for all three categories.) Takeaway: Despite the raging popularity of STEM jobs, students somehow aren’t getting the message. They anticipate a bigger battle getting hired.

So far, students’ knowledge of labor market reality is alarmingly off. But when it comes to picking a major, this “knowledge” doesn’t necessarily weigh in. Students put the most weight on factors other than labor market outcomes. Choosing a degree, they focus on these issues:

• Whether they think they’ll like the course.
• Whether they think they’ll be good at it (earn good grades).
• Whether they think the connecting career pays well (the only factor related to labor market outcomes).

Now, the two leading factors aren’t necessarily bad. As the creator of Find Your Calling, we’re invested in helping students discover careers and programs they actually excel at and enjoy. We just want to see these factors balanced with more solid labor market intel. Notably absent from students’ list of factors shaping their degree choice is whether they believe they’ll have a good chance at getting hired in the corresponding occupation; in other words, whether or not the career is growing and workers are in demand.

Conclusion

The report says: “The preeminence of factors other than labor market outcomes in major choice is partly explained by students’ lack of information about these labor market outcomes,” and recommends that colleges increase “the salience of information about labor market outcomes” to improve students’ prospects. But naturally (and importantly), this is “a good strategy only so far as students have access to accurate information” (emphasis mine).

We see this as a call to action. Indeed, our mission the past two decades has been to put this very information in the hands of students to help them make better decisions. One of the primary ways we’ve done this is through Career Coach, a web-based portal that offers self-assessment and career exploration services. Today, Career Coach serves over 300 community colleges across the US. In 2016 alone, over a million students used Career Coach to receive exactly the kind of insight encouraged by the National Bureau of Economic Research.

If this report shows that students’ (lack of) knowledge of the labor market negatively affects their choice of major, we would love to one day see a new study detailing a turn of the tide—when students’ solid understanding of careers (and themselves) is the prevailing force shaping their education strategy.

To learn more about Emsi data and Career Coach, contact us today.

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