Learning and Earning: working in college Essay

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Learning and Earning: working in college

LEARNING AND EARNING:
WORKING IN COLLEGE
JONATHAN M. ORSZAG
PETER R. ORSZAG
DIANE M. WHITMORE
C
OMMISSIONED BY UPROMISE, INC.
AUGUST 2001
1
Executive Summary
• Students are increasingly likely to work while in college. Since 1984, the fraction of
college students aged 16 to 24 who also work full- or part-time has increased from 49
to 57 percent. Not only are students more likely to work today, but they are more
likely to work full-time: the share of students working full-time while going to school
full-time has nearly doubled, rising from 5.6 percent in 1985 to 10.4 percent in 2000.
In 2000, 828,000 full-time students worked full-time, compared to 366,000 in 1985.
• Working students can be categorized into two groups: those who primarily identify
themselves as students but who work in order to pay the bills, and those who are first
and foremost workers who also take some college classes. Almost two-thirds of
undergraduates who work consider themselves "students who work"; the other third
consider themselves "workers who study."
• In the 1995-96 school year, employed students worked an average of 25 hours per
week. Students at four-year colleges are more likely to work a smaller number of
hours per week. On average, working college students earn roughly $7.50 per hour.
• The empirical evidence suggests that the effects of working while in college varies by
the type of job held (e.g., full-time vs. part-time work) and its relation to the academic
environment (e.g., an on-campus vs. an off-campus job).
• Part-time student employment may have beneficial effects: for example, an oncampus
research position may spark a student's interest in further academic programs
or provide important work experience that will improve future labor market
prospects. Working part-time as a student generally appears to supplant only nonproductive
activities, such as watching television. In addition, students who work
fewer than 10 hours per week have slightly higher GPAs than other similar students.
• However, full-time employment may impair student performance. For example, 55
percent of those students working 35 or more hours per week report that work has a
negative effect on their studies. Students working full-time also reported the
following liabilities: 40 percent report that work limits their class schedule; 36
percent report it reduces their class choices; 30 percent report it limits the number of
classes they take; and 26 percent report it limits access to the library.
• Students who work full-time are also more likely to drop out of school. For example,
the available evidence is consistent with a roughly 10 percentage point differential in
graduation rates between full-time and part-time workers. In 2000, nearly 830,000
full-time college students worked full-time. Because of the adverse effects of such
full-time work, tens of thousands of these college students are likely to drop out of
school and fail to receive a college degree.
• Working a limited number of hours (e.g., 10 hours a week) at an on-campus job
appears to have positive impacts on student performance, while working a significant
2
number of hours (e.g., 35 hours or more per week) has adverse consequences. It is
unclear at what point student employment moves from being beneficial to being
counterproductive. But the difference between graduating from college and not
graduating from college may involve a change in work schedules that would have a
modest impact on student earnings relative to the lifetime gains from completing
college. For example, reducing hours worked by 10 hours (from 35 hours per week
to 25 hours per week) would reduce a student's annual earnings during the school
year by roughly $2,250. Such potential earnings pale in comparison to the lifetime
gains from completing college.
• Since full-time work appears to have negative effects on student enrollment rates and
perhaps also on academic performance, it is therefore of particular concern that fulltime
work among full-time college students has risen sharply over the past 15 years.
For these students, the research suggests that, if possible, it may be prudent to find
other ways of financing college so they can complete their degrees, maintain their
academic performance levels, and thereby reap the long-term benefits of a college
education.
3
Learning and Earning:
Working in College
Jonathan M. Orszag, Peter R. Orszag, and Diane M. Whitmore1
August 2001
The financial burden of college tuition is significant and rising. In light of the
increasing price of college, many families are facing significant challenges in financing
their children's education.2 The evidence shows that as one response to the financial
burden of college tuition, students are working more while in college. Over 60 percent of
college students report that their parents now expect them to work during the school year
to help cover expenses.3 More students are working, and more are working longer hours.
Today, more than half of college students have a job. In 1999, on average,
working students earned roughly $7.50 per hour. These earnings undoubtedly help to
alleviate some of families' financial struggle to pay for college in the short run. But the
extent of working while in college raises important questions. In particular, what is the
overall effect of work? Does it have a beneficial effect in the long run by building
discipline and a strong work ethic in students, or does it have a deleterious effect by
diverting students' efforts from schoolwork? The evidence suggests that the answers
depend on how much a student works and what type of job she has.
1 Jonathan M. Orszag (jorszag@sbgo.com) is Managing Director of Sebago Associates. He previously
served as Director of the Office of Policy and Strategic Planning at the Department of Commerce, and was
an Economic Policy Advisor on the National Economic Council at the White House. Peter R. Orszag
(orszagp@sbgo.com) is President of Sebago Associates. He is also a Senior Fellow in Economic Studies at
the Brookings Institution. He has previously served as Special Assistant to the President for Economic
Policy, as Senior Economist on the Council of Economic Advisers, and as a member of the economics
faculty at the University of California, Berkeley. Diane M. Whitmore (whitmore@sbgo.com) is Economic
Counselor at Sebago Associates, Inc., and a Ph.D. candidate in economics at Princeton University. She
previously served on the staff of the Council of Economic Advisers.
2 Joseph E. Stiglitz, Laura D. Tyson, Peter R. Orszag, and Jonathan M. Orszag, "The Impact of Paying for
College on Family Finances," Sebago Associates, Inc., November 2000, available at http://www.sbgo.com.
3 U.S. Department of Education, National Center for Education Statistics (NCES), "Profile of
Undergraduates in U.S. Postsecondary Educational Institutions: 1995-96." NCES 98-084.
4
Characteristics of Student Employment
An increasing number of students work while in college. Since 1984, the fraction
of college students aged 16 to 24 who also work full- or part-time has increased from 49
to 57 percent.4 The share of full-time college students working has also increased; in
October 2000, a majority of full-time college students was employed. Figure 1 displays
the increase in employment rate among college students.
Figure 1: Employment Rates of College Students
30
35
40
45
50
55
60
1984 1986 1988 1990 1992 1994 1996 1998 2000
Employment as a percent of
population
All students Full-time students
Not only are students more likely to work today, but the share of students working
full-time while going to school full-time also has increased dramatically. The percentage
of full-time college students working full-time has nearly doubled, rising from 5.6
percent in 1985 to 10.4 percent in 2000 (see Table 1).5 The data indicate that the increase
in the employment rate is largely due to increases in work among full-time college
students; the share of part-time college students working has remained relatively constant
over the past 15 years.
4 Data are from the October Current Population Survey (CPS).
5 In 2000, 828,000 full-time college students worked full-time; in 1985, 366,000 such students worked fulltime.
5
TABLE 1: EMPLOYMENT PATTERNS AMONG 16-24 YEAR OLD COLLEGE STUDENTS
1985 1990 1995 2000
All college students:
Employed 50.8 51.6 53.3 57.1
Full-time 14.1 14.8 14.3 17.6
Part-time 36.7 36.7 39.0 39.5
Full-time college students:
Employed 44.2 45.3 47.3 51.7
Full-time 5.6 6.0 7.5 10.4
Part-time 38.6 39.3 39.7 41.3
Part-time college students:
Employed 85.5 83.1 82.1 83.6
Full-time 58.9 59.3 46.7 53.2
Part-time 26.7 23.8 35.4 30.5
Note: Employment as a share of 16-24 year old college population. Source: October CPS.
The Department of Education undertook a special survey during the 1995-96
school year to provide an in-depth picture of how undergraduates finance college through
work.6 Working students can be categorized into two groups: those who primarily
identify themselves as students but who work in order to pay the bills, and those who are
first and foremost workers who also take some college classes. According to the survey,
almost two-thirds of undergraduates who work considered themselves "students who
work," while about a third considered themselves "workers who study."7
The average number of hours worked by students during the school year varies by
the type of institution and by whether the student is part-time or full-time. As Table 2
shows, in the 1995-96 school year, employed students worked an average of 25 hours per
week. About one-quarter of students work 35 or more hours per week, and another
quarter of students work 15 hours or less. Students at four-year colleges are more likely
to work a smaller number of hours per week; over one-third of such students work fewer
than 15 hours.
6 U.S. Department of Education, National Center for Education Statistics (NCES), "Profile of
Undergraduates in U.S. Postsecondary Educational Institutions: 1995-96." NCES 98-084.
7 The following section limits analysis to those who primarily identify themselves as students.
6
TABLE 2: HOURS WORKED PER WEEK
Percent working
1-15 hours 16-20 hours 21-34 hours 35 or more
hours
Average
hours per
week
Total 25.3 21.8 27.0 26.0 25
Type of college:
4-year 33.9 23.5 24.7 17.8 22
2-year 14.7 19.4 29.5 36.4 29
Attendance:
Full-time 31.4 16.1 25.8 18.7 23
Part-time 15.4 22.9 25.8 42.7 30
Source: NCES, Table 1.
On average, working college students earn roughly $7.50 per hour.8 Although
hourly earnings vary somewhat for college students, three-quarters earned less than $8.00
per hour in 1999. More than one-third of students earn within $1.00 of the minimum
wage. Table 3 also shows that part-time college students earn more per hour (on average)
than full-time college students.
TABLE 3: HOURLY EARNINGS OF EMPLOYED 16-24 YEAR OLD COLLEGE STUDENTS
Average 25th
percentile Median 75th
percentile
Share
earning less
than
$6.15/hour
Total $7.48 $5.85 $6.75 $8.00 39.0 percent
Type of college:
4-year $7.59 $5.75 $6.75 $8.00 42.0 percent
2-year $7.27 $6.00 $6.90 $8.00 33.0 percent
Attendance:
Full-time $7.13 $5.75 $6.50 $7.75 45.4 percent
Part-time $8.55 $6.65 $8.00 $9.00 19.6 percent
Source: Authors' calculation from October 1999 CPS.
8 These figures exclude tips and overtime. The amount of earnings from tips is not available, but 17.8
percent of employed students report receiving tips, overtime pay, or commission.
7
The majority of students who work also receive financial aid to attend college.
As Table 4 shows, 56 percent of workers receive some other type of aid in the form of
grants or loans. Nearly 70 percent of students who work 15 hours or fewer also receive
another form of financial aid. Students who work more hours per week are less likely to
be recipients of financial aid.
TABLE 4: FINANCIAL AID FOR WORKING STUDENTS
Percent receiving aid Amount received
Any Grant Loan Total Grant Loan
Total 56.8 44.0 35.4 $5,988 $3,274 $4,146
By hours worked per week:
1-15 68.9 56.1 46.3 $7,966 $4,725 $4,344
16-20 57.0 46.0 35.6 $6,151 $3,146 $4,216
21-34 55.0 39.2 35.5 $4,949 $2,530 $4,080
35 46.9 35.6 25.7 $4,255 $2,038 $3,810
Source: NCES Table 6.
Workers on financial aid received an average award of $5,988 in 1995-96.
Students receiving financial aid reported that they earned $5,197 - including work-study
and other employment, but excluding summer employment - while enrolled that year.9
There is some evidence that parents count on students' earnings to finance
college. Students were asked whether their parents expected them to work, and if so how
many hours per week.10 Over 60 percent of undergraduate students reported that their
parents expected them to work. On average, these parents expected students to work
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