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Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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Lots of high school seniors have been hearing this week about where they were accepted to college. As has apparently become the custom, Harvard admittees got a video message from famous dropout Mark Zuckerberg, who told them, "I hope that you go to Harvard, and they hope that you stay a bit longer than I did."

Harvard, sometimes called "a hedge fund with a university attached," will be OK financially even if all its undergraduates drop out. Colleges and universities in general, though, have reason to worry about students not sticking around -- or never showing up in the first place. The long post-World War II boom in higher education in the U.S. may finally be coming to an end.

The first and clearest indicator that something is different is that higher education enrollment has been on the decline in the U.S. since 2011:

This is partly due to economics, as the recession persuaded many young people to stay in or go back to school, while the subsequent recovery has pulled them into the job market. It is also simple demographics -- the "echo boom" of births to baby-boomer parents in the U.S. peaked in 1990, and a lot of those kids entered college in 2008. Since then the number of Americans in their prime college-attending years has been going down.

This demographic decline isn't inexorable -- births in the U.S. hit another peak in 2007, meaning colleges will likely welcome another record-breaking class in 2025. Births dipped again during and after the recession, but could well come roaring back. Still, there are other forces that will probably keep making life tough for those running and working at the nation's institutions of higher learning.

For evidence of this, just look to the March U.S. employment report released today. Amid healthy economy-wide employment gains, the state government education sector, made up almost entirely of employees of public colleges and universities,  added exactly zero jobs. 

That's just one month, and the precision is false because the numbers are preliminary and likely to be revised. Still, something appears to be going on. Here's employment in the sector over the past 10 years:

There's definitely been a slowdown in employment growth since August 2015, and it seems like the trend line has flattened since the financial crisis, although the numbers jump around so much that it's a little hard to tell. Private colleges and universities, for which jobs data is available only through February, offer a smoother trajectory and a different inflection point, in 2012:

The long-run trajectory for employment in both public and private higher education looks like this:

A couple of things stand out here, especially when compared with the enrollment chart. One is that something other than declining student demand has been holding down employment growth at public colleges and universities at least since the early 2000s. State funding cutbacks are almost certainly that something. If current trends continue, one education analyst wrote in 2012, "average state fiscal support for higher education will reach zero by 2059." 

The private schools don't have that problem, but many have suffered financially from enrollment declines. Yet overall, as is apparent from the charts, private colleges and universities have been adding employees faster than they've been adding students. That seems like it might not end well.

  1. The monthly payroll employment numbers from the Bureau of Labor Statistics don't break down the constituent elements of state government education, but the Quarterly Census of Employment and Wages does, and in September, colleges and universities accounted for 85.7 percent of employment in state government education, and junior colleges accounted for another 10.4 percent.

  2. Because they fall slightly lower in the BLS hierarchy of industry classifications, the data is released with a month's delay.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Zara Kessler at zkessler@bloomberg.net