Beauty Link - Volume 1, Issue 2 - (Page 36)

Q | feat ure | R Unemployment’s Influence Hw i Yo ng Kim , Ph .D., Pre sid e n t Ed u q u e t t e In c. O r ig i n a ll y p r i n t e d i n t h e Ja n u a r y 20 0 9 i s s u e o f E d u q ue t t e A d v a nt a ge ast year, most Title IV schools enjoyed an increase in enrollments. The conventional wisdom in our sector has been that as the unemployment rate goes up, the enrollment goes up too; as long as the unemployment rate does not stay high for several years. The rationale is that the newly unemployed will go back to school to learn new skills. However, if the unemployment rate stays high and job opportunities do not materialize by the time those students graduate, the incentive for additional people to enroll in a school diminishes. There may be variations to this story. This one happens to be my favorite. With the current economic condition and terrible unemployment forecast for this year, I wondered what’s in store for our sector. I decided to put the conventional wisdom to the test and see if one can make a forecast for this year. I obtained the fall enrollment data in all non-degree granting institutions in the U.S. and the unemployment rate in the past eight years. The fall enrollment data for 2008 is not yet available, so I made a rough guess. I was struck when I saw the result. The conventional wisdom bears out the test of hard data. Beginning in 2001, the unemployment rate started to rise and so did the enrollment. On the third consecutive year of high unemployment rates, the enrollment rate plunged. As the unemployment rate gradually went down during the 2004-2006 period, the enrollment gradually recovered. The year 2007 is interesting. Enrollment plunged as the unemployment stayed low. It seems that when the unemployment rate stays low, the enrollment goes down. I believe the conventional wisdom can be generalized to “the enrollments increase when there is significant change in the unemployment rate, either up or down, and stays low when the unemployment rate remains constant.” The reason for the increased enrollment during declining unemployment rate may be explained by people moving to higher paying jobs when new job opportunities are created. This movement will N O N - D E G RE E E N R O LLM E N T S A ND U N EMPL OYMEN T RATE create more people wishing to learn new skills. 550 8% So, what does it mean for 2009? The 2009 unemployment rate forecasts are very high; much higher than 7 percent. But, whatever it may be, it’s very 7% likely to be higher than last year. That means our sector may see record high enrollments in 2009. If the economic condition stays bad for a couple 500 of years, as it is expected, we may see a plunge in 6% enrollments in the year 2010. If the enrollments this year turn out to be as good as expected, it probably is a good idea to resist the temptation to expand. Studying the data, a bad 5% year seems very likely to be around the corner. It 450 seems wise to stay lean and build up reserves as much as possible to ride out 2010. % 4% U UNEM PL OYMENT RATE ENROLL MENT S ( x1000) 2000 400 2001 2002 2003 2004 2005 2006 2007 2008 2009 3% YEAR Enrollment data is obtained from the U.S. National Center for Education Statistics. Unemployment data is obtained from the U.S. Bureau of Labor Statistics. Dr. Hwi Yong Kim is president of Eduquette Inc., a company that partners with career colleges in the development and the implementation of cost-effective student recruitment, student education and school management. Dr. Kim is a former research physicist at the California Institute of Technology. For more information, visit 36 | B EA U TY LIN K | T O O LS O F T HE T RADE 2 0 0 9

Table of Contents for the Digital Edition of Beauty Link - Volume 1, Issue 2

Beauty Link - Volume 1, Issue 2
Message from the AACS President and CEA Chair
The Workings of Washington
The Ergonomics of Cosmetology
Creating the Perfect Brow
Smart Technology
Is Your Web Site Hooking Visitors?
And Then There's Compliance
Voices from the Classroom
Marketing to Male Clientele
Lasers in the Esthetics Industry: Past, Present and Future
Unemployment’s Influence
2009 AACS Select Industry Partners
The Less Common Road
Candid Cameras
Regulatory Issues
CEA Convention
Early Warning Indicators
Beauty Schools 101
Multicultural Corner
Upcoming Events
New Products & Services
People & Places
2009 AACS Spring Management Conference
New School Member Profile
Look Who's Reading
Index to Advertisers

Beauty Link - Volume 1, Issue 2