Here’s a clip from a recent special report from the Associated Press, touting the value of a college degree:
College grads have long enjoyed economic advantages over Americans with less education. But as the disparity widens, it is doing so in ways that go beyond income, from homeownership to marriage to retirement. Education has become a dividing line that affects how Americans vote, the likelihood that they will own a home and their geographic mobility.
The dominance of college graduates in the economy is, if anything, accelerating. Last year, for the first time, a larger proportion of workers were college grads (36 percent) than high school-only grads (34 percent), [Georgetown University researcher Anthony] Carnevale’s research found. The number of employed college grads has risen 21 percent since the recession began in December 2007, while the number of employed people with only a high school degree has dropped nearly 8 percent.
This new AP report is just the latest in the “Learn more, earn more” genre. Another magnum opus was the 2002 Census Bureau report, “The Big Payoff.” There have been literally hundreds of versions of this message over the years. I’ve been hearing it all my life. I remember as a kid seeing public service announcements on TV declaring, “To get a good job, you need a good education.” I remember Vice President Dan Quayle mangling the message of the United Negro College Fund, saying, “What a waste it is to lose one’s mind. Or not to have a mind is being very wasteful. How true that is.”
And, of course, people with college degrees make more money — on average — than people with less than a college degree. That fact is amply supported by data and is true beyond dispute. In fact, it is so obvious I don’t know why anyone bother mentioning it. Better quality products usually command at a higher price, don’t they? We expect a car with premium features to have a higher price than a stripped-down version of the same model. We expect a Fender Stratocaster guitar made in the company’s Corona, California plant to fetch a higher price than a Squier knockoff made in Asia, or even a second-tier Mexican Stratocaster like mine. Fresh, local vegetables cost more because they are made with more expensive labor inputs. No one is surprised by those examples. And no one should be surprised that more highly trained workers earn more in the labor market.
Before going further, I would note that I, personally, have gained a great deal from attending college and graduate school. I have never cared much about making money and I’ve turned my back on more than one lucrative opportunity because it wasn’t what I wanted to do or because it went against my principles. But having those degrees has opened doors for me and I would never want to disparage higher education in general.
A few years ago I wrote an article for the Indiana Business Research Center. You can see it here. The title is Education’s Value: It’s Not That Simple! It isn’t very current and it is aimed at an Indiana audience. But the major points still very relevant.
- College graduates are more likely to work, and more likely to work full-time and year-around. When you see comparisons of how much more college graduates earn in a year than high school-educated workers, remember that a chunk of the difference is hours worked.
- A huge portion of college graduates fail to realize the supposed benefits. Statements based on the average of millions of cases usually obscure cases that contradict the overall conclusion. Something close to half of college graduates earn less than the average college graduate salary. That is important. In the case of higher education, some graduate from college and die the next day. Some people graduate from college and go back to work at the same Starbucks or Uber job they had before. When you hear statements like, “College graduates earn 56% more than high school graduates,” remember that the average is an abstraction. It doesn’t describe any real person, let along all of them. Instead, there is a wide distribution of outcomes. Some earn no more than a high school graduate or earn nothing at all, while some others earning much, much more than a 56% premium. [Note: The article linked above, claiming a 56% difference says that is the widest gap ever. But here another report quoting the same expert that in 2011 the gap was 84%.] Anyway, remember that once a person has obtained a good college degree, they still need good luck, fair treatment, and personal grit to get a well-paying job and benefit from it.
- All degrees are not equal, because all jobs and all industries are not equal. To tap into the college earning bonus, a student must choose a field of study that will lead to a well-paying job.
- The greatest determinant of wage rates in the US is age, not education. A 30-year-old with a college degree probably will make more than a 30-year-old with only a diploma. But he still making less than a 50-year-old with a diploma. The illustration Figure 3 is clipped from the IBRC article:
The message here is not that college isn’t worth it. The message is that getting the full benefit from college isn’t guaranteed, and that students ought to think hard and plan well. Also, that experts ought not to oversimplify complex messages.