Putting College Degrees into Context

In bad economic times the conventional wisdom holds that people retreat to schooling to improve their skills and make them more employable for when the economy turns around. Further, college degrees, in particular, are supposed to increase one’s lifetime earnings so much that we encourage students and their families to take mortgage-sized loans to fund higher education on the grounds that the salary one receives from the jobs one gets with a degree will offset the incurred debt.  I’ve argued for years that this isn’t a fair depiction of the value of a college degree since it doesn’t account for the context that one uses the degree for.

For instance, a person with a community college degree in business or finance will probably earn more money and be more employable than a person who earns a B.A. in psychology from a four-year private or public college and seeks work as a social worker. Ironically, the low-paying social work job requires a B.A. and therefore its associated debt, whereas a person who can prove equivalent experience in lieu of a degree in business or finance at least stands a chance of getting hired without incurring college debt.

However I didn’t think about the context of recessions upon college degrees until now. David Leonhardt touches upon this in the current issue of Atlantic Magazine, noting:

With fewer jobs, more 20-somethings have moved back home with their parents. They have also delayed getting married and having children. Not all of the social trends are bad. Surprisingly, the crime rate and the divorce rate have continued falling. But the economic toll is still a pernicious one: young people have been robbed of opportunities at a time in life when getting workplace experience may be most valuable. Lisa Kahn, a labor economist at Yale, has found that white males who graduated from college during and just after the recession of the early 1980s—which was similar in severity to the recent one—paid a permanent price. Even 15 years later, they were making 10 percent less, on average, than workers who had graduated in good times. It’s a safe bet that the impact on those grads who couldn’t land work for a while—the NEETs [“not in employment, education, or training”—PF]—was even worse.

The cost of college degrees has grown exponentially over the past two decades, and there is plenty of data that show salaries and wages for the middle-class and lower income earners haven’t kept pace with costs in the same period. When coupled with the research above, I think the advice we give our kids about going to college needs to be radically changed.

College is not an automatic ticket to higher earnings and, as this research indicates, WHEN you go to college is probably more important than WHERE you go to college for getting the most bang for your college buck. Also, as college degrees get more plentiful among the population their value goes down. There are jobs that require college degrees now that didn’t require them earlier, such as air traffic controllers, pre-school teachers, secretaries, and bookstore cashiers. There is no evidence that employees in these fields with college degrees perform any better than their counterparts without degrees. Dr. Ivar Berg, in his book Education and Jobs: The Great Training Robbery, noted how insisting on college degrees for employment in most areas creates a cruel and unnecessary barrier to the advancement of the poor. These jobs were all done well by people who only held, at best, high school degrees in the past.  

The flip side of this problem is the underemployed college graduate, who is becoming more of a reality in today’s economy. Indeed, I read an article just this week about out-of-work people who deliberately “dumb down” their resumes so they won’t appear over-qualified to prospective employers. Such is the value of higher education: buyer beware!