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This Paper Refutes Itself

A hefty new study purports to prove U.S. needs more college graduates, but flops

By George Leef

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August 04, 2010

It’s over one hundred pages and bears the imprimatur of a prestigious university center. But just as you shouldn’t judge a book by its cover (or weight), you shouldn’t judge a policy paper by those criteria.

Help Wanted: Projections of Jobs and Education Requirements Through 2018 by Anthony Carnevale, Nicole Smith, and Jeff Strohl, published by the Georgetown University Center on Education and the Workforce looks terribly impressive, but its main conclusions-- that the college degree is definitely “worth it” and that the American workforce will soon face a serious shortage of college-educated workers-- are not proven.

On the contrary, if you look closely at its data, you reach the opposite conclusions.

Before getting into the substance of the paper, it’s worth a moment to explain why this matters. With the American economy struggling like a swimmer fighting against a strong undertow, it’s now especially important to make wise use of resources. If we devote more money and manpower than necessary to education (or anything else) at this point, we’ll make our bad economic situation even worse. 

Not only that, but if, as I’ve argued, the more we expand higher education the more we degrade educational standards, following the paper’s advice will also make a bad educational situation worse.

The authors begin by arguing that the government’s official source of information about the labor force (the Bureau of Labor Statistics) misleads the public about the extent to which jobs in the future will require college education. “Ultimately,” they write, “the official data misinforms the educational choices and career plans of individuals and their counselors.” The BLS doesn’t show that the nation is facing an acute shortage of workers who have a college education. That has the authors upset.

I doubt strongly that anyone makes educational choices on the basis of BLS projections, but let’s put that cavil aside and proceed to the crux of the matter: Will future labor force conditions increasingly necessitate and reward college education?

The paper tries to show that they will, using several approaches.

One is the common argument that because people who have college degrees on average earn substantially more than people who don’t, it follows that the market is indicating the need for more college graduates.

 It’s undeniably true that on average, those who have college degrees earn significantly more than do those without them. But that doesn’t tell us anything about the margin: Will an individual who could go to college but is only a mediocre student necessarily enjoy a wage premium if he or she decides on college?

Carnevale, et al say that the answer to the question “Is a degree worth it?” is “a resounding yes.” A key reason why they think so is the big difference between average earnings for the college educated and those who didn’t go beyond high school.

But look closely at the income distribution data on p. 102. True, the top earning category (over $67,500 per year) is dominated by people with college education (76 percent with an associate’s degree or higher). In the lowest two categories, however, you also find a substantial number of college-educated people. Among those making $20,000 or less annually, 6 percent have master’s degrees or higher, 14 percent have bachelor’s degrees, and 9 percent have associate’s degrees.

Same for the group earning between $20,000 and $35,000 per year—5 percent have a master’s or higher, 15 percent have a bachelor’s, and 11 percent have an associate’s degree.

That’s a large number of people with college education under their belt who are earning below-average incomes.  The authors completely overlook the significance of this.

For quite a few years, scholars have been pointing out that many college graduates spill over into jobs traditionally done by high school graduates (or dropouts). Frederic Pryor and David Shaffer, for example, noted this trend in their 1999 book Who’s Not Working and Why. Looking back several decades, they write, “An increasing share of university-educated workers are taking jobs where the average educational level has been much lower….From 1971 through 1987, a rising share of male and female university-educated workers of all ages took such high school jobs.”

N.B.: The fact that a lot of college-educated people are working in low-skill jobs is not a recent phenomenon caused by our current recession. It’s decades old.

Here again--without realizing it--the authors of the paper provide corroborative evidence on this point by showing that many college-educated workers are in jobs that don’t call for any academic training.

For example, among people working as cashiers, 10 percent have an associate’s degree or higher and 23 percent more have “some college.”  How many students choose to go to college anticipating a job as a cashier?

The paper’s data also show significant percentages of people with college education in such jobs as farming, fishing, forestry, construction, installation, maintenance, and repair, food preparation and serving, and other occupations where the training is on the job rather than in the classroom.

Considering the large numbers of college-educated people now working in low-paying jobs, it appears that for many Americans, going to college is not financially worthwhile. The authors claim (p.99) that “a conservative estimate of the net present value of the lifetime average marginal return from a Bachelor’s degree over a high school diploma is $1 million.” For someone earning $30,000 per year with educational loans to pay off, that’s light years from being true.

There’s another way in which the paper undercuts its own conclusion about the alleged need to put more people through college. For years, people advocating that position have been pointing to the growing differential between average earnings for college-educated and non college-educated workers as proof that it’s beneficial to earn the degree. 

Since 2005, however, that differential has been trending down, as the authors note (p.98). The fact that it’s going down is yet another indication that the labor force is glutted with workers who have college degrees.

Yet the authors dismiss that datum: “Given trends in wage premiums over the last three decades, we believe it is irresponsible to argue against the pursuit of a college degree solely because real returns have fallen compared to the most recent past.”

That “micro” response evades the “macro” point. For some young people, going to college makes just as much sense as always and it would be foolish to tell an individual, “Don’t go to college because the average wage differential has fallen.” But the paper is about the supposed national, macroeconomic, need for greater numbers of college-educated workers. The falling wage differential, which reflects the numbers of college-educated people with jobs as cashiers, waitresses, travel agents and so on, undermines the authors’ conclusion about the “rising demand for college-educated workers.”

Well, isn’t it true that more and more jobs will require workers to have at least some college education, if not bachelor’s degrees? Isn’t that a sound reason to expand higher education?

That’s the other major argument of “Help Wanted.” On Friday, I’ll examine it.

 


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