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Ignoring the Elephant in the Room

A Pew Research study claims that those who don't go to college penalize themselves.

By George Leef

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April 17, 2014

Every time a new study comes out regarding the “payoff” from college, I wonder: Will this finally be the one that takes note of widespread underemployment among recent grads and comprehends the impact of credential inflation?

In February, Pew Research released a study on the effects of college but the instant I saw the title, I was sure that this would not be one that broke out of the usual “college is a great investment” model. That study, “The Rising Cost of Not Going to College,” actually moves further in the wrong direction by telling people that people who don’t go to college are penalizing themselves.

The many “college is a great investment” papers present statistics showing that, on average, people who have college educations earn more than do people without them. They leave the conclusion, “If you aren’t planning on college, you really should,” implicit.

Pew, however, makes that explicit. “If you don’t go to college, you’ll lose out big time” is the message it sends.

What makes that message particularly distressing is the fact that more and more young Americans who have their college degrees are unable to find jobs they couldn’t have gotten straight out of high school—or maybe even while still in high school. They’re often struggling with large college debts. And yet this study tells them that going to college is more important than ever.

Pew proclaims that its research is “non-partisan and non-advocacy” but they don’t say that it’s “non-misleading.” This study is very misleading and if young Americans take it seriously, many will go to college just because they think that not going would be a self-inflicted penalty.

The paper declares, “As college costs have increased in recent decades, so, too, have many of the economic rewards for getting a four-year degree as well as the penalties for not doing so….”

But is it true that the rewards for college have increased? And is it true that Americans who don’t attend college suffer a financial penalty?

Because Pew is highly respected, it is worth some time to closely examine its data and conclusions.

The most important data in the paper are in a chart showing a widening gap over time between full-time workers who have a four-year degree or higher, those who have a two-year degree or “some college,” and those who are high school graduates. Looking back to 1965, the difference was comparatively small: college graduates earned on average $38,833, the middle group earned on average $33,655, and high school graduates earned on average $31, 384.

By 2013, the inflation-adjusted figures were: $45,500, $30,000, and $28,000. Average earnings for college grads are way up, but they’re down for people who did not earn four-year degrees or go to college at all. At a glance, those figures certainly appear to justify the conclusions that getting that bachelors degree is an excellent investment and that young Americans who don’t do so are seriously penalizing themselves.

Paraphrasing Hamlet, “Get thee to a college!”

But before everyone who doesn’t have a college degree hurries to apply (or if still in high school, to take the SAT or ACT as the prelude to applying), let’s inject a cautionary note. Going to college guarantees you a lot of expense, both in money spent and time that could have been used differently, but it does not guarantee you a job that pays well enough to cover your costs. In truth, it doesn’t guarantee you any sort of job.

Reading through the report, you find no evidence of the fact that large numbers of college graduates can only find employment in jobs paying the minimum wage. Currently, according to Bureau of Labor Statistics data, 260,000 people with college or even professional degrees are so employed. Moreover, the percentage of college graduates who work in jobs that don’t require any advanced academic preparation (the “mal-employed”) has been rising for years, and now stands at 36 percent. If college degrees are becoming more valuable, why are so many graduates either unemployed or employed at low-paying jobs?

Those facts clash with the report’s encouragement for anyone who does not have a college degree to enroll and try to earn one. They comprise the elephant that Pew can’t see.

The report’s only hint that college isn’t proving to be as beneficial now as it previously was is its finding that only 62 percent of the “Millennials” agree that their college experience “has paid off” compared with 84 percent of the “Generation Xers” and 89 percent of the “Boomers.” Conversely, the percentage who say that college was not beneficial is growing. Among “Boomers” it was only 8 percent, but among   “Millennials” is has reached 12 percent.

Unfortunately, the authors never ponder this paradox: How can it be that college education is getting more and more valuable in financial rewards when there is abundant evidence that many students learn little while in college?

In their book Academically Adrift, Richard Arum and Josipa Roksa quantified what numerous professors have said for years—students can pass many courses with minimal effort owing to falling academic standards and the erosion of the curriculum. Falling academic standards and declining learning by students seems inconsistent with the notion that degrees are becoming increasingly beneficial.

The solution to the paradox is that the gap is widening because credential inflation is steadily wiping out good careers for people who don’t have college degrees.

Look back at the oldest of the data. In the mid-1960s, prior to the great push to increase the number of people going to college with federal student aid, the average earnings gap was quite small. Up until that time, very few good careers were foreclosed to Americans who didn’t have college credentials. For reasons of professional licensure, some fields required college degrees—law and medicine for example—but otherwise young people who had good high school educations could get into entry-level jobs in finance, insurance, manufacturing, hospitality, and most other businesses.

After the government started vigorously promoting “access” to college, however, something changed in the labor market: credential inflation. Employers, facing a market in which more and more job applicants had college credentials, began to screen out those who didn’t. (One reason for that was the Supreme Court’s 1971 ruling in Griggs v. Duke Power, the subject of this Pope Center paper. That decision made aptitude testing legally dangerous for employers, so they increasingly turned to using college credentials as a proxy.)

Professors James Engell and Anthony Dangerfield noted this trend in their 2005 book Saving Higher Education in the Age of Money, writing, “(T)he United States has become the most rigidly credentialized society in the world. A B.A. is required for jobs that by no stretch of imagination need two years of full-time training, let alone four.”

Therefore, the explanation for the gap between the average earnings of college graduates and people with lower educational levels, as well as the paradox regarding the decline in learning, is that those with little or no postsecondary education are increasingly confined to the lowest-paying job sectors. 

Evidence that this trend is still going strong is found in this survey, which found that “27 percent of employers say their educational requirements for employment have increased over the last five years and 30 percent are hiring more college-educated workers for positions that were previously held by high school graduates.”

I have been arguing for years that we have oversold higher education. Among the undesirable consequences of that are the erosion of learning standards and the phenomenon of credential inflation. With the large numbers of recent college graduates who can’t find employment that pays well enough to justify the costs of going to college, it appears that we have reached the final stages of a process that has driven costs up but value down.

Instead of telling young Americans, regardless of their academic abilities and interests, that they’ll be penalizing themselves if they don’t go to college, Pew ought to focus its research on the divide between those who are likely to gain in human capital from college and those who will just spend time and money for a mere credential.

 

 

 


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