The Enduring Myth of College Degree Protection

If you just got through paying for the first semester of college, you may not want to read this article.

The Georgetown Center on Education and the Workforce published a study last week that broke down the impact of a college degree on future employment. The conclusion: Those with a bachelors degree show some advantage over those with just a high school diploma, but most of the job gains are found with those who have advanced degrees.  The Atlantic said it this way, "We are in a grad school economy."

The Washington Post's Dylan Matthews looked at the GCEW study and found that they lumped together those with a regular bachelors degree and those with advanced degrees to come up with this chart.

In addition, Matthews sites an analysis done by the Economic Policy Institute that showed 98.3 percent of the job gains in that combined group went to the advanced degree holders. Lawrence Mishel of EPI said of the GCEW report, "... the report does not address the effect of education on the amount of job losses and gains in the economy. What it does address is how the limited number of jobs available in the recovery was allocated to people with differing education levels."

This chart from EPI shows that have bachelors holders have suffered much worse joblessness than normal during the recovery. With an unemployment rate of 4.1 percent they are doing better than high school diploma holders, but still worse than they were prior to the recession.

Both Democrat and Republican candidates are now touting the benefit of a college education and want to see more high school grads go into college. But the fact that the college talent pool did not quickly get picked up during the recession shows that there is already an abundant supply of them in the labor market. Having more people with degrees is not going to change that dynamic and could actually work to depress wages for those degree holders.

The hard thing for some people to grasp is that the economy has the greatest impact on the number of jobs and a degree does not necessarily shield you from that impact. Mishel puts it this way, "[W]hen the financial crisis hit and the housing bubble burst, there was a major decline in the demand for goods and services and therefore, employers responded by producing fewer goods and services and laying off staff and cutting back on hiring. Even if  everyone working in construction in 2007 had a college degree construction employers  would still have radically cut back employment."

In the  New York Times August 25, 2012, they quote the Associated Press:

“About 1.5 million, or 53.6 percent, of bachelor’s degree-holders under the age of 25 last year were jobless or underemployed, the highest share in at least 11 years. In 2000, the share was at a low of 41 percent, before the dot-com bust erased job gains for college graduates in the telecommunications and IT fields.

“Broken down by occupation, young college graduates were heavily represented in jobs that require a high school diploma or less.

“In the last year, they were more likely to be employed as waiters, waitresses, bartenders and food-service helpers than as engineers, physicists, chemists and mathematicians combined (100,000 versus 90,000). There were more working in office-related jobs such as receptionist or payroll clerk than in all computer professional jobs (163,000 versus 100,000). More also were employed as cashiers, retail clerks and customer representatives than engineers (125,000 versus 80,000).

“According to government projections released last month, only three of the 30 occupations with the largest projected number of job openings by 2020 will require a bachelor’s degree or higher to fill the position — teachers, college professors and accountants. Most job openings are in professions such as retail sales, fast food and truck driving, jobs which aren’t easily replaced by computers.”

A college degree used to be your ticket into a secure well paying job. The numbers just don't show that to be the case anymore. 

Technology has certainly affected the market, automating many jobs that the relatively unskilled labor pool used to do. Technology is also advancing exponentially. The existence of a given technology today allows for the creation of many new forms technology tomorrow that could not have been thought of before. There is no perceivable end to this expansion which means that the potential for technology to start taking over jobs of those with college degrees is also rising.  Technology, starting with the wheel, has been a means for relieving man of the burden of providing for his own existence. Every invention, from the phone which meant you didn't have to physically be in the presence of the person you wanted to communicate with, to the dishwasher has freed up time for mankind to pursue other goals.

It has been, and I believe always will be, the realm of the dreamers to come up with those new pursuits that will fill the newfound time. The current trend in employment seems to support that the future will still be dominated by the dreamers, those who can plumb the depths of current knowledge and find something new and valuable: the masters, the Phd candidates. The mantra of education preparing students for; a) the workforce of tomorrow, b) the economic engine of the state or c) the global economy assumes that we have a clear vision of where those jobs are going to be and where technology is going to take us. Those pushing Common Core take for granted that we know what that knowledge base and skill set needs to be. That's a risky assumption.

If our education system is to produce many successful people, it would appear that they need to focus on teaching people how to be one of those dreamers.

Check Your Underlying Assumptions

Wisdom tells us to examine the underlying assumptions of any argument before agreeing with it. That way, when offered two options, neither of which is palatable, one can sometimes show that the underlying assumptions behind the two options are flawed and a third more agreeable option will make itself apparent.

The President, the US Department of Education, DESE, even the Missouri legislature are pushing for changes to education to "prepare students for the workforce of tomorrow." There's a lot of talk about whether this approach to learning is appropriate, whether it is communistic in nature, who should design it etc. But let us for a moment examine the underlying assumption behind it.

Why should the federal or state government CARE if students are educated? Because an uneducated child frequently becomes an unemployed adult and the government (on all levels) has instituted safety nets, otherwise known as entitlement programs (welfare, WIC, food stamps, public housing, free lunch etc.) to catch these people. All of these programs cost money and those out of work people don't contribute to the economy, which doesn't increase the tax base, which makes the government harder to run.

If we peel back one more layer, however, we come to the assumption that better educated children will lead to employed adults. Education will reduce unemployment, boost the economy and overall aid the operation of government. But the Economic Policy Institute says THIS assumption may not be valid. The argument frequently given is,

"[T]the jobs problem is not a lack of demand for workers but rather a mismatch between workers’ skills and employers’ needs. Another version of the skills mismatch is also being told about the future: we face an impending skills shortage, particularly a shortfall of college graduates, after the economy returns to full employment.

The common aspect of each of these claims about structural problems is that education is the solution, the only solution. In other words, delivering the appropriate education and training to workers becomes the primary if not sole policy challenge if we hope to restore full employment in the short and medium term and if we expect to prevent a (further) loss of competitiveness and a further rise in wage and income inequality in the longer term."

An EPI Briefing Paper challenges this critical assumption and throws into question whether we are shoving a whole lot of money towards the wrong solution for the wrong problem. The paper, citing the work of several Federal Reserve Banks and researchers, found:

• There is no one education group—particularly not the least educated, as the structural argument would suggest—fueling the rise of long-term unemployment in this recession. If there has been some transformation of the workplace leaving millions of workers inadequate for the currently available jobs, then it was not based on a major educational upscaling of jobs.
• The challenge the nation faces as high unemployment persists is not better education and training for those currently unemployed. The problem is a lack of jobs.
• It is hard to find some ever-increasing need for college graduates that is going unmet: college graduates have not seen their real wage rise in 10 years, and the pay gap with high school graduates has not increased in that time period. Moreover, even before the recession college students and graduates were working as free interns, a phenomenon we would not observe if college graduates were in such demand.

EPI contends not that we don’t have enough people with the right skills to fill the jobs in the American workforce, but rather that we don't have enough jobs to employ the people looking for work. This makes the question not, “How do we best educate people for the jobs of the future?” but rather, “How do we create jobs in the future?”

We know that small businesses are usually the ones that develop jobs that bring the nation out of recession. In other words, jobs are created by people recognizing and then working to fill a demand for products or services. Even more simply, the best way to get people working is for them to make their own jobs, not wait around for someone else to create them. Education certainly plays a role in this process. It can provide a foundation of basic skills like math, communication and maybe even a little science. To prepare students to succeed in an entrepreneurial society, it should promote creativity and an urge to look beyond oneself to find what others want and then meet those wants.

Looking at the current trend in education towards group think, group projects (where individual achievement and creativity are reigned in) and standardized testing (of what we already know) it does not appear that we are preparing the students of today for the needs of tomorrow. To claim that we can even know what skill sets are going to be needed tomorrow in a dynamic, entrepreneurial economy is illogical on its face. If we knew what was needed then some entrepreneur would already be working to supply it. The whole argument for preparing our students for the workforce of tomorrow falls apart if the underlying assumption that we can identify skill sets that are going to be needed tomorrow is false. We are chasing a phantom. We may find that we have a fabulous education system where everyone scores really well on the tests and yet our unemployment numbers continue to rise. We may push a whole generation into the debt of post secondary education with little or no hope of getting a job to pay off that debt. Maybe, before we plunk our money on the table, we should spend a little time checking the underlying assumptions.