Note that the mentioned paper which estimated that “signaling accounts for one-third of the educational wage premium” was flawed in that it assumed that …

“Stage 3: Test signal. The firms observe a noisy but informative signal, θ ∈ [0, 1], about whether or not the agent is skilled.”

weakness: in the model used, skill is acquired at additional cost independent of general efficiency progress from education. Many employers do not test at all for skills for people who are unable to send a signal, heavily distorting the rewards for signalling. In other words significant problems arise when high school education does not even result in a wage offer of minimum wage.

In today’s horrible job market employers can often choose between college or high school grads. They choose college grads in this economy for the lower paying jobs, simply because they can get what they consider overqualified staff. The best of the low pay jobs go first – to college grads – and the lower paying, low pay jobs, go to who is left – high school grads.

The problems with this is:

1. Colleg grads serving tables believe the work is beneath them and their attitude is often negative. A high school grad that appreciates the job is a better choice in the long run.

2. College doesn’t teach you how to work as a receptionist or put up with obnoxious people. Your higher opinion of yourself often leads to demonstrated low opinions of others.

3. The overqualified are always looking for a better job, so your job for them is really just a stop at the train station of careers.

4. Some college experiences at formative ages – drinking, cramming, often easy classes – are not conducive to good work habits.

5. Some work their way through college. Some loaf their way. There is no way to tell by looking at the diploma.

Hard working folks deserve the same pay for the same work – regardless of what club they joined, the ivy league school attended or their family peerage. It’s an American concept that you are judged by what you actually do.

I have seen so many high school grads easier to train, harder working and more dependable than many college grads.

It is sad that acceptance into the labor force should ever require a degree in anthropology to become a waiter, or that a waiter should lose their job to someone – just because that someone has a degree worthless for the job.

Anyway, I will pass on your article to a young friend, who is working for $9 an hour after ten years of experience in retail, and has a master’s in mathematics. His co-workers are also at $9.

Unions used to sort out these things rather well. In the Newspaper Guild, for example, reporters were paid acording to years of experience on the job, not whether they attended Harvard or Montco Community College.

Which leads me to wonder whether the next suggestion is that we pay Princeton grads more than Brown grads, or vice-versa? Is a degree in home economics more valuable to a carpenter than a degree in Latin. Time will tell.

This is really companies dodging the full costs of training and taking advantage of the desperation new grads have to use their degrees. The new grad who is underemployed is put in the position of either keeping a job he/she is overqualified for or jumping blindly into an insecure, part-time job to get requisite experience that matches the degree (and, of course, competition for these insecure part-time jobs is heavy).

Similarly I’ve noticed interns and student emploees used in some organizations as cheap labor rather than as trainees. In the office where I work full-time letting my mind rot and soul grind away, students do even more mindless tasks, nothing that will prepare them for a full-time job here or elsewhere.

It’s a horrible waste of human capital. People in my position don’t live up to potential and lose morale. People who take the risky route get even more devestated when they don’t make it. Training is left to the individual and (insufficient) public sector as much as possible. I feel bad for the people without education who are pushed out of jobs they can do by graduates who end up trapped in jobs requiring no degree.

When the Boomers finally do start retirinig (was supposed to happen by now, but the well-off ones are workaholics and the poor ones can’t afford to retire), there’s going to be a massive human capital deficit. The problem will no longer be finding jobs, but figuring out what it is we’re supposed to be doing!

I’m curious though about the “underemployment” category. How is that defined? What is considered underemployed for an Art History major? Russian Literature? At some point the notion of underemployed needs to be assessed in terms of demand for specific majors and what the position might be.

For example, is a first line retail sales supervisor an underemployed position for a sociology major?