College is Not Inoculation

February 1st, 2013 at 8:49 pm

Just working up some numbers for testimony next week on education and jobs and wanted to share this graph of real weekly earnings for full-time workers with a bachelor’s degree, 25 and up.

I think there’s a strain of debate on these issues that argues once someone has a college degree, they’re immune from the challenges of today’s job market.  Then there’s a related strain that says there’s jobs out there, but only “skilled” workers.

Well, clearly the earnings of these full-time-working adults with BAs haven’t been doing so great, falling not just in the recession as you might expect, but over the 2000s expansion as well.  And if there’s currently excess demand given the supply of college-educated workers, you sure don’t see it in these wage data.

Source: BLS

But wait, you say.  Shouldn’t we be looking at relative wages?   Real earnings may be falling for college workers but maybe they’re falling less than for those with terminal high-school degrees.  (Though, truth be told, the popular rap is decidedly not “go to college and you’ll do less badly.”)

Using this same data series I found little change in the college/hs wage differential, but EPI does a more refined analysis of the college wage premium, adjusting for age, gender, industry, and other factors.  The figure below shows the premium to be flat for women over at least the past decade, and rising a lot more slowly for men than was the case back in the 1980s.

Source: EPI, State of Working America

The point is that while college completion certainly gives you a solid leg up, both in terms of jobs and earnings, it doesn’t inoculate you against global wage arbitrage, accelerating labor-saving technology, and high unemployment.

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8 comments in reply to "College is Not Inoculation"

  1. Mark Thomson says:

    What proportion of US college students study for a BA? Are you using this as a proxy for all college grads?

  2. Mark Thomson says:

    “…doesn’t inoculate you against global wage arbitrage, accelerating labor-saving technology, and high unemployment.”

    Hmm… not sure I see the point about unemployment in the data you presented.

  3. purple says:

    College should have more to do with developing the citizen or global citizen, than as a trade school. Otherwise, just have trade schools.

  4. teething ring says:

    Jared, does your top graph cover ALL adults with B.A.’s, or only those whose final degree is a B.A.?

  5. Fred Donaldson says:

    The chart shows wages for those with BA degrees are falling, and most degrees are BA degrees, with engineering (BS) at only 5% (for example), but the gap between the BA and the HS grad we see today may narrow as the current generation ages.

    Many of the folks in these charts are in the 30-65 range and started out in good jobs after earning their degree. College grads today, who are delivering pizzas, will not see any wage gap between them and their fellow workers if they continue in similar jobs.

    A BA in social sciences, psychology, criminal justice, is not in the same demand as a qualified electrician, carpenter, etc., and the individual is often not as smart. Liberal Arts education can teach good work habits, improved research abilities, but sometimes it doesn’t. Technical training seems better at focus and achieving individuals able to do a job, rather than able to write a report on how to do a job.

  6. andrew says:

    good luck supporting a university giving out only BS degrees!

  7. Kevin Rica says:

    There definitely has been credentials inflation which accounts for part of the erosion of the education premium.

    If you teach college, particularly one with open admissions, you come across some students who are apparently only there for the financial assistance. You are told not to advise them to drop a course that they are clearly going to fail because it might imperil their student aid. Some never show up, but never drop.

    And then, of course, some get diplomas. Tom Harkins went out on a high note when he investigated for-profit colleges.

    And then, of course, there are all those people who complain that its unfair to require HS students to pass proficiency tests in order to graduate. Probably the reason that we see the college premium disappear is because college is the new sigh school.

    As the Wizard said to the scarecrow: “I can’t give you a brain, but I can give you a diploma.”

    • Tax Lawyer says:

      None of these charts adjust for after-loan repayment income. I would gladly turn in my law degree for a refund, with interest, of my student debt. And I finished in the top 5% of my law school class and had a CPA certificate before even starting. Post-graduate education is even more fraudulent. Those jobs just aren’t there.

      Electricians, plumbers, carpenters, HVAC, exterminators, all blue collar work etc. is where the future lies–and this is from someone who finished in the top 5% in college and in law school. Those trades carry little or no debt, have apprenticeships and pay well from the get-go. AND they carry job security. Try finding a job at a law firm nowadays–last year’s graduating class enjoyed a whopping 15% placement rate as lawyers. The other 85% are defaulting on their loans and asking you whether you want fries with your order.