Everyone knows the college degree has lost its magic. Too many grads wind up with decades of debt and no guarantee of a good job. But just how bad is it? In a compelling article in the Wall Street Journal, Richard Vedder reveals “explosive growth” in the number of university grads stuck in “relatively unskilled jobs.”
According to his research, there are more university grads working in retail than there are soldiers in the US Army, and more janitors with bachelor’s degrees than chemists. “In 1970, less than 1% of taxi drivers had college degrees,” he reports. “Four decades later, more than 15% do.”
Not surprisingly, this has led to a dramatic narrowing of the gap in earnings between college grads and high school grads. “The benefits of a degree are declining while costs rise.” Since 2006, the article reports, the gap between what the median college grad earned compared to the median high-school grad dropped – by $1,387 for men over 25 working full-time, and by $1,496 for women.
If you narrow the range to younger workers, and look at only ages 25-34, the decline is even worse. The men’s differential fell by 11%%, from $20,623 to $18,303, while the women’s differential crashed by almost 20%, from $18,525 to $14,868.
Meanwhile – surprise, surprise – during that same 2206-2012 period, the cost of a degree jumped by 16.5% (in constant 2012 dollars). And this at the same time as the recession was flattening household incomes – and thus, the ability to pay.
What’s to be done?
The universities will change. Not that they want to (“…they are often strangled by tenure rules, spoiled by subsidies from government and rich alumni”), but they will be forced to. Declining enrollments will produce financial strain, and painful adjustments will be necessary.
First, colleges will have to constrain costs. Traditional residential college education will not die because the collegiate years are fun and offer an easy transition from adolescence to adulthood. But institutions must take a haircut. Excessive spending on administrative staffs, professorial tenure, and other expensive accouterments must be put on the chopping block.
Second, colleges must bow to new benchmarks assessing their worth. With the advent of electronic learning—including low-cost computer courses and online courses that can reach thousands of students around the world—there is more market competition than ever. New tests are being devised to assure employers that individual students are vocationally prepared, helping recruiters discern which institutions deliver superior academic training. Purdue University, for example, has joined with the Gallup Organization to create an index to survey alumni, providing universities and employers with detailed information, including earnings data.
“Creative destruction” may finally be coming to higher education. “The cleansing would be good for a high education system still tied to its medieval origins – and for the students it’s robbing.”
You can read the entire article here. It’s well worth your time.