August 21, 2012

College Degrees Aren't Umbrellas

umbrella_by_blunt.jpg                                                                              By George Leef 

Why go to college? Go back fifty years, and the answer commonly given was, "To become a well-rounded person who has a grasp of our civilization's history, science, and art." Go back about twenty-five years and the answer commonly given was, "So you'll be able to get a good job." And now one authoritative source is telling us, "Because you'll be better off when the next recession hits."

That source is the Georgetown Center on Education and the Workforce, which recently released its latest study, The College Advantage: Weathering the Economic Storm. Analyzing employment data over our current recession, the study finds that "workers who had completed a four-year college degree or higher were largely protected against job losses...." That leads the authors, Anthony Carnevale, Tamara Jayasundera and Ban Cheah, to conclude:

In jobs at every skill level and in many different occupations, the better-educated applicant has the edge. For workers, the findings point the way to acquiring the skills that the market needs and values. For students and their parents who are contemplating whether higher education is a good value, these findings make clear that the answer is a resounding yes.

There are gaping holes in the study's logic. I have critiqued similar studies from the Georgetown Center before, as have writers like Neal McCluskey and Richard Vedder. Our criticism has centered on the persistent failure of those studies to recognize that correlation doesn't necessarily mean causation, that is to say, just because people who have college degrees generally fare better in the labor market does not mean that they fare better because they took college courses. Nor does it mean that everyone who obtains a college degree today will derive any advantage from it, much less advantages that outweigh the costs. The new study makes the same mistakes.

Much of this hefty study is devoted to the labor market changes following the economic recession that began in 2007. The statistics undoubtedly show that layoffs hit people (especially men) who did not have college degrees much harder than it hit people who had college degrees. But does that lead to the conclusion that having a degree helps you "weather the storm?"

It does not. The authors correctly observe that job losses due to the recession were concentrated in construction and manufacturing.  Most of the labor force in these sectors did not have college degrees. Thus, we have a correlation - most of the workers in the worst-hit sectors happened to be non-college people - but we don't have causation. They did not lose their jobs because they didn't have college degrees. Many lost their jobs because a combination of low interest rates and federal policies promoting home ownership artificially expanded their industries. Moreover, the study shows that some of the construction and manufacturing workers who held college degrees lost their jobs. Their education didn't protect them when demand for construction work and manufactured goods plunged.

Here's a thought experiment. Suppose most of the workers in these industries had taken the advice of the Georgetown Center and gotten college degrees. Would the job losses in construction and manufacturing have been any less? It is impossible to see how college degrees could have saved them from unemployment. Construction companies couldn't have kept more carpenters simply because they had a college education.

Here is another thought experiment. Suppose there were no housing bubble, but instead a bubble in an industry or profession with a high concentration of college degreed workers, leading to large job losses among them. Would that justify the conclusion that their education was a bad investment because their degrees did not protect them? Of course not.

Actually, that doesn't have to be just a thought experiment. The legal profession has suffered a very severe contraction over the last few years, with large job losses among people who have college degrees and law degrees. All their education was no protection for them when the demand for legal work took a nosedive.

Hashing over the employment data for the last five years just doesn't prove the point the authors want readers to accept. Having a college degree (which is assumed to mean "better-educated" even though it is evident that many who get college degrees don't actually learn much, as Arum and Roksa's book Academically Adrift demonstrated) won't necessarily protect an individual against the storms of unemployment.

But doesn't it give you "an advantage?" The authors argue that it does because no matter what sort of job one holds (and at least the study doesn't try to hide the fact that many college grads are now employed in jobs that don't call for any advanced education) you earn more if you have a degree. "The median earnings for workers with a Bachelor's degree in low-education jobs are 37 percent more than for workers with only high school diplomas," they write, citing an earlier Georgetown paper, The Undereducated American.  Higher earnings are certainly an advantage, even if you're working as a dish-washer and not making very much. So doesn't that prove the point?

Not at all. Once again, they have confused correlation with causality. Employers do not, as the authors state, "pay more for educated workers." Nowhere will you find different rates of starting pay depending on your level of education. A restaurant does not, say, offer dishwashers $7 per hour if they only have a high school diploma (or no educational credential at all), but $10 per hour if they hold a degree.

The difference in earnings comes from the fact that over time, some workers will prove themselves to be dependable and competent and thus earn raises, while less dependable and competent workers won't. Among those who earn raises, more are apt to be workers who have been to college - but that isn't because of college. It's because of their better work habits. Anyone with the good work habits does just as well, college or no. Conversely, do poor work and you won't get a raise even if you happen to have a Ph.D. Again, it's not having the degree itself that gives a worker an advantage; it's having good work skills and attitudes, which tends to correlate with college.

I'll conclude with a challenge. The paper repeats a claim that we see again and again in this literature: "New jobs are demanding more education than before." I agree that it is becoming more common for employers to demand that job applicants have college credentials, even for work that calls for no skills for which you'd need advanced education (here's an example). But this phenomenon - credential inflation - is not the same thing as increased knowledge and skill levels being necessary for performing jobs. What I would like to see from the Georgetown Center or anyone else is evidence that there is a large increase in jobs where only individuals who have completed college degrees could possibly perform them.

There certainly are some jobs like that - jobs that absolutely require skills and knowledge that even the sharpest high school graduates don't have. What I don't think is true, however, is that the number of such jobs is increasing so much that they will go unfilled unless we ramp up college completion. Maybe I'm mistaken. I'll only concede that point, though, upon demonstration that a substantial swath of the labor market is shifting from jobs requiring good basic skills and trainability to those demanding mastery of a serious college curriculum. 


George Leef is director of research for the John William Pope Center for Higher Education Policy.

Comments (1)


"Nowhere will you find different rates of starting pay depending on your level of education."

This is not strictly true. The federal government hires at different pay grades based on education for the same position. A undefined rational is that the higher credential could perform at a higher level but it is not an overt requirement.

But in the real world, your statement is true.

Post a comment

Leave comments here. Unless they are vicious or obscene, they will be printed.




So You Want to Be a Professor? Why?
Samuel Goldman

Outside the 'Consensus'-- Notes of a Climate Change 'Denier'
Peter Wood

Texas Leads the Way on Higher-Ed Accountability
Thomas K. Lindsay

More Decline in the U. of Chicago Core
Adam Kissel

Do We Over-Invest in Non-Traditional Students?
Richard Vedder

All Essays >>>

Published by the Manhattan Institute
The Manhattan Insitute's Center for the American University.