May 29, 2014--The $ of a College Education

Back in 1976 I wrote a book about the history and then current state of higher education--Second Best. The "second best" referred to how the system favored the affluent at the literal expense of the less fortunate.

One chapter was devoted to the financing of colleges and universities, especially the redistribution of assets from the working poor and lower middle class to the upper middle class and wealthy.

Studies that I cited showed that since the system disproportionately encouraged the enrollment and graduation of these latter students, tax money and other forms of assets flowed upward from those at the bottom to those at the top. The best evidence at the time showed that college graduates over their lifetimes earned about 50 percent more than those with only high school diplomas and even "some college," with some college including community college students who never went on the earn bachelors degrees.

I hoped the book, which was widely reviewed and discussed, would contribute to the debate about this unfairness and contribute to efforts to close these gaps in educational attainment and economic outcomes.

But from recent evidence it is clear that I and many others were less than effective.

This may come as something of a surprise since there is so much casual talk currently, supported by anecdotal stories, about how recent college graduates can't find jobs and are therefore moving back home, holed up again in their old bedrooms.

Friends have been telling me for years that they know this brilliant young person who graduated with honors from Georgetown or a talented student from the University of Michigan who has been looking unsuccessfully for work for the past three years. Or had to take a part time job.

From this one might suspect that the income gaps at least have narrowed and that unemployment among college grads would have risen.

But a recent study cited in the New York Times by the Economic Policy Institute, using Labor Department data, shows that the unemployment rate among college graduates is only 3 percent (while for those with "some college" it is more than 25 percent) and that the earnings gap is even more pronounced than in the past.

Five years ago grads earned 89 percent more than non-graduates, ten year ago it was 84 percent more, back in the early 1980s it was a 64 percent premium, and as my research showed it was "only" 50 percent more in the mid-1970s.

On the other hand, the most recent data reveal a shocking 98 percent advantage in earnings for college graduates when compared to those with either a high school diploma or a year or two of college. This translates to $1.0 million more in earnings over a working lifetime.

It may be true that a percentage of employed college graduates feel they are underemployed or are working in fields that do not align with their interests or aspirations; but the anecdotes, which confirm predetermined presuppositions about the state of things, do not represent the truth.

The truth however, is mixed--it is good news that college graduates are doing so comparatively well (though it is not good news that the average graduate is $25,000 in debt); but it is little comfort to think about those falling further and further behind. That was true in 1976 and, sadly, it is even more so today.