Monday, October 25, 2010

Why Did 17 Million Students Go to College?

Two sets of information were presented to me in the last 24 hours that have dramatically reinforced my feeling that diminishing returns have set in to investments in higher education, with increasing evidence suggesting that we are in one respect “overinvesting” in the field. First, following up on information provided by former student Douglas Himes at the Bureau of Labor Statistics (BLS), my sidekick Chris Matgouranis showed me the table reproduced below (And for more see this).

Over 317,000 waiters and waitresses have college degrees (over 8,000 of them have doctoral or professional degrees), along with over 80,000 bartenders, and over 18,000 parking lot attendants. All told, some 17,000,000 Americans with college degrees are doing jobs that the BLS says require less than the skill levels associated with a bachelor’s degree.


Occupation
Number with at least a Bachelor’s
Percentage
Customer service representatives
482,784
21.62
Waiters and waitresses
317,759
13.40
Secretaries, except legal, medical, and executive
311,440
16.64
Executive secretaries and administrative assistants
243,131
16.64
Receptionists and information clerks
141,476
12.89
Laborers and freight, stock, and material movers, hand
118,441
5.07
Janitors and cleaners, except maids and housekeeping cleaners
107,457
5.01
Truck drivers, heavy and tractor-trailer
85,205
5.09
Bartenders
80,542
16.00
Carpenters
65,412
7.27
Food preparation workers
63,737
7.24
Amusement and recreation attendants
63,704
24.61
Landscaping and groundskeeping workers
62,414
6.77
Construction laborers
59,409
5.82
Telemarketers
54,713
15.85
Postal service mail carriers
49,452
13.95
Electrician
49,109
7.76
Hotel, motel, and resort desk clerks
37,156
16.14
Flight attendants
29,645
29.80
Parking lot attendants
18,749
13.74

I have long been a proponent of Charles Murray’s thesis that an increasing number of people attending college do not have the cognitive abilities or other attributes usually necessary for success at higher levels of learning. As more and more try to attend colleges, either college degrees will be watered down (something already happening I suspect) or drop-out rates will rise.

The relentless claims of the Obama administration and others that having more college graduates is necessary for continued economic leadership is incompatible with this view. Putting issues of student abilities aside, the growing disconnect between labor market realities and the propaganda of higher-education apologists is causing more and more people to graduate and take menial jobs or no job at all. This is even true at the doctoral and professional level—there are 5,057 janitors in the U.S. with Ph.D.’s, other doctorates, or professional degrees.

This week an extraordinarily interesting new study was posted on the Web site of America’s most prestigious economic-research organization, the National Bureau of Economic Research. Three highly regarded economists (one of whom has won the Nobel Prize in Economic Science) have produced “Estimating Marginal Returns in Education,” Working Paper 16474 of the NBER. After very sophisticated and elaborate analysis, the authors conclude “In general, marginal and average returns to college are not the same.” (p. 28)
In other words, even if on average, an investment in higher education yields a good, say 10 percent, rate of return, it does not follow that adding to existing investments will yield that return, partly for reasons outlined above. The authors (Pedro Carneiro, James Heckman, and Edward Vytlacil) make that point explicitly, stating “Some marginal expansions of schooling produce gains that are well below average returns, in general agreement with the analysis of Charles Murray.” (p.29)

Now it is true that college has a consumption as well as investment function. People often enjoy going to classes, just as they enjoy watching movies or taking trips. They love the socialization dimensions of schooling—particularly in this age of the country-clubization of American universities. They may improve their self-esteem by earning a college degree. Yet, at a time when resources are scarce, when American governments are running $1.3-trillion deficits, when we face huge unfunded liabilities associated with commitments made to our growing elderly population, should we be subsidizing increasingly problematic educational programs for students whose prior academic record would suggest little likelihood of academic, much less vocational, success?

I think the American people understand, albeit dimly, the logic above. Increasingly, state governments are cutting back  higher-education funding, thinking it is an activity that largely confers private benefits. The pleas of university leaders and governmental officials for more and more college attendance appear to be increasingly costly and unproductive forms of special pleading by a sector that abhors transparency and performance measures.

Higher education is on the brink of big change, like it or not.

Christopher Matgouranis helped enormously in preparing this posting.

5 comments:

Matt Holbert said...

I'll share a quote from Joseph Needham that seems germane to this discussion: "Ethics are the rules whereby men may live together in society with the utmost harmony and the best opportunities for the development of their talents in the common good." It's hard to see where higher education has been ethical over the last 100 years or so. Maybe it's time for a fresh start. One that takes reality into account. We are going to have a contracting economy. Higher education and all other institutions currently only prepare participants for an expanding economy. Perhaps we should dramatically alter higher education institutions to reflect reality.

CAMERON @EDUCTO said...

This is clearly a Wisconsin Tourism Federation moment for education. We simply cannot have a more competitive society if our graduates are not working at full capacity.

However, I remember as a freshman in college that I had a English Major-graduate working for me. One day he had an epiphany that he didn't want to take directions from a 19 yr old. He quit.

Perhaps...there is also an awakening coming for these 17 million students.

Glen S. McGhee said...

It would be more revealing of the underlying dynamics of the sorting process at work in the labor force to include unemployment figures as well.

Without including those that are unemployed, and under-employed part-time graduates, there is no sense of what is happening at the lowest rung of the employment ladder.

The question before us is whether this lowest rung of the employment ladder is growing, and if so, by how much; or, if this is due to the overproduction of college degrees. Or it may be both.

But the point is, without more historical data about employment / unemployment, part-time employment,and even under the table employment, we cannot identify the dynamic at work at the lowest rung of the employment ladder.

Glen S. McGhee said...

But if the data presented indicates a steepening of the Lorenz Curve, what then?

Then higher enrollment levels may simply point to the lack of viable options for youth, who prefer a party-school to unemployment.

But this also means something we are overlooking: that the bottom slot in the stratified labor pyramid is now decoupled from the labor markets themselves, producing a kind of standing reserve that has been excluded from economic life.

This unpleasant fact of life, if true, is being overlooked because we continue to sample on the dependent variable, in this case, degree attainment. This was what I was getting at earlier.

Economic history -- and much else -- in the US can be told from the point of view of the "bottom slot" and this POV needs to be included when looking at the postsecondary sector (see Richard Williams on Jamestown and the Irish migrations, just reissued this year).

Mexican workers, Chinese workers manufacturing good that are sent to the US, Eastern Europeans -- all these are having an impact on the economy in the "bottom slot", but to this list we are only now beginning to add college graduates.

Glen S. McGhee said...

Randall Collins, the sociologist whose "The Credential Society" (1979) has proven to be eerily prophetic, discusses the micro-situational dynamics of education attainment in his 2000 article on "Situational Stratification" (2000:18).

"Mere correlation between years of schooling and income is an aggregate of outcomes that hides rather than reveals how educational stratification operates. Years of schooling are not a homogeneous currency; years in different kinds of schools are not equivalent, in terms of what kinds of subsequent educational and occupational channels one can enter. ...

Educational credentials should be regarded as a particular kind of Zelizer currencies, valuable in specific circuits of exchange but not outside of those circuits. It is at the point where years of schooling are translated into recognized credentials that
they leap in social value.


Moreover, those credentials themselves vary in their consequences, depending both upon the aggregate amount of competition among credential holders at a particular historical time (credential inflation), and also upon the extent to which credentials are earmarked for particular kinds of specialized jobs or professional licensing barriers.

Years of education are only a vague proxy for what kinds of credentials people hold, and that in turn gives only a vague picture of what microsituational uses they have in people's lives. We need a microdistributional research program to look at educational stratification; this would include both the situational advantages and
disadvantages of official recognition at each level of school experience, from elementary on through secondary and advanced and thereafter into the occupational and social encounters of adult lives.