Thursday, December 6, 2012

Is College Worth it (again)

The BBC and NYT ran two similar stories within a day of each other. This is the ‘Is College Worth It?’ debate slightly recast-ed:

The BBC:
Today's young Americans have a below-average chance of becoming a graduate, compared with other industrialised economies.

One commenter - Adam, Knoxville, US - noted:

I am a secondary school Math teacher. I have a B.S. in Chemical Engineering and a M.S. in Education. I would go on to earn a Ph.D., but it is too expensive. One reason my students don't want to go to college is they don't see any value in it. They read and watch stories of people making millions without ever going to college: athletes, musicians, stars, models, innovators, self-trained programmers. And then there are skilled technicians who don't need college (plumbers, security specialists, hair stylists, etc.). We also hear in the news about companies leaving US soil because they cannot find people to work in their factories - high paying jobs that don't require a college degree. Apparently our young people don't want to go to college, but at the same time they don't want to work in a factory environment either. Another issue with value is that students are well aware of the fact that teachers and other college educated people don't make that much money. A starting teacher in our district (with a family of four) makes approximately $28,000 a year (poverty level). Students look at us and ask 'Why should I go to school to earn a degree to be poor? We are already poor, so what benefit is all that extra work?" I am at the point where I agree with them. Salaries of the middle class have not changed much in 20 years, while the rich are now measured by billions, not millions. There is staggering inequality and students are not blind.

In fact, he has nailed the reason down: The perceived relative returns to college have come down. But in fact, the earnings gap between college and high school graduates has actually increased. While median college earnings have not moved much in the past 30 years, college tuition has been rising - both of which may have contributed to the perceived fall in the returns to college.

Another possible reason is from the NYT:
… compile a list of occupations that have shown the most “up-credentialing” in the last five years — that is, occupations whose job ads were significantly more likely to name college diplomas as a prerequisite in 2012 than they were in 2007.

Here is a look at the 10 occupations with the biggest percentage increases in requiring a college degree.
Occupation title2007-12* Growth in % of Posted Jobs Advertising for a Bachelor’s Degree2007 % of Ads Requiring Bachelor’s Degree2012* % of Ads Requiring Bachelor’s Degree
Dental Laboratory Technicians175%12%33%
Chemical Equipment Operators and Tenders83%6%11%
Medical Equipment Preparers55%11%17%
Buyers and Purchasing Agents, Farm Products43%54%77%
Electronics Engineering Technicians38%21%29%
Dental Hygienists38%40%55%
Architectural Drafters37%41%56%
Cargo and Freight Agents36%33%45%
Claims Adjusters, Examiners and Investigators35%48%65%

*2012 data is from Nov. 1, 2011, to Oct 31, 2012

Some of these occupations may actually require more advanced skill sets than they used to. Others may require the same old duties and skills, but employers assume that people who don’t go to college in this day and age must be inferior candidates. There’s also still an oversupply of workers, so employers know they can afford to be picky.

Many administrative jobs — human resources manager, property manager, school administrator, desktop publisher, security manager — also appear on the full list.

These tend to be jobs that require fewer technical skills, so it’s not clear why a college-level education would suddenly become more important — except maybe as a sorting device for narrowing down the deluge of résumés to the most qualified (or overqualified) applicants.

In most of these administrative occupations, hiring has fallen over the last few years, as you can see in the columns further to the right showing the total number of jobs posted. That could also mean that the openings that are left — the ones that have been harder to fill even when workers are abundant — are disproportionately the ones actually do require more advanced skill sets.
For other categories of jobs, it’s harder to tell whether the “up-credentialing” reflects changing job duties or mere degree inflation.

A lot of the jobs listed are medical technician positions, for example, which typically require some kind of technical skills that can be achieved with postsecondary schooling like an associate’s degree or a certification of some kind. It’s unclear whether these jobs have gotten more technically sophisticated in the last five years, or whether employers just want to narrow down the pool of potential applicants to those perceived to be more ambitious.

Not noted in the article is that many of these jobs also appear to be lower wage jobs, thereby contributing to the lower returns from college. However, as the article noted early on:

The wage gap between the typical college graduate and those who have completed no more than high school has been growing for the last few decades. In the late 1970s, the median wage was 40 percent higher for college graduates than for people with more than a high school degree; now the wage premium is about 80 percent.

Given these trends, the question is then - can you afford not to go to college - even for a lousy job? The ball seems to be back on the cost of college side of the equation.

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