In a post reacting to an NYT piece on young people and higher education, Bill MacBride makes the following observation:
But in the long run, more education is a positive for the economy – and Rampell’s article suggests the kids (well, young adults) are alright!
I really wish he’d show his work on this. It concerns me that this may be more an article of faith than a provable fact.
The difference in the unemployment rate for those with college degrees or better and those without is widely published. I don’t think this means what those touting it seem to think. If the credentials race is a zero-sum game in which those with PhDs out-compete those with MAs who out-compete those with BAs who out-compete those with AAs who out-compete those with high school degrees who out-compete those who didn’t graduate from high school in an environment like today’s in which the number of new jobs created barely keeps up with the natural increase or, worse, fails to do so, where’s the positive? Since those who’ve pursued further credentials are undertaking greater consumer debt to do so, pursuing higher credentials the better to compete for the few jobs that are materializing doesn’t make the economy more vibrant, it merely exacerbates existing social problems. As I’ve documented here before the rate of on-time high school graduation rate in major urban areas has remained persistently high for generations.
There are other reasons to believe we’re not creating jobs that require ever-higher levels of education but requiring ever-higher levels of education as credentials for jobs that don’t require them. For example, the length and number of post-docs in physics, chemistry, and the other sciences have been increasing over the last decade. That doesn’t suggest a robust demand for science PhDs so much as a lack of better jobs for science PhDs.
There are exceptions to this. Healthcare, for example. But since healthcare is so heavily subsidized the question becomes does whatever additional economic activity is produced outweigh the deadweight loss? I don’t know the answer to that but I have my suspicions. I don’t think the answer is self-evident.
The experience of other countries, e.g. Germany, China, and Japan, also provides counter-evidence of the assertion. All three have lower rates of graduation from university than the U. S. and lower rates of unemployment. Clearly, there is no straight-line connection between the two factors.
Additionally, in recent years China has seen something similar to what’s been seen here: increasing numbers of young people with university degrees who must take factory jobs in which the skills they’ve presumably acquired at university are wasted and who are, understandably, dissatisfied. They call them the ant tribe.