Alex Tabarrok at Marginal Revolution has a post on higher education, actually an excerpt from an upcoming book of his:
There is nothing wrong with the arts, psychology and journalism, but graduates in these fields have lower wages and are less likely to find work in their fields than graduates in science and math. Moreover, more than half of all humanities graduates end up in jobs that don’t require college degrees and these graduates don’t get a big college bonus.
Most importantly, graduates in the arts, psychology and journalism are less likely to create the kinds of innovations that drive economic growth. Economic growth is not a magic totem to which all else must bow, but it is one of the main reasons we subsidize higher education.
The potential wage gains for college graduates go to the graduates — that’s reason enough for students to pursue a college education. We add subsidies to the mix, however, because we believe that education has positive spillover benefits that flow to society. One of the biggest of these benefits is the increase in innovation that highly educated workers theoretically bring to the economy.
As a result, an argument can be made for subsidizing students in fields with potentially large spillovers, such as microbiology, chemical engineering, nuclear physics and computer science. There is little justification for subsidizing sociology, dance and English majors.
College has been oversold. It has been oversold to students who end up dropping out or graduating with degrees that don’t help them very much in the job market. It also has been oversold to the taxpayers, who foot the bill for these subsidies.
There’s an interesting chart in the post that illustrates that over the last 25 years the number of graduates per year in science, technology, and mathematics has remained the same or declined slightly while the number of graduates in the performing and visual arts, journalism, and psychology has skyrocketed.
Let me add a little fuel to this fire. According to the BLS the number of people employed in architecture and engineering in 2001 was about 2.49 million while the number in 2010 was roughly 2.3 million. I won’t go into the dreary statistics on the number of unemployed engineers or the engineers who are no longer able to get work in engineering. They’re easy enough to find. Another statistic to consider: the number and length of post docs has been increasing steadily, a reasonably good indicator of a lack of better jobs. That includes biomedical.
There are, essentially, three reasons to pursue higher education (there used to be four). The first and best is that it leads to a fuller, better, more satisfying life. That might well be worth subsidizing. However, unless college students have changed tremendously in the approaching fifty years since I started my undergraduate education, virtually no one seeks higher education for that reason.
Some pursue higher education for the reason that I did: it’s what we do. I no more questioned the idea that I would go to college (and graduate school) than I did that I would enter first grade. Both of my parents had college educations and graduate degrees. Of course I would do the same.
I think that most kids go to college because they or their parents believe it will help them get good jobs. I think that this is fatuous or, as Dr. Tabarrok more kindly puts it, oversold. Higher education does not ipso facto lead to a good job. That’s a cargo cult mentality. Good jobs, like everything else, are based either on supply and demand or fiat. More people with college degrees does not create more jobs for people with college degrees. It just provides a competitive edge over people who don’t have college degrees in securing jobs that could well be performed without college degrees.
In my day there was another reason to pursue higher education: avoiding the draft. Anybody who thinks that those who pursued higher education because it’s what we do actually did so to avoid the draft are merely reflecting their own prejudices and class identities.
Please do not point out the statistics on the income expectations of people with college or post-graduate degrees. The studies rely on the lump fallacy, the idea that there is a lump of undifferentiated college degrees. When you control for a relative handful of jobs (including the dwindling number of jobs for engineers), doctors of medicine, lawyers who’ve graduated from the top 15 law schools, MBAs from top schools, etc. the income expectations of college grads, particularly when you subtract the four years of deferred wages they’ve bought as part of the education package, aren’t nearly as rosy.
When you combine the low realistic wage expectations of people with training in the performing and visual arts, journalism, and psychology, the small number of jobs being created in any field right now, and the unconscionably high cost of higher education, you get the OWS movement.
It just provides a competitive edge over people who don’t have college degrees in securing jobs that could well be performed without college degrees.
I have a BS in Mathematics. I did some graduate work in same before I wised-up and dropped out*. Since then I’ve worked as an actuarial analyst and a financial analyst. I never had to use anything I didn’t already know when I dropped out of high school halfway through eleventh grade. All the college degrees did was signal others that I was one of them, and therefor someone they could hire. (Incidentally, I only met one entry-level person in those years with a degree in Actuarial Science that I felt actually had more starting knowledge than I did.)
My brother-in-law was born in 1948, twenty years before me. After high school and the Army (stationed state-side during the Vietnam war because his brother was already in-theater as a Ranger), he went back to work in the grocery business he had been in during high school. He eventually rose to be a division head (VP under one organizational plan, later a president under another) in charge of stores over entire states. I’m pretty sure he did some management courses at some point, but that was to supplement what he already knew. The folks running the company back THEN wanted people that knew the business, not people that had degrees. Eventually that company started hiring people with degrees from Harvard and Wharton for the very top jobs, replacing the old grocery hands. They filed for bankruptcy within a few years, as all the old-timers who came up in the company quit when they saw how badly the new guys were running a grocery chain. So much for all those guys with credentials. You can probably figure out the chain using Google.
College degrees mean pretty much nothing, even for some fairly “technical” jobs. If you’re not using stuff learned in college in the first week on the job, you’ve probably wasted your time & money.
* One incident had a big impact on that decision. A bunch of us were working late into the night on a combination of assignments & test prep. Around 1:30 we headed out to get some food. One of the PhD students (call him F.)came with us to the Subway across the street. He knew the guy working behind the counter pretty well. On the way back to the grad lounge, I started kidding F. about spending so many late nights at school that he knew the late night clerks by name, ands they him. He said, “No, we got our Masters together a couple of years ago. That’s the only job he can get.” I asked others about it later and they confirmed. Scary. (And UF has a pretty good mathematics department.)
F. had also told me in my first week of grad school that I needed to quit. “Just quit now. Get out, go live your life.” I thought he was kidding at that time (lot of weird people in math departments), later I knew he had been serious. It had nothing to do with my merits as a mathematician, he just thought it a completely futile waste of time. Without a doubt the most jaded & cynical graduate student I met. Unfortunately for him, he was too far along to stop. Fortunately for him, he was charming, good-looking and his family had money. He did get that PhD eventually, and last I checked he was teaching at some small liberal arts college.
That’s an interesting chart. I was looking at this graph yesterday, which suggests to me that we are reaching constraints on the percentage of the population that can obtain a bachelor’s degree (around 30%). Putting the two together it appears that whatever gains in degrees we’ve had over the last thirty years have been in the humanities and at the expense of hard math and sciences. Don’t worry I guess we’ll import these employees.
I think government’s role in higher education should be limited. Its focus should first by promoting the universal attainment of a high school degree that will make one a productive member of society. Higher education will always be a minority attainment, stacked with socio-economic elites that vote.
I would organize the purpose of higher education differently. First, it may promote productivity. I think that’s a proper role of government to encourage. If we are going to have government administer an H1-B visa program to import engineers and scientist, the government might as well promote training for those jobs domestically.
The other purposes are more problematic. College is providing a screening tool that signals to the employer teachability, socialization, and lower risk than the same person without a degree. Since the value is in comparison, this use risks exacerbating socio-economic inequities. The person with a college degree from a lesser university or with lesser grades may not benefit from the degree if its purpose is comparative. There is also the issue of college education signalling shared socio-economic class values. I don’t think the government should be subsidizing that at all.
Higher education will always be a minority attainment, stacked with socio-economic elites that vote.
That’s why government will remain in the business of subsidizing universities.
Something I was trying to get at yesterday in the OWS thread at OTB: So tomorrow all these bright-eyed young freshman have an epiphany, and decide to major in math, engineering and the hard sciences. Let’s assume they’re good at their subjects.
When they graduate four or six or eight years down the line, there are going to be a lot of them competing for jobs. So compensation goes down, because it can. The skills carry a premium today because they are relatively rare.
I remember something like that happening in nursing, perhaps in the seventies or eighties? There was a shortage of nurses. Within ten years there was a glut and wages went down.
Can we win?
Maybe you just have a narrower definition of “engineer” than I do, but the height of the tech boom and the depths of a housing bust do not seem like the fairest dates to make your point about engineering jobs to me.
Do you leave out computer systems design? This would tend to ignore a very large section of engineers: systems design, computer engineers, software engineers.
It also doesn’t jive with of a lot of tech CEO complaints that we don’t automatically give green cards to tech grads before they go back to their home countries.
Or maybe you are extrapolating a structural problem to an overall problem. ASIC designers are a dime a dozen right now because of semiconductor consolidation, but embedded systems engineers are very hard to find.
Here’s a Fred graph for the above data (I hope it worked!). To me it looks like things are on a growing trend with some cyclical bumps and troughs.
Janis Gore: It does not just require an ephiphany, the Obama administration has set a goal and initiated policies to increase the number of college graduates by 50% by 2020. Assuming that is even possible, I too would assume that it would either reduce wages for college graduates or provide no real benefit to the next 50%.
An aside: In the early eighties someone reported that at the rate of graduation that year, by 2000 there would be 48,000 lawyers in the Dallas metro area.
I work next to the state attorney licensing body; I’ve often been told that the main disciplinary problems associated with lawyers is that there are too many lawyers and too little work. The number one problem: stealing from clients (a/k/a borrowing from client accounts with the intent to reimburse). The surplus of lawyers hasn’t really reduced legal costs.
The surplus of lawyers hasn’t really reduced legal costs.
Sam, I’m not cherry-picking. The statistics I used are the BLS’s National Occupational Employment and Wage Estimates. The 2008 data area here, if you’d prefer. I had the 2001 data on hand (didn’t need to look them up again) and I used 2010 to relate the numbers more closely to the census data.
Computer technology is a separate category from engineering and you’re right: there has been growth there. About 500,000 additional jobs over ten years compared to little or no growth among engineers. However, relating that to education is not straightforward. People called “computer engineers” or “systems engineers” generally aren’t engineers at all and may have nearly any kind of educational background including little or no science, technology, or mathematics.
As to why big companies complain about the domestic supply of prospective employees and demand more H1-Bs, that’s simple: they want to hammer down wages for engineers. Microsoft in particular is notorious for paying H1-Bs less than they do non-H1-B employees in the same jobs. It’s against the rules but it’s a commonplace.
BTW, 2001 was not “the height of the tech boom”. That had already faded by then. According to the IEEE by 2001 there were more unemployed electrical engineers in the U. S. than at any time in history and it took a full five years before the number had risen back to where it had been in 1999, the actual peak of the tech boom.
I guess I’m a bit flummoxed. A theme giving people gas is that demand for certain degrees fluctuates. When was that not so?
I graduated at a time when Chemical and Metallurgical Engineers were in high demand. Well, yeah, coming off the commodities boom of the late 70’s. Civil Engineers, not so much.
I don’t really follow it anymore, but if we have an infrastructure push CE’s will be the top dogs. And with all the global warming crap I suspect the bloom is off the rose for Chem E’s. But this is not new. Its been going on for a hundred years. I guess I just don’t understand the beef.
As for things like degrees in History, English Lit and soforth. I think those are wonderful pursuits. I just hope you have a trust fund. And if you don’t, and you can’t get a job……….look in the mirror. Last time I looked nobody put a gun to anyone’s head and said “you will major in Women’s Studies.”
I don’t think that’s the gas, Drew. More like at the rate we’re going convention will demand a $60,000 masters in business to run a 7-11.
There was huge over-investment in specialized semiconductors through the 90s (more than half my 2001 graduating electrical engineering class was still doing ASIC design as a specialization) which fizzled out as that industry consolidated. General purpose chips became powerful enough that it was cheaper to write software for special applications on them rather than design a whole new chip. And finally licensing (like ARM CPU cores) eliminated a lot of redundant designers. I view this largely as a structural shift from hardware to software, rather than a trend for the entire profession.
The trend as I see it is rather that we are moving away from jobs that have clearly defined duties over the entire the career and any given job description today will be obsolete in a year. This does not mean that “engineering” which I’m going to loosely define (to my benefit) as applying theoretical math and science concepts to the real world will not continue to be a useful education.
I guess when someone writes “we need more engineers”, I generally read it as, “we need more people to invent cool stuff and some nerds to help them make it”.
I’ve got gas from (a) the Obama policy proposal above, (b) Prof. Taylor’s assertion that students have been operating under some social contract that if you “go to college, even it it means debt, . . . there will be a job for you,” (when did this happen?) but mostly (c) that the rhetorical promotion of a college educations feels as though it is advancing social inequality.
Indeed. I did tech support for a major computer manufacturer, and my degrees are in philosophy (there is, though, a connection between computer science and philosophy). Most of my co-workers were not formally trained in computer science. Their backgrounds were varied, English, History, etc. There were, of course, Computer Science majors, but we were pretty evenly divided between those with backgrounds in CS and those without. As I said once before, where you start is not,usually, where you end up.
I telescoped two groups in that last comment. The first group I worked in was one with a preponderance of non-tech folks. This was the entry-level group, where you learned the tech ropes and company policies, etc. Lots of classes, and so forth. Training on the phones, etc. But when we graduated, so to speak, and went to the focused support groups, that’s where the pure CS majors made their presence more strongly felt. But still, as I recall, we were about 50-50 in the focused group. Of course this was during the dotcom boom, and the company was looking for folks who some kind of aptitude for the work.
“I don’t think that’s the gas, Drew. More like at the rate we’re going convention will demand a $60,000 masters in business to run a 7-11.”
Really, Janis? I’ve never run into a 7-11 employee I would think had a masters.
Look, snark aside. In my business, which is to invest and oversee multiple businesses, despite all the talk about massive unemployment, our biggest challenge is to find high quality talent. Its not easy. And when we find them, we treat them VERY well. This is how businesses succeed.
What follows will of course get me into trouble. But I think the unemployed need to look in the mirror. We have plenty of dopes, incompetants and malcontents who want jobs. But when we see real quality, we are all over them like flies, and want them in the family.
I don’t know why this is so misunderstood. When you own a business, or run a business, you lose the most sleep worrying about the employees who don’t/can’t perform. The Holy Grail is a group of talented, motivated, competant people who make the business move. And when we find those folks, we take care of them in spades.
And guess what. After we sell a company, and a new owner pisses people off, we re-hire these people in new investments (after any non-competes are done) .
One of the great misconceptions of the left is that business views employees as plow horses. Some do. But those businesses then become plow horses. What you need is thoroughbreds, and some mighty steeds under them. And you tell them, “the owner/Board is setting an overall direction, now go do it – we will help and support you with people and capital- and if you do it you, too will attain great personal, business and financial success.” It works. Its magic. 20 years and a lot of happy rich managers tells me so.
And Obozo wants to raise cap gains taxes and dictate who does what. Absurd on its face. Talk about unemployable dopes.
You’re right, Drew, that the thoroughbreds will most likely do all right.
But what exactly do we do with the 90% who are “plow horses,” and will never be anything but plow horses?
That seems to me to be the question.
I’m not on the left, Drew.
What do you do with the thoroughbreds who never get to race because the entry fees are too high?
Who said anything about you and the left Janis? You imputed that.
Secondly, the entry fees may, or may not, be high; we’ve hired all types. Only talent, attitude and accomplishment matter. As a general proposition, we find the more educated to be better candidates. But it is in no way a “rule.” (Heh. We bought a business from two guys who never graduated high school. 20% EBITDA margins. Don’t come to me complaining about academic cred.)
I actually agree with you, Michael. And perhaps this illuminates the philosophical differences between us. Yes, what do we do about the plow horses?
One view – mine – is that we create a vibrant, growing economy where there is an active market for the “plow horses.” To foster this, we do everything we can to let the thoroughbreds run. They create the opportunity. And let them benefit as they may.
The alternative view is to look at the plow horses as pitiable entities. So what we do is tax and throttle the thoroughbreds – cut their legs off – to subsidize the plow horses, and basically make them our national pets. Take them out to pee and crap once a day…. And now we are all plow horses, for our masters in government.
No thanks. Slavery was outlawed 160 years ago.
And blacks got some semblance of civil rights 50 years ago.
I guess when someone writes “we need more engineers”, I generally read it as, “we need more people to invent cool stuff and some nerds to help them make it”.
That’s it exactly. You can be Goddamned 100% certain that the Obamas daughters will NOT be pushed into math/science/engineering, but into professions more closely aligned with their parents’ careers. Same was true of the Bush daughters, Chelsea Clinton (hmm, what’d SHE end up doing), etc. Math/science/engioneering is for the suckers while the financiers, lawyers and politicians reap the rewards.
Can all you lovely mathematicians, engineers and chemists put together a lawn sprinkler that attaches to a garden hose that won’t break after six months? Thanks in advance.
You’re avoiding coming to grips with the reality which is that no matter how vital and thriving the economy the “plow horses” can be increasingly replaced by robots and off-shoring. Their value is dropping to the point of non-viability — they will not find jobs, they will not be self-sustaining.
That’s what’s happening.
Here’s what else is happening: they still get to vote.
So within the context of reality as it is likely to be over the next few decades, what exactly do you propose? Assume just for the sake of argument that I’m right, tell me what you would do.
We have plenty of dopes, incompetants and malcontents who want jobs. But when we see real quality, we are all over them like flies, and want them in the family.
So which is it: People are unemployed because they suck, meaning the economy is bad because they suck, or government is getting in the way of making life wonderful for everyone?
Actually, this is a fun line of arguement. All us zombies out here would like to know: When did we become a bunch of dopes, incompetents and malcontents? Apparently that happened in 2008. I wonder what happened? Too bad we can’t all be like the Vikram Pandits, John Corzines and Drew BijkSchwingingDijks of the world. (Who knew Drew was Dutch?)
Not that you acknowledge my existence, but you really could try to make some sort of coherent arguement.
But what exactly do we do with the 90% who are “plow horses,” and will never be anything but plow horses?
Fuck ’em, let ’em starve. I actually saw several comments that stated that today on the Wall Street Journal story about food stamp usage being at an all-time high. No social contract, and no religious imperative to treat people decently. This is going to work out **splendidly**.
I feel your pain, Janis. Sprinklers and hose nozzles seem to be some of the worst products on the face of the earth.
I don’t agree. I’m well aware of these trends and agree with you. However, you could make the same observation about specific industries, or for example the transition from agrarian to industrial society, since the late 1800’s.
The answer certainly isn’t to just make a portion of the population wards of the state, or drag the most productive down. That’s just vindictive behavior, which you allude to with your vote comment.
Part of my answer to your question I’ve already covered. I don’t think some of the unemployed are as good as they think they are. I know that sounds mean, but its just my experience. I’d suggest they resolve their own problems.
Second, as I think you know, we acquire almost soley manufacturing businesses, we are beginning to see some actually migrate back to the US as global wage structures rise, shipping costs rise and firms tire of quality and delivery problems.
Lastly, and I know this will be rejected, the regulatory burden must be lowered. Its a job killer. Inevitiably the wails and moans about dirty water etc come. But that’s just bull. Dodd Frank is the current poster boy. The burden is real, and those who advocate for the mounting level of regs need to ask themselves why they cling to their ideology while claiming to care for the unemployed. They are irreconcilable positions.
As a parting note, I was listening to some commentary yesterday from people running the fracing operations in NY, and PA. They are having some troubles getting people to come to rural areas. In fact, we have a business in PA, and we are having trouble filling a significant position for the same reason. So some of the unemployed are so because they want a job on their terms, not reality.
This is a lot more complex problem than just the sympathetic “robots are taking over” so we’ve got to put people on the dole.
Again, I don’t think you are dealing with the issue. I think you’re falling back on nostrums, on an ideology that is increasingly absurd in the face of reality.
You simply cannot get past a sense of victimization to address the obvious fact that a significant percentage of the population cannot be gainfully employed and is not likely to become gainfully employed at a rate that covers their basic needs.
Set aside your quibbles about repatriated industries (incidentally, how is that happening in the face of all those mean regulations and the ACA?) and answer the question: what if? What is your suggested adaptation if it really is true that significant portions of the population will be unable to find gainful employment?
Actually, I think you are the one not dealing with the issue. You dismiss my points and just declare the end of emploment as we know it to be an incontrovertible fact, as if there have never been similar issues in the past that people adapted to. Look at the job openings listed here:
There is a range. And they are not just temp or burger flipping jobs. And I just told you we are looking for a CFO, but personal considerations cause many to reject the opportunity. Its a six figure position. I’m sorry we don’t buy all of our companies in Tiburon, San Diego or Naples, FL, but there are certain realities to the job market that just don’t square with your end of the world as we know it attitude.
Here’s another reference – took me 30 seconds to find:
This is in the natural gas business. The oil shale business could and should provide hundreds of thousands of jobs. Yet Obama is so wedded by ideology to solar and the like that they aren’t doing what they should be doing: embracing this with all their might.
I just don’t know what to say to you. In a classic defeatist style you have declared the end of the employment world for a segment of the population and decided the only solution is to put them on government assistance. Yet I’m showing you concrete evidence of opportunities; you just don’t want to hear it.
I don’t know where to go from here.
Is that a national aversion or a NIMBY issue, Drew? North Dakota seems to be doing fine.
I’m not sure, Janis.
You can certainly imagine that NY attitudes would differ from the Dakotas. However, most of this activity is in rural areas. We are not talking the upper east side of Manhattan.
In the news just the other day was that the Obama admin was sicking their EPA folks on the shale people. Predictable. Create every regulatory complaint and obstacle to what would be a world changing event: complete non-reliance on the ME for fossil fuels. I said it about a week ago. Notwithstanding all my criticism of him as an incompetant, he could hit the history books as a hero and difference maker if he’d just let the tigers out of the cage on shale. But as I also noted, he’s a small minded man driven by ignorance and bad counsel, philosophy and ideology – don’t hold your breath. Better to dither in constructing beanies for wind powered cars………
I haven’t followed the issue closely. A couple of good friends from high school were the daughters of chemists at ARCO who were working on shale extraction techniques in the sixties and seventies.
They were conscientious men.
We have 9% unemployment. You know that, right? You figure if we just let the energy companies poison enough of Colorado we’ll erase that 9%?
The fact that a job goes begging in one place while 10 people beg for a job somewhere else still means there aren’t enough jobs. And were those jobs in oil shale for displaced bank tellers? Not so much?
It’s fascinating that you won’t even begin to address the hypothetical. Maybe you’re right. But maybe you’re not. A theoretical possibility, right? I mean it is just barely possible that you’re wrong and that I (and a lot of other people) are right, and that we’re going toward a world where, to put it in simplified terms, anyone with an IQ >100 can be replaced by a machine.
What if, Drew? What if your religious faith is wrong?
I think you need to consider Michael’s hypothetical. When we transitioned from an agricultural economy to an industrial economy it was accompanied by a shift in low-skill rural farm labor to low-skill urban factory labor. Today it appears to me that low-skill workers are not shifting to some other productive capacity – instead they are getting replaced and off-shored. It’s possibly that something with pop up or the global marketplace will change, but that is not guaranteed to happen. If you don’t want these people “on the dole” then they will need productive employment.
It’s a mistake to divide folks between plowhorses and racehorses. A lot of us are Tennessee walkers. We can plough and prance both.
By alma mater, I’m a mustang.
A word to the wise for parents and high school seniors:
The best and worst prospects for college graduates by major: http://politicsandfinance.blogspot.com/2011/11/best-and-worst-college-majors-if-at.html.
I think you need to look at that list a little more critically, Michael. Take one of the highest-ranked majors in the list: astronomers and astro-physicists. According to the BLS, a total of about 1,800 astronomers and astro-physicists are employed in the U. S. That strongly suggests to me that the list doesn’t mean what you appear to think it means.
It’s very, very difficult to become an actuary. They’re highly selective and according to the SOA there are only 37 programs nationwide (the BLS says more). My off-hand guess is that most people are weeded out before they take the major.
figures do not lie, but lairs do figure. …. pay for what you get, get what you pay for, both are important… we as a nation do not have a very high value added to our products … invention, and pragmatism were two of this nation’s charactics .. we lack those now in my opinion [humble] … our work ethic is not competitive with other countries .. .. our ideas and tech has been outsoursed to others .. .. if i may, google doug pelmear and his 109.5 mpg car [over 20,000 miles] and ask why it is not marketed ……
I’m disgusted and concerned by the reflexive anti-Americanism of liberal arts graduates, who, on would think, would cherish freedom more than most.
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