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Higher Education

College Is a Waste—but Not Going Is Worse

Every day brings another news story about unemployed and underemployed college grads. About 48 percent of employed U.S. college graduates “are in jobs that the Bureau of Labor Statistics suggests requires less than a four-year college education,” according to a report in January by the Center for College Affordability & Productivity. In 1970 fewer than 1 percent of taxi drivers had college degrees; now more than 15 percent do, the center says. Factoids like that inspired this fake headline today in the Onion satirical newspaper: “College Graduate First Person in Family to Waste $160,000.”

But going to college may be a bit like what people say about getting old: Not so good, but it beats the alternative. That’s what you should take away from the widely publicized report Tuesday called The Rising Cost of Not Going to College from the Pew Research Center.

The Pew report found that college grads have a bigger lead on non-grads than in previous generations: “On virtually every measure of economic well-being and career attainment—from personal earnings to job satisfaction to the share employed full time—young college graduates are outperforming their peers with less education.” Among college grads aged 25 to 32, 72 percent say college has already paid off and 17 percent say it will pay off in the future.

The Pew report comports with Bureau of Labor Statistics data: In January the unemployment rate for people with a bachelor’s degree or more was just 3.2 percent (PDF), vs. 6 percent for people with some college, 6.5 percent for people with just a high school degree, and 9.6 percent for people with less than a high school degree, according to the BLS. College grads earn more, too (PDF): Full-time workers aged 25 and over with at least a bachelor’s degree had median weekly earnings of $1,219 in the last quarter of 2013, almost twice the $648 median earnings of high school graduates with no college.

One way to interpret the college edge is that young people learn stuff in college that increases their value to employers, thus enhancing earning power and satisfaction. But even if people learned nothing useful in college, employers might prefer college grads. Why? Because they don’t have the time or energy to evaluate each applicant on his or her merits. It’s convenient to use grad/no-grad as a sorting mechanism.

A cynic might say that the right play is to go to college even if you have no interest in getting a college education. That’s probably true for some young people, but not all. Someone who really isn’t cut out for college isn’t going to get the same leg up from it. Strong people own barbells, but buying barbells won’t make you strong.

Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.

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