Hitting The Books Still Pays Off
By Anthony P. Carnevale
An assault on the value of a college education is coming from an unlikely corner: prominent liberal economists. Where their ideological predecessors fought to open higher education's doors to the disadvantaged, influential voices on the Left have lately been declaring that the earning power of a college degree -- long America's surest elevator of class -- is overblown.
Sadly, this misguided message is being trumpeted by some pretty impressive thinkers. Jared Bernstein of the Economic Policy Institute moans that the wage premium for skills has fallen during the current business cycle. Princeton University's Paul Krugman goes further, saying college-educated workers are not sharing in the nation's recent prosperity, and "improving our educational system is not the way to mitigate inequality." And offshoring will so shrink the job market for the college-educated in the U.S., former Federal Reserve Vice-Chairman Alan Blinder warned recently, that many students would do better to pursue a trade or face-to-face personal service.
But this recent liberal cooling of opinion toward college seems to have more to do with politics than economics. By asserting that a college degree may no longer guarantee a good job, these policy wonks (many still fuming since Republicans took the Congress and President Bill Clinton lurched to the right in hot pursuit of a second term) can argue that only an expansion of the welfare state and national industrial policies can save us from global economic forces.
YET CASTING ASPERSIONS ON THE VALUE of college in order to resurrect shopworn ideas is not only factually inaccurate but also politically reckless. Americans across the political spectrum welcome the nation's increasing reliance on education as the arbiter of economic opportunity because, in theory, education allows us to expand merit-based opportunity without surrendering individual responsibility. After all, we each have to do our own homework to make the grades that get us into college, and thus in line for the "good" jobs. Education has become America's Third Way between runaway markets on the Right and welfare state dependency on the Left. So those who want to move this centrist education consensus more toward big government will eventually find themselves in a losing quarrel with the American people.
Politics aside, this is one argument these usually reliable experts deserve to lose based on facts. The wage advantage of a college degree over a high school diploma increased by 83% from 1979 to 2003, or about $1 million over a working career. And advantages for college grads have grown over the period despite an 11% increase, equal to about 33 million new job seekers, in the supply of college-educated workers. Krugman worries that the college wage premium increased by only 1% per annum since 1975. Only? Where I come from an increase of 1% per annum compounded over 30 years is real money.
A recent pause in the growth of earnings advantages for college grads seems to have fueled much of the current debate over higher education's value. Average wages of college grads did fall 3%, or about $1,600, from 2001 to 2004. But such lulls are common in wage growth: Wages for the college-educated declined in the "jobless" economic recovery of the mid-1990s, only to be followed by an explosion in both job growth and wage advances later in the decade. Moreover, the decline scenario may be a timing fluke: Use 2000 rather than 2001 as the base year, and average wages of college grads actually increased by about $2,000, or 4%, by 2004.
Still, higher wages aren't the only payoff. Nearly 95% of full-time workers aged 25 to 54 with at least a bachelor's degree have health-care coverage, while about 90% have retirement plans. Such coverage drops to 81% and 80%, respectively, for similarly aged workers with only high school diplomas.
Rather than discounting education, the evidence supports the opposite: With the demise of blue-collar jobs that let workers with modest skills earn middle-class wages, college is no longer just a preferred avenue to professional careers, it is increasingly the only road to economic success. That's why I bet none of those knocking higher ed's value are telling their own kids to skip college. Until they do, their pronouncements are just bad advice for other people's children.
Views expressed in Outside Shot are solely those of contributors.
Anthony P. Carnevale, a senior fellow at Education Sector, is a former economist for the Senate Democratic Policy Committee