Winds of Economic Change Blow Away College Degree: Peter Orszag

Nov. 9 (Bloomberg) -- Many parents in the U.S. arelegitimately concerned about the prospects for their college-agechildren. After all, today’s students face three overlappingchallenges: a long-term structural shift as the world’seffective labor supply expands; rising tuition and growingconcerns about the quality of public higher education; and themisfortune of graduating into a weak labor market.

The first challenge arises from rapid shifting of thetectonic plates that underlie the world labor market. Over thepast 25 years, the effective global labor supply has at leastdoubled and by some estimates has quadrupled. This hassuppressed wage growth in the developed economies and reducedthe share of national income accruing to labor. So far, peoplewithout a college degree have primarily borne the consequences.As a result, globalization has widened the inequality betweenworkers at the 90th percentile of wages and those at the 50thpercentile.