Thursday, June 04, 2009
Teaching and Sorting
Why are the wages of the college-educated declining? A big part of the answer is that the pool of college graduates is rapidly expanding. It’s not surprising that as college becomes more universal, the return on a college education falls.
As the number of job applicants with degrees rises, employers become more sophisticated in assessing the value of any particular degree. The degree itself matters less than the institution that granted it, the subject areas of concentration, and the grade point average earned. A 4.0 math degree from Cal Tech is a very different thing from a 2.8 communications degree from San Francisco State University.
In a way, it encapsulates a basic philosophical quandary for higher ed. Should our focus be on sorting the strong from the weak, or on making everybody strong?
Frum implies, correctly, that at least some of the wage premium attaching to college degrees comes from their relative scarcity. To the extent that seeing a degree program through to completion bespeaks, say, above-average tenacity and/or intelligence, it serves as a signal to prospective employers.
From that perspective, improving pass rates in developmental classes is actually counterproductive. Frum's position assumes that scarcity is the primary market value of a degree, so it follows logically that making degrees more common makes them less valuable. Anybody who pays attention to the rise of the professional adjunct has to concede that there's at least some truth to this.
From an educator's perspective, though, I'm struck that if Frum is right, then the actual content of what we teach doesn't matter much. (He appends the standard harumphing about The Classics, but it's really ancillary to his argument.) The real work of higher ed happens at the Admissions office. By that standard, community colleges aren't higher ed at all, since we don't exclude. Exclusion, rather than education, is the point. We could make students run through rows of tires on the ground if we wanted to; as long as fewer finish than start, we've done our job. As Thorstein Veblen noted a century ago, the 'signalling' achieved by a liberal arts education is that you're elite enough that you don't actually have to learn anything useful. Any schmuck can make a living with a skill; only the elite can afford to major in philosophy. Get in, get through, and get yours; the actual content of what you study is quite beside the point.
In the cc world, by contrast, the animating assumption is that the content of what we teach is both good in itself and likely to lead to economic growth. Even if degrees lose a certain exclusivity, the social and economic benefits of a more educated citizenry and workforce are likely to outweigh any losses from relative ubiquity. In other words, more educated workers are more productive workers over time. If the first two years of college become more common, this position implies, then we should expect to see more economic growth over time, since people will be more capable of doing more productive things. Content matters. Education, rather than exclusion, is the point. There may be some dislocations on the micro level -- what conservatives in other contexts like to call 'creative destruction' -- but there will be prosperity on the macro level. Put enough skilled and educated people together long enough, and sooner or later, you'll get sparks.
And of course, there are enough triumphs of underdogs to keep us going. Just because your parents aren't loaded doesn't mean you're stupid or without potential. Community colleges are the only realistic starting point for many people, some of whom parlay their hard work here into impressive careers. I'm at a loss to explain why that's a bad thing.
Much follows from which side you're on. If you believe that exclusivity is the point, then colleges built on second chances are debasing the currency. They're cheating. If you believe that education is the point, then giving people second (and third...) chances to bring up their games is an obvious public good, worthy of substantial public support.
From the perspective of exclusivity, something like 'outcomes assessment' just looks like misplaced priorities; it takes content entirely too seriously. From the perspective of education, it's absurd that we haven't been doing a better job of it as a matter of course. If teaching is our core function, why the hell wouldn't we try to improve how we do it? The indifference to the content of education, I think, is behind both the research university model and tenure. Both of those are built on an implied hostility to actual teaching, which makes sense if you assume that actual teaching is beside the point. Teach well or badly, whatever -- the kids will sort themselves out, and the cream will rise to the top. Meanwhile, there's prestige/fame/grant money to chase! Teaching is for adjuncts. We speak of research 'opportunities,' but of teaching 'loads' -- the language tells you what you need to know.
I can't deny that the 'exclusivity' perspective has a long history, a certain internal coherence, and a kind of intuitive appeal for those of us who navigated the system well. It explains market saturation in certain fields, and gives a handy excuse for cutting taxes on the wealthy. But it's wrong, and it's wrong all the way down. At a really fundamental level, either you believe that content matters, or you don't. Either you believe that everybody deserves a real shot, or you don't. Either you believe that education is a common good, or you believe that it's a private good. The rest follows.
Interestingly, the students I see at very exclusive liberal arts colleges believe in their education. Most of them aren't so cynical to recognize their own privilege (and not all of them come in with that privilege). I have told students that having the name of the school on their resume will take them further in many cases that their GPA, which won't matter at all after building up experience.
I guess, though, that quite a few people won't be willing to pay for the expensive college degree if your pay doesn't go up accordingly. But I suspect there are still some who go for the "experience" rather than the education.
Depends on what part of the business your college is in. A lot of the problems higher ed is having right now are caused by a lack of clarity on the issue. The major distinction, IMO, is between the sheepskin and the knowledge.
Frum is absolutely right that back in the day, having a bachelor's or better was a distinction, and worth a substantial salary premium. As all of us overeducated types know, this is no longer the case. Unless your degree is from a prominent school, all it does is insulate you from suspicion that you're some sort of major screw-up.
DD, you are mostly in the business of imparting and certifying knowledge, and you charge a very reasonable price for that. Frum's argument basically isn't relevant for you. The schools that are in trouble are the ones that offer a nothing-special education with a heapin' helping of social signaling for a much higher price. Since the social signal is devalued, the ROI of an education there is now too low.
The only problem with "making everybody strong" is that employers will be able to get better employees for about the same price. A better-educated workforce means productivity gains for the company, but the degree to which an individual employee is able to market himself will depend on how easily replaced he is. If a local cc is cranking out large numbers of qualified people in a particular field, the average local wage in that field for a given skill level will drop. That's just simple economics. Weirdly, you might help your graduates most by not producing too many of them at once.
These are not mutually exclusive positions. I most certainly believe that my college degrees is worth far less to me now than it would have been if I earned it 50 years ago. The supply of college educated people is so high that just having the degree does not mean much more than just having a high school degree meant 50 years ago.
In many undergraduate fields, separating the strong from the weak for acceptance into professional schools (vet, med, dental, pharmacy, etc) is the purpose. In other fields, providing training and knowledge is the goal.
Frum's argument amounts to "The demand for college-educated workers has not changed, but the supply of college-educated workers has increased. Therefore, the wage premium for college-educated workers must fall."
But that's not what he says. He commits the logical fallacy of "affirming the consequent:"
"The wage premium for college educated workers has decliend. Therefore, the demand for college educated workers must have remained constant, while the supply of college-educated workers must have increased."
The correct argument starts with what has happened to demand and to supply and reaches a conclusion about the wage premium. But that's not what Frum has done.
In fact, the evidence is that the demand for college educated workers continues to increase. But the evidence about increasing supply is, if anything, mixed. Goldin & Katz (in The Race Between Education and Technology) argue that our real problem in the US is that the supply of college educated workers has, if anything, failed to keep pace with growing demand (seen very clearly in Figures 1.4 and 1.5, pp. 20, 21).
So Frum's argument fails the test of logic and, when correctly stated, isn't clearly supported by the facts. So what are we left with? I think saying he's "wrong, wrong, wrong" sounds about right.
Yes, I don't think the problem is at the bottom (CCs) or the top (elite R1s) but in the vast, vast middle of four-years that serve as a four-year bar tab for the underachieving children of the upper middle class and an expensive bait-and-switch for those who must take out loans to afford it ... only to discover the wage premium isn't real great from Nowhere State or Poor Liberal Arts College and they've now got six figures of loans to cope with while looking at job fields that pay less than $40,000/year, jobs that 20 years ago would have been doable with a high school education.
Competence has value.
Therefore, the proxy is assumed to have value as well.
The utility of the proxy measure "Education" for "Competence" has changed. While this is not true in every case At the high end), in general the argument could be made that the actual amount of "Competence" that corresponds to a certain level/type of "Education" ahs been watered down substantively.
1. You don't have to "know" as much to get a degree nowadays
2. More people get degrees
1 + 2 =
3. The underlying value of the degree has been decreased.
("Used to be, you actually had to learn something potentially worthwhile or valuable in order to get a degree. That is only true now for a few (not all) 'Professional' type degrees that come with independent cretification by a professional organization or board. The major exceptions to this of course are the self-referential degrees like the Ed.D." Agree? Disagree?)
Of the 20 occupations with the greatest number of job openings from 2006-2016, only 5 require college degrees. The rest require short-term on-the-job training or relevant work experience. Incessant political spin about the need for college education notwithstanding, the brutal reality is that our economy requires massive numbers of low paid workers with minimal formal education.
Note that all these jobs are needed to make our society function; if more people get college degrees, these jobs won't go away--they'll just be filled by people with college degrees.
Now, I agree completely that community colleges need to respond to workforce needs (e.g., let's educate more nurses). However, Obama's notion that "everyone should have a year of college" does not take into account the socioeconomic reality of our society. If everyone had a year of college, that wouldn't change the job demand in the next decade; it would just increase the formal education of people in socially essential but low-paying jobs.
My BA in something useless from the type of school Veblen is talking about (heck, its from the same place Veblen got his degree) is less than 15 years old. I don't think the pool of college educated adults has changed dramatically since then. However, it was a $100,000 degree when I graduated and is about a $180,000 degree now. Salaries for any jobs haven't gone up nearly that fast.
Lots of factors hold down wages. Very little seems to hold down the cost of college. People will barrow what they need to in order to pay for it and I think we are hitting the point where it's become so unstainable that it is not worth it.
It was a first rate education that paid off very well for me, including after working awhile a full ride to a professional masters program at an R1 university. However, the cost has gone up so much it is hard to seem "worth it."
When it came time to choose a graduate school, I had a choice of a full scholarship with an assistship at a public R1 institution and partial to no support at three private R1 universities.
Given that government was my high paying career option, I didn't want the kind of debt that the private schools would mean. I work with people who have degrees from the other 3 schools and there is nothing about their education that would have been worth the debt.
I'm not so sure it is about the pool or signaling or anything really other than the cost of many types of education have hit the unsustainable point.
There is, after all, another possibility: the pay for middle class jobs has fallen as those jobs are outsourced and as executive pay has increased.
There are data on the relative value of various levels of education. Although not in the right units for this discussion, this graphic from the New York Times circa 2005 is a start.
There is a dramatic increase in average attainment in the time interval. Much can be accounted for by the increasing rarity of education that stops after elementary school, but the percentage of the population that is college-educated also rises steadily. The percentage of Americans with at least some college rose from 10% in 1940 to about 26% in 1975. (I chose this date because it is just after the end of the Vietnam War, which incentivized college education.) The figures continued to rise steadily: in 1990 it was 39%, in 2000 it was 51%, and the 2008 figure is 55%!
In addition, the ratio of people with less than 4 years of college to the number of people with at least a bachelor's falls steadily throughout the interval. There is now a higher percentage of people with a bachelor's or better than at any time in the nation's history: the 2008 figure is 29%.
I don't have time to graph the data by cohort, but the table includes breakdowns by age and gender. Might be interesting.
Clearly, most of the delta in educational attainment is driven by younger cohorts at any given time, so I infer that today's 25-year-olds are competing against a ferociously well-educated talent pool if G is rising this fast. No wonder they all think they need a degree to succeed. The US economy is also not producing new well-paying jobs at a rate that matches the increase in educational attainment, hence the devaluation of the bachelor's except in certain select fields.
It's not supply and demand if the costs of failing to come to agreement are vastly different for the two sides; then it's a variant on monopsony.
I looked at the data for "4-year or more" in Table A-2, and it doesn't show a recent "rapid increase" for the working age population.
The data for the 25-29 cohort shows a rapid increase post war that continued and flattened circa the peak in the baby boom (and a recession almost as bad as this one) in 1975. There is an large, almost step, increase circa 1995 from 23% to 28%, then pretty steady since then.
Looking at a graph for this subgroup, it is evident that the increase was much more rapid, and more sustained, from 1962 to 1976 than anything in recent times.
The population as a whole shows a steady increase from 1950 to present with no abrupt changes, let alone a recent "rapid" increase in the college educated population.
I agree that there have been no recent sudden changes in the trends exhibited by the data; we've been on the same basic path for 25 years now. I wonder if the actual issue is a sort of "tipping point" involving the total number of college-educated people in the society.
"When you account for the amount of financial aid provided, the cost of a college degree in the US has remained essentially flat."
At the time the comment didn't make an impact on me- but now I have to wonder:
Is a $20,000 degree ($15k paid by individual plus $5k in financial aid) in the early 1980s the same as a $50,000 degree ($15k paid by individual, plus $35k in financial aid) today?
And does this kind of move to a "third party payer system" really drive up price on a 1-1 basis?
Hmmmmmm . . . .
(p.s. the underlying "value" of the education may still be $15,000 in which case what are we really doing as a matter of national public policy?)
What the data show is that the median earnings of people with bachelor's degrees rose from approx. $42K in 1995 to $47K in 2000, and then fell from $47K in 2000 back to $43K in 2005. (And in 2007 were back up to about $45K).
Meanwhile, other categories stayed basically flat during this period, but were significantly lower: associate degree holders stayed steady around $35K; HS grads at around $30K, and non-HS grads floated around $22-24K.
None of this suggest to me that the higher-ed bubble is bursting; the most likely explanation to me is that people with BA's saw a steep increase in their salary during the dot com boom, and lost that bonus afterwards.
All of the other theories - fluff courses, exclusivity, different schools, etc. - don't really have much explanatory power, since things really haven't changed much in higher ed since 1995 in terms of curriculum. I.e., there were just as many fluff courses then as there are now.
And while it is true that tuition inflation has continued unabated, it was in full swing in 1995 as well. To be sure, for most people it doesn't make sense to take out $80K in undergrad loans for a BA in English. But then it didn't make sense to take out $60K in loans for a BA in English in 1995, either.
While both the cost of the education and the value of the education have remained constant (the argument goes), the price has been grossly inflated by subsidy.
Now, faculty salaries have benefitted from these perverse incentives . . . to the detriment of the very people the programs are intended to help (students)!
Anyhow, I'm not even sure this proposition is accurate (or precise) but economically it makes sense.
The most striking thing about the data is what the gender breakdown shows. The only recent "rapid" increase has been in female grads, so Frum could unknowingly be making a point about gender bias in starting pay rather than one about college in general.
By the way, men are not so much missing as outnumbered. The fraction of young men with a college degree is still below the 1976 peak, whereas the fraction of women with a degree is now well above that peak for men.
1) It keeps getting more useful, so more folks keep trying to get some, increasing demand, and
2) It relies on an increasingly scarce commodity: skilled educator labor. It's just extremely hard to post productivity gains in education, due to the personal interactive nature.
In that sense then, I think that Frum is missing the point -- as you indicate, Dean Dad -- that education is either a public good or it is not.
The problem comes when we mix the definition up public good in with personal income -- they payback for the investment. Now we are moving far off the plot of a 'public good' argument and into an 'education as means to increased wealth' argument. And there Frum is kind of on the right (if reprehensible track). When we *sell* education on the promise that it pays back in higher income, we had better be sure that it does, and we have used past correlations between *wealth* and education levels to argue that the future would produce the same results. What we forgot in that equation was that historically higher educational attainment was a consequence of wealth, not a cause. That it could sustain that wealth was a consequence of the tight little network of wealthy people engaging in creative nepotism.
Broaden the population, dilute the network. Dilute the network, and the income dwindles too. even here in Canada where we claim not to have class stratification, we see that the more students who complete an undergrad degree, the less wealth corresponds with it, and the opportunity costs for the degree, combined with lack of access to the network of plum jobs mean that 4-5 years post-grad, people in 'professions' are still living at home because they can't afford to be on their own.
The question is whether the other goods that come from an education that cannot guarantee increased earnings (because it never did do that; rather, it consolidated *wealth*) still make it reasonable to consider it a valid public good. If we can demonstrate that higher levels of health and autonomy still follow from (rather than predict) higher educational attainment, then great. Public good secured!
On the other hand, if what we find is that we are robbing people of years of income, charging them terrible interest on an education that can't pay back, and that they end up in the same low-prestige jobs with associated poor health outcomes, etc., then "education is the route to higher wages and more autonomy" will have turned out to be the great swindle of the century.
All that said, I think Frum is an elitist self-impressed twit with poor argumentation skills, and that his momma, the late CBC anchor Barbara Frum, must roll in her grave every time he deigns to tell the rest of us what's what.