Felix Salmon has a reponse to my story in this week’s Newsweek which contains a lot of meaty pushback. A lengthy excerpt:
And even if you do work your way up the career ladder, that college degree is going to help you, years after you get it, in ways you probably don’t even realize — unless you don’t have one. I can think of two people, in particular, who work alongside college graduates in large organizations with deeply-established HR departments. Both of them are incredibly competent, and would naturally have risen much higher up within their organizations, were it not for the fact that they don’t have degrees. They’ve both been working for many years, to the point at which you’d think that whatever they did or didn’t learn at college would be irrelevant. But it’s not. Degrees don’t just get you in to certain jobs, they shatter a glass ceiling which is very much still in existence for those who don’t have them.
McArdle’s also wrong that credentialism is a zero-sum game. For one thing, we’re part of a global economy, where many employers will hire only college grads — and if they can’t find those college grads in the US, they’ll find them in Ireland or Israel or India instead. If you want lots of Americans to have lots of good jobs, it’s a simple fact that you want those Americans to have degrees: we can’t roll back the clock to a time when employers were happy giving career-track jobs to people without them.
The fact is that while this economy is undoubtedly tough for recent graduates, especially those with liberal-arts degrees, it’s much, much tougher for people who don’t have any degree at all. And as the economy recovers, the graduates will get better jobs, more quickly, than their non-college-educated peers. It’s a simple statistical fact.
The average amount of student debt per student in this country is large in absolute terms — about $30,000 — but is still a small price to pay for a lifetime of access to jobs and promotions which would otherwise be off-limits. It’s easy to rack up much larger debts than that, but most students don’t: they turn out to be rather more sensible, when it comes to debt, than many of the worriers give them credit for.
McArdle also seems unnecessarily worried about the public fisc
I definitely agree that college has become a necessary degree to advance in a lot of fields. And you can argue, as my former colleague Jordan Weissman does, that this represents a genuine advance: that the fact that 50% of insurance salesmen now have a college degree represents a genuine improvement in the quality of insurance salesmen.
But this is somewhat recursive: the fact that college diplomas are required for more and more of the high paying jobs will definitionally increase the returns to education, but if all we’re doing is using the credential as a signal, then this is not, from a social standpoint, a good thing. It would be far cheaper just to agree not to lean so hard on the signal.
Does going to college make you a better insurance salesmen? It certainly gives you more access to wealthier people (my understanding of the insurance sales market is that most people get into it, burn through their roster of friends and family, then have trouble making a living and exit within five years) But again, this is recursive: if having a degree is a hurdle you must leap to require wealth, then getting a degree will give you more proximity to wealthy people. But this does not add value to insurance sales; it just redistributes it.
Insurance sales is in the broad category of lower-level finance jobs which, as far as I know, have actually de-skilled over the last few decades; the advent of computers has automated a lot of the stuff that used to be done manually, requiring fairly good math skills. Also, these days more and more people buy their insurance online.
Unless most of the value of a diploma is human capital, making a college degree a positive requirement for advancement is both wasteful (even if college teaches you a great deal, it is not so fantastically useful that we should ignore the evidence of job performance) and reinforces class barriers that are already looking pretty rigid. The people who have the hardest time getting to college, and succeeding there, are students from homes where no one has a college diploma, which also--hello wage premium!--tend to be homes where finances are pretty tight.
The barriers to those kids entering and completing college are legion. There’s poor K-12 education, which leaves them ill prepared. There’s a simple lack of knowledge about how college works, which middle class kids take for granted. How do you get there? How do you finish? Arizona State University, for example, started requiring people to choose majors very early, because otherwise a lot of the kids they serve were kind of lost--they’d take a bunch of classes, none of which added up to a major, and then get to the end of three or four years without enough credits in anything to graduate. Or they'd keep switching, stretching out their time at school, and the loans to pay for it, to unreasonable lengths. Or they’d feel overwhelmed by the choices and drop out.
They also don’t have families who tell them which degrees pay--they frequently have a touching faith in the power of any degree, which is why they are often vulnerable to the more predatory for-profit institutions. And of course, they have no family support for living expenses, and indeed, may be required to work to help out their parents.
Of course, this is not an argument for telling those kids not to go to college: it’s often an argument for better K-12 education, universities that spend more time figuring out how to get the vulnerable kids in and through school, rather than how to exclude them in order to inflate their stats, better counseling. But I do not, for example, think that we are going to fix low-income schools overnight. And it seems to me outrageous to look at a good worker who didn’t make it to college for one reason or another, like needy parents or a crap high school, pass them over in favor of some newly minted BA--and then defend the value of a BA on the grounds that look, people who have BA’s make more money!
I don’t mean to suggest that this is what Felix is doing, but it does feel like that’s what we’re doing as a society. I do not want to gut college and return to a world where 5% of the population graduates. But I do want to question the insistence that college is the only route to success--an inistence that comes ever-louder from parents, employers, and policymakers. The kids I see who don’t want to go to college, or aren’t cut out for it, face a future considerably more closed off than it was 50 years ago. I understand that much of this is technological change, but as stories like the one told by Felix illustrate, it’s hard to believe that’s the whole explanation. Those glass ceilings didn’t used to be there, and they didn’t just grow. We put them there.
This is one reason that I disagree when Felix says that I am "unnecessarily worried about the public fisc". Having the goverment waste money on a zero sum game, instead of students, is still a waste. And in an era of tightening budgets, one that we should think hard about--do we want to subsidize an ever-expanding number of diplomas, or would we rather focus on offering intensive pre-K to high-risk students? These are choices that are going to have to be made, because unless there is some sudden, surprising drop in the cost of entitlements, the money is not going to be there for everything we might want to do.
And I strenuously disagree that credentialism can be anything more than zero sum. As long as the credential is a rationing tool for high paying jobs, rather than a proof of useful additional skills that the college education has imparted, it has to be zero sum: we are allocating existing enjoyable/high salary positions, not creating more of them by upskilling our workforce.
It may be even more necessary, given competition from foreign as well as domestic credentials, but it is still zero sum: no one can gain without someone else losing, whether that person is a foreigner or a fellow American. It often is entirely rational for people to enter into this zero-sum competition; even if it’s rigged, it’s the only game in town. But it’s not rational for everyone--as I say, the marginal return can differ substantially from the average return--and the more loan debt people take on to finish, the riskier that marginal return starts to look.
I speak from experience: I graduated from Chicago with (very) high five-figure debt. I then spent the next two years dramatically underemployed and living in my parents’ spare bedroom. When I finally got a job, it paid $40,000 a year. In New York City.
Now, salary is not the only metric to look at: my MBA helped me get a career as a business journalist, which I love. But salary was also a pretty big deal. Mine was well, well, well under the average for my class--and because I had average-sized loans, that was a big problem. I spent years on an excruciatingly tight budget, using every freelance check I got to pay down a little more principle. My finances were always in peril. I lost sleep, and years of saving that I would have liked to have done--and of course, years of living on something other than ramen.
Those are things to think hard about before you take on massive debt to fund an investment in education--even one as supposedly surefire as an MBA from a Top 5 school. I’m glad things ended up they did, but if things had gone in an even slightly worse direction, I probably wouldn’t be.
Now, of course, I don't think that education is only a credential. But the fact that so much of it seems to amount to a credential, and that employers seem increasingly prone to mindless reliance on that credential, is room for concern. Especially to the extent that this helps drive a lot of additional spending on said credential.
Felix is right that universities should control costs. But it seems fruitless to tut-tut at them about it, since they have been hearing these complaints for decades. As far as I can tell, the only thing that actually induced much change was the dramatic decline in state reimbursements that followed the financial crisis. And though I know of no data on the subject, anecdotally the cuts seem to have been fairly small, and also, not necessarily to have fallen heaviest on extracurricular incidentals rather than core educational stuff.
Administrators say that they are hostage to students, who choose schools based on amenities. And to regulation and liability issues, which require them to have ever-increasing staffs in charge of various efforts--from sexual harassment training to sidewalk repair--which stave off lawsuits. They also complain about alumni who like to donate buildings which must be expensively maintained, and not lawn-care services or endowed positions in air-conditioning repair. And professors, who need to be wooed with ever-lower teaching loads, forcing the university to hire more adjuncts--who do cost money, even if they are living on desperately low wages.
Are these complaints true? It is very hard to tell. As with hospital administrators, university administrators are marvelous at coming up with explanations for why cost inflation is the fault of everyone except the administrators themselves.
More to the point, I have no idea how to get them to control costs, except for the consumers--students and state governments--to start caring about costs. If you will hand university administrators any amount of money in exchange for a diploma, then they will probably find a way to spend any amount of money. And so we seem to be caught in what Bryan Caplan terms “a stably wasteful equilibrium”.
But of course, that is not an easy, simple answer either. It’s hard to be cost conscious when your future--or that of your child--is at stake.
The easiest answer I have is one that Felix will probably like: make student loans bankruptable. But the mechanism by which this would actually work--helping the currently indebted while making it harder to get loans for many schools, and majors--is one that he probably wouldn’t. It might well be horribly regressive, and for that matter, problematic in other ways that no one’s yet thought of. Even the answers that are easy and simple are not necessarily happy.
If this all seems a bit fuzzy, it's because this is what I'm struggling with. I want every kid who could benefit from college to go. But I want to see real benefits, not just rearranging the seats in a giant game of musical chairs. I appreciate the role that college has played in helping poorer kids into the middle class. But I also increasingly see its role in keeping kids out of the middle class--and burdening a lot of the kids who don't make it with massive debt.