A four-year college degree, seen for generations as a ticket to a better life, is no longer enough to guarantee a steadily rising paycheck. For decades, the typical college graduate’s wage rose well above inflation. But no longer. In the economic expansion that began in 2001 and now appears to be ending, the inflation-adjusted wages of the majority of U.S. workers didn’t grow, even among those who went to college. The government’s statistical snapshots show the typical weekly salary of a worker with a bachelor’s degree, adjusted for inflation, didn’t rise last year from 2006 and was 1.7% below the 2001 level. College-educated workers are more plentiful, more commoditized and more subject to the downsizings that used to be the purview of blue-collar workers only.”
—The Wall Street Journal, July 17, 2008
I was listening to a this American Life program with a segment titled “Hey Mister DJ.” In it NPR financial reporter, Adam Davidson, attempts to convince his cousin, DJ, to go back to college.
The spoiler is the Georgetown economist that he enlists to convince DJ ends up taking DJ’s side of being a dropout.
I don’t object to the advice per se. But I do have three issues to pick with this idiot economist.
- The economist claims that because DJ’s job is non-tradeable it is more secure than a job after a college educator? Where is the economic data for that? The answer is, there is none.
- The economist says that the reason people want you to stay in college is “because [college educated people] have snotty biases” Where is the proof of that? The answer is, there is none because it’s a statement of belief. Dj admits that the members of the family who have been college educated are “very successful.” I guess very successful == snotty. I’d like to see that economic study.
I shouldn’t be surprised of such a fact-free advice from a a free-trade nut.
Why does that get me angry? Because here are the facts.
- A college graduate earns, on average $25,000/year more than a high school diploma. Adjusted for inflation and the cost of that education, that’s $300,000 ROI—pretty much the best deal around.
- You need a college education to get a higher degree which opens even larger pay and higher lifetime economics ROI. A college education doesn’t preclude you from any of the jobs that DJ has had.
- Here is a typical statistic against a college education, it comes from the Wall Street Journal and I quoted it at the top of this article. Read it very closely, what it is saying is that the wage gap between college and high-school is no longer increasing and that you have to get an even higher degree if you want guaranteed employment. The clever use of words omits the fact that from 2001-2006, all wages have been depressed—hence the economics term “jobless recovery.” It never disputes the basic premise that college-educated workers make more money, have more job security, and have more stable and healthier households. And how will you get that higher degree anyways without a college degree?
Let’s apply my overpriced, college-educated brain to this economics professors arguments, shall we? (All of which gives me my third issue with her if you’re counting at home):
- Her example of a “textile factory [worker] in Massachusetts, and the textile factory closed, then you’re kinda out of luck without a college degree” is bogus—a person of DJ’s age doesn’t have a job like that. Even in her own book, she notes that those jobs no longer exist, and haven’t in the United States for a long time. She needs to read her own research about where the jobs for a 25 year old are because I guarantee that textile factory or that auto plant aren’t hiring DJs.
- “[DJ] is putting up telecom equipment,” This is a creative way of referring to pole-digging on your resume. I know one person who actually does build out wireless telecom networks and he’s a Caltech graduate. One wireless communication testing company I interviewed at after the last downturn only hires college grads.
- “…he works on construction sites.” I seem to remember reading that this bright spot in the economy is quickly evaporating with the end of the housing bubble. While I’ll be the first to admit that I can’t do DJ’s job because I wasn’t a football jock in college and this is hard work, I’m sure there are a lot of people who aren’t college educated who can and want to—far more than the economy can support.
- “…these [jobs that DJ has had] are all careers or jobs that the technical term is ‘non-tradeable’…that job…isn’t moving China.” I believe the “technical term” for this statement is bullshit. Basically her point that the jobs DJ has had are “non-tradeable” applies just as much to the guy who served me the “Angry Whopper” I’m eating right now. “Non-tradeability” does not necessarily mean job security, as the professor implies—the fact that DJ has had so many different jobs seems to imply quite the opposite.
- Where do you think the mythical “textile factory worker (DJ’s age)” who loses his job is going to go? In other words, as time goes on the competition for these “(technical term is) non-tradeable” jobs is going to increase. If he’s kept himself relatively in-shape, the factory worker will have no trouble competing for DJ’s current job as a ditch digger. Whereas, that same factory worker would need to retrain to compete for a job requiring a college education: say a job as a PHP developer. (Ironically, you don’t need a college education to be a PHP developer, but you pretty much need one to get a job as a PHP developer—at least from what I see when I look up a typical req.).
- “and, in fact, the strippers inside, their job isn’t moving to China either.” Still, the job security of a stripper job isn’t that good. Let’s hope they’re using the money they get to pay for college!
- “There’s a lot of jobs [in DJ’s family history] that aren’t moving too.” What a non-sequitor! The only time I inherit the jobs and skills of my parents is in Virtual Villagers 2.
- By the way, do you know trait of your parents is statistically proven to be the strong determiner of income and job security of a child? (Answer: a college education.)
- “Do you know how many? I mean…I have thousands of lawyers [within miles of my house] and I don’t think I’d trust a single one of them with the wiring of my house to.” That’s why you hire an skilled electrician for that. If DJ is building those skills…great! but he isn’t.
- By the way, great logic! “Do you know how many times I’ve eaten at Burger King…and I don’t think I’d trust a single one of them with an operation on my body to.” WTF???
- “Somebody at that construction site that DJ is working is going to work their way up to supervisor…and foreman… and so forth.” No doubt. Somebody at my Burger King is going to work their way up to shift supervisor, assistant manager, and manager and so forth. Still, you don’t need to read Fast Food Nation to know the odds of that. That’s the whole point in using statistics instead of anecdotal evidence.
- And don’t think that the fact that DJ is a “social butterfly” will save him. There are a lot of non-exportable, high-school-educated, socially-savvy jobs that are disappearing rapidly. Don’t believe me? Talk to your real estate agent or the broker who just sold you that adjustable rate mortgage. Can’t find them because they no longer work there?
- “My brother quit high school…and he has a very nice life. He lives on a boat in Florida.” Anecdotal evidence. Exception that proves the rule. Besides, her brother entered the workforce in the 70’s. Did she forget to mention that?
No matter if you have a college education, or not, the salient point on a personal level is you should be parlaying your skills through diligent practice to build a position of security because of an accumulation of skills. If DJ is doing that—and you certainly can’t tell this from the program despite the professor’s claims—great! But if not, I’d say a college education, or more, is a good hedge.
I’m not saying that you automatically earn more if you finish college. Exceptions exist. There are a number of mortgage brokers who lived like ballers until recently—they earned many times more than me.
But just like those mortgage brokers, you might be the exception that proves the rule.
“…there’s one thing I’ve learned with absolute certainty, which is that the competitive advantage of the United States, and our citizens—the way we will succeed in this global economy going forward—is through skills, education, knowledge.”
(Nobody is saying a college education is the only way to get those three things…but it sure seems like an obvious and cost-efficient way.)