How Essential Is College to America's Economic Future?
A few weeks back, the Manhattan Institute hosted a debate on the question, “Are Too Many People Going to College?” Arguing in the affirmative was CCAP's good friend George Leef, of the Pope Center. Taking the opposite side was author Peter Sacks. Since then, both have engaged in further discussion on MindingtheCampus (see here and here).
In his presentation, Leef argued quite strongly that “the United States has greatly oversold higher education.” To support his case, Leef maintained that policies designed to get increasingly more Americans into and through college are misguided because they proceed from exaggerations of the benefits of college and understatements of the costs of college expansion. In terms of the benefits, Leef rejected the oft-cited rationale that the college earnings premium means more people would benefit from college, reasoning that there is no reason to suppose that that earnings premium will even continue into the future (especially once one takes underemployment of college graduates into account). Leef also argued, despite common views to the contrary, it simply is not the case that high levels of college attainment are the key to economic success. During his presentation, Leef drew a number of parallels between the recent housing boom and bust and what he argued was a looming college bubble. But he did note one major difference:
The analogy to the housing bubble isn't perfect, however. At least the houses that were built were generally of good construction.
In our higher education bubble, many of the educations purchased by students are the equivalent of houses without roofs. Many Americans today graduate with a college education in name only, having gained little or nothing in useful skills and knowledge.
As far as the costs of pushing more people through college are concerned, Leef cited both the social costs of credential inflation but also the academic costs associated with declining education standards over recent decades. The decline in educational quality led Leef to conclude, quite simply, that “a large percentage of college students learn essentially nothing.”
Presenting the alternative viewpoint was Peter Sacks who, while conceding that college is not for everyone, argued that rather than facing a glut in the number of college graduates, the U.S. labor market is actually suffering from a shortage of college grads and that the real problem for the nation is one of under-education. Similarly, he contended that large-scale investment in higher education is necessary for economic growth, even more important than capital and technological investments. Finally, Sacks objected that reducing the number of people going to college would allow a social elite to self-perpetuate, through the higher education system, and lock out less affluent Americans from ever realizing the American Dream. Sacks rested his case by concluding, quite dramatically,
As we speak, the American Dream is already on life suppor
t. Adopt the notion that too many people are going to college, and we kill off the Dream for good.
All in all, from my perspective, Leef won this debate quite handily. In fact, the whole debate could have been suspended mid-way through the Q-and-A segment once Sacks admitted that he himself learned nothing in college, an admission that would apparently confirm precisely the point Leef made about the sorry state of educational quality today (to be sure, Sacks did aver that he learned how to learn in college but exactly what that means and how that would truly benefit students who learn nothing else, he did not more fully explain).
I think Leef had a much better command of the evidence and was able present a cogent argument more effectively (at times, at least to me, it seemed that Sacks flitted from point to point, often neglecting to tie it all together). For instance, Sacks worries about the “costs” of not putting more people through college, cost being defined as “billions of dollars in potential economic returns to individuals and society that instead evaporate into thin air.” But the problem is that those costs were never really never more than wishful thinking to begin with: the billions of dollars figure is based upon the assumption that the marginal college student tomorrow will earn the average college earnings premium today, clearly an untenable assumption once we consider that that marginal student is far less likely to possess the positive characteristics (work ethic, academic ability, etc.) that the average college graduate possesses today. In fact, the true value of those “costs” Sacks cites could actually be zero; that is, that the economic returns marginal students receive without going to college at all may be equal to their potential returns if they did obtain a college credential.
Similarly, Leef also presented a better case than Sacks in the context of whether more college graduates are needed for the labor market tomorrow. In this respect, Leef sounded a lot like the job recruiters Jeff Selingo spoke with recently:
all of the recruiters told me they were surprised by the number of applicants they encounter who clearly were not ready to go to college in the first place, yet possess a degree.
“The focus on access and completion has come at a real cost,” one recruiter told me (he didn't want his company identified because he's not allowed to speak on its behalf). “We're encouraging students to go to college who should be considering other options, and then we're pushing them through once there.”
Part of Sacks' problem is that, unlike Leef, he is not fully accounting for the possibility that education is largely or entirely a signaling device. To the extent that a bachelor's degree is a signalling mechanism, as Bryan Caplan notes, while an individual has an incentive to go to college, it doesn't make sense to have social policies which encourage more people to go to college.