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Winter for Higher-Ed
Skipping College Will Cost You (Eventually)

Rising tuition may be scaring some students away from college, but skipping it is still more costly in the long run, according to a new study by the Pew Research Center.

The wage premium for college grads is at an all time high, too. The median annual salary for high school graduates is $28,000, versus the $45,500 per year earned by those with college degrees. In other words, a college graduate earns an average of $17,500 more than a student with only a high school degree. In 1965, that gap was only $7,400.


The main reason for this change is the national shift from a manufacturing to an information economy. The New York Times:

“That is one of the great economic stories of our era, which you could define as income inequality,” said Paul Taylor, an author of the report. “The leading suspects are the digital economy and the globalization of labor markets. Both of them place a higher premium on the knowledge-based part of the work force and have the effect of drying up the opportunities for good middle-class jobs, particularly for those that don’t have an education.” […]

“For today’s young adults, the only thing more expensive than going to college is not going to college,” […]“And that sort of captures the dilemma that many find themselves in.”

This shift is a good thing for American workers as the whole, but studies like this make it clear that it will be hard on those who don’t go to a four-year college. Unfortunately, the system that delivers this vital credential is prohibitively expensive for many prospective students, and it encourages those who do get it to remove themselves from the workforce for an extended period of time.

To make the information transition as smooth and painless as possible, we need to bring down tuition and offer worthwhile alternatives to the traditional four-year college experience.

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  • Brian Stahl

    No, we need to reform our high schools so that they offer some of the skills you can get in college. Realistically, you don’t need a college degree to do the day-to-day work as a real estate agent, police officer, or any number of other jobs that currently require a degree.

    A bachelor’s degree has basically become a signal that a prospective employee is smart and works hard. We need to change schooling so that employers can look at a high school transcript and have a basic understanding of an employees ethic.

    • Andrew Allison

      Minor disagreement: our high schools need to be reformed so that graduates actually receive a secondary education (almost half those entering colleges require remedial 3R courses). Secondarily, as you point out, we should to stop wasting resources on post-secondary “education” for which there is no demand.
      Major disagreement: a baccalaureate degree today is far from being “a signal that a prospective employee is smart and works hard.” Leaving aside the fatuousness of many courses and grade inflation, that signal is whether it took three or six years to collect the necessary credits.

  • Andrew Allison

    Pew’s “research” doesn’t pass the smell test. First, the chart shows that inflation adjusted income has not increased for full-time employed baccalaureate and advanced degree holders for almost 30 years (the cost of obtaining the degree having risen astronomically). Missing is the percentage of baccalaureate degree holders working part-time. Also missing is the income distribution of full-time employed, thereby disguising that of those in jobs for which they are overqualified in 1985 and 2013. A serious evaluation would include a real, not imaginary, ROI which took account the effect of the debt acquired in the pursuit of said degrees in net income.

    • rheddles

      Do the inflation adjusted income figures also include imputed income from employer paid medical expense? Because that is the source of a lot of employee compensation cost growth from the employers’ perspective over the last 30 years.

      • Andrew Allison

        Pew knows (LOL). But I’d guess not — the story is about income, not compensation costs. However, I detect more than a whiff of interest in moving benefits to the income column in order to tax them.

  • TommyTwo

    I’ll admit to not having read the report yet, but I wonder how it gets around the correlation-causation difficulty. (That is “college-bound” people are significantly more likely to succeed in life than others, even if they don’t actually end up in college.)

  • jdubya_az

    I think it really depends on the type of degree. We are not necessarily moving from a manufacturing to a solely information economy. We are moving towards a more automated and robotic assisted economy. I am in the industry of integrating systems: providing automation to remove human inputs. This requires technically-skilled individuals to design, build, and integrate these new replacements into the manufacturing process.
    With all of the regulations and acts that Washington imparts on this economy, you will see more and more of this in the next few years. That is the only solution.
    The government is the reason for this automation happening. It is too expensive to host a position, hire for it, and be chained to increasing government regulations of how to compensate for these positions.
    If you think this is wrong and you are not involved in any industrial application, I suggest you get informed quickly.

  • qet

    “Back where I come from, we have universities, seats of great learning,
    where men go to become great thinkers. And when they come out, they
    think deep thoughts and with no more brains than you have. But they have
    one thing you haven’t got: a diploma.”

  • Joseph Blieu

    The presentation of data here is dishonest. Why create a category for 2 year degrees and some college yet not create a category for BA/BS, MS/MA, and PhD which are also 2 year differences in attendance time? I think most agree that high incomes are concentrated in MD, JD, and MBA grads in the 250K range with BS Engineers and Buisness BS grads in the 80K Range. All said I think the conclusion is that there is a small average benefit for a BA/BS and a great average benefit for a professional degree. And I think that the gifted students who are accepted into these programs would have made money even if they had not gone to college. Harvard grads are good because they only take good kids.

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