Is college worth the high cost? After all, everyone knows a college degree doesn’t guarantee a good job—English majors all work at McDonalds, right? This lore is gaining acceptance (see discussion of the “college bubble” here and here, for example) but a new review in Science (Autor, 2014) marshals data suggesting that it’s dead wrong.
College graduates not only continue to make more than non-graduates, the education-wage premium is increasing. It has risen in most advanced economies, and nowhere more than the US. In fact the difference between the median incomes of high school graduates and college graduates in 1979 was about $17,400 (in 2012 dollars). In 2012 it had doubled to around $35,000. (Autor doesn’t cite these data, but a 2013 OECD report also suggested that unemployment rose much less for college graduates during the recent recession.)
The income difference is not an artifact of the wild increases among the top 1% of earners. As Autor emphasizes, wage inequality has increased across the spectrum of incomes and is well represented among the “other 99%.” He cites various studies suggesting that 60% or so of the increasing difference in US wages is due to the increase in the education-wage premium. Other factors contributing to the difference include the decline (in real dollars) of income for high school graduates, the declining influence of trade unions, the rise in automation and subsequent loss of jobs calling for minimal cognitive skills, and competition for those jobs in the developing world.
Autor makes the case that these seemingly disparate factors can come together into a relatively simple model of supply and demand. Since the 1980’s the number of people getting a college education has increased, but the rate of increase has slowed, relative to earlier decades. Hence, the supply of people with the cognitive skill set afforded by education was expanding, but at a slow pace. Meanwhile, the percentage of jobs requiring that skill set was increasing at a much faster pace, as low skill jobs were exported or automated. The market responded to supply and demand: wages for college graduates skyrocketed because there were not enough of them; wages for high school graduates declined (in real dollars) because there was a glut of such workers, relative to the need.
As Richard Murnane (who often collaborates with Autor) has argued for decades, there is every reason to think that these employment trends will continue; jobs that require modest cognitive skill yet pay living wages will not return to the United States economy.
So yes, college is worth it—or better, obtaining cognitive skill that is demonstrable to employers is worth it. The promise of obtaining them outside of the usual educational route (via MOOCs, for example) is still a work in progress.
For educators and education researchers, this conclusion doesn’t change much of what we’ve been trying to do, as we already believed in the importance of education for individual economic promise. Autor’s analysis offers data should we care to take on skeptics, and adds urgency (if any was needed) to the work.