Forty-eight percent of college graduates have jobs that do not require a four-year college education, finds a new study by Richard Vedder, Christopher Denhart, and Jonathan Robe of the Center for College Affordability and Productivity. They also report: “In 1970, fewer than one percent of taxi drivers and two percent of firefighters had college degrees, while now more than 15 percent do in both jobs.” Vedder, Denhart, and Robe contend the country is churning out too many college graduates, and is wasting resources on higher education that could be better spent elsewhere—not the least of which are the years healthy young adults spend not being productive so that they can spend more time socializing.
But what of the many studies showing that college graduates earn a significant wage premium over high school graduates? The authors point out a number of problems with inferring from those data that college is worth the cost. Most crucially, they contend that the value of a college degree lies in the signal it sends potential employers about a graduate’s fitness for employment rather than in the actual education the candidate has received. And as employers have increasingly relied on that signal to screen job applicants, more people have pursued the credential, causing its value for recent graduates to decline.
As labor market realities make the real value of a degree clearer, we might expect fewer people to choose to go to college, and the problem would fix itself. As Vedder, Denhart, and Robe point out, however, there is a major problem with that scenario: Massive federal loan subsidies already incentivize college attendance, and politicians may be planning to increase the subsidies. President Obama, for example, has stated that the nation’s goal should be to increase the number of people attending a four-year college so that “by 2020, America will once again have the highest proportion of college graduates in the world.” [“Why Are Recent College Graduates Underemployed? University Enrollments and Labor Market Realities,” by Richard Veder, Christopher Denhart, and Jonathan Robe, Center for College Affordability and Productivity, January 2013.]