Published on 2013/12/12

Education Pays? A Debatable Claim Being Swept Under the Rug (Part 1)

Education Pays? A Debatable Claim Being Swept Under the Rug (Part 1)
Despite the widespread belief that higher education is a pathway to higher wages and better quality of life, recent evidence suggests otherwise.
With the air going out of the college bubble — evident through accelerating declines in postsecondary enrollments — the need to keep up the smiley-face front that getting a degree is “a great investment” is crucial to the higher education establishment.

The College Board’s recent report, “Education Pays: The Benefits of Higher Education for Individuals and Society,” is a shameless effort at making students and policymakers believe earning a college degree is the closest thing to a panacea for all personal and social problems. The authors write with an almost giddy enthusiasm: “The evidence is overwhelming that higher education improves people’s lives, makes our economy more efficient, and contributes to a more equitable society.”

Someone who just woke up from a 50-year sleep might conclude that during their slumber, America had discovered that putting kids through college was the ideal policy: they emerge much more productive and earn far higher incomes, will be much less likely to become unemployed or need public assistance, will be better parents and citizens, all while leading healthier lives. If you took this seriously, you’d think the country was committing a terrible error in not insisting that everyone who could possibly go to college do so, and graduate.

But we shouldn’t take it seriously. America has already oversold higher education.

Our colleges are already admitting large numbers of academically weak, disengaged students; further expansion could only come from scooping up lots of really sub-marginal ones. We’re about where the housing market was in 2006 with respect to people who were capable of handling a mortgage. Almost all of the people being drawn into mortgages after that point were poor credit risks, setting themselves up for dreadful losses. It’s the same today for college attendance.

The big point in the sales pitch for college is that people who have college degrees earn far more than do people who don’t. As evidence, “Education Pays” cites research contending that, “On average, the benefits of a four-year college degree are equivalent to an investment that earns 15.2 percent per year. This is more than double the average return to stock market investments since 1950. … From any investment perspective, college is a great deal.”

But pointing out that, on average, college has been “a great deal” does not mean it’s a great deal for everyone today.

If you look closely at the data in the report, you can spot the inconvenient truth: significant numbers of college graduates now earn less than the median earnings for those who only have high school diplomas. In 2011, 20 percent of male college graduates and 16 percent of female degree holders earned less than the median for those with high school educations. That’s a significant number of underemployed people, and their numbers are growing. For them, college isn’t such a “great deal.”

The report tries to sweep this under the rug, saying, “Anecdotes about individual students whose paths through postsecondary education have not worked out well do not contradict the fact that on average and for most students, college is an excellent financial investment.”

Just a few anecdotes, people — nothing to worry about.

I beg to differ. There is good reason to believe a large and increasing percentage of Americans who go to college will have spent a lot of time and money for negligible gain.

A study published in 2010 by the Center for College Affordability and Productivity, “From Wall Street to Wal-Mart,” mined Bureau of Labor Statistics data on the jobs college graduates do get. They found that of the 20 million individuals who earned a degree between 1992 and 2008, 12 million (60 percent) of them were in jobs that required less-than-college education skill sets.

Just to cite one employment category, in 2008, more than 365,000 cashiers had college degrees, up from 132,000 in 1992. That is not just a few anecdotes.

Suppose the manufacturer of a weight-loss drug ignored reports that substantial numbers of consumers who took its expensive product had either no positive results or experienced bad side effects and continued advertising that, on average, those who took it experienced good results. Most of us would regard that as highly irresponsible. People for whom a drug is apt to do no good or even prove harmful ought to be warned, not breezily told about the wonderful average effects.

Not all drug consumers are the same, nor are all students. Unfortunately, the authors of the College Board report proceed as if students were fungible bits of raw material who enter a black box called college and emerge as graduates who are very likely to enjoy a large earnings boost for having gone through the process. They grudgingly admit that “different paths are appropriate for different individuals” but never acknowledge that, for many, college is apt to be an extremely costly waste of time.

Reality is much at odds with the lovely portrait the College Board has painted.

“Education Pays” also ignores the evidence that large numbers of students learn little or nothing during their college years.

The paper never mentions the disturbing results of the US federal government’s National Assessment of Adult Literacy, which found in its most recent analysis (2003) that only 31 percent of college graduates reached the level of proficiency in understanding prose. They aren’t very good at either quantitative or document literacy either.

Similarly, “Education Pays” ignores one of the most important books on higher education in many years, Academically Adrift by Richard Arum and Josipa Roksa. The authors concluded that 45 percent of students did not demonstrate any significant gains in learning after two years of college and 36 percent did not demonstrate significant improvement after four years.

How can college dramatically raise the value of workers if they graduate with barely more human capital than they had when they left high school?

This is the first of a two-part series by George Leef challenging commonly-held beliefs about the link between postsecondary credentials and career success. To be reminded when the next piece goes live, please click below:

Next installment coming soon

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Readers Comments

Vera Matthews 2013/12/12 at 10:38 am

Comparing college education to the drug industry is hyperbolic. There’s no evidence that college is “apt to do no good or even prove harmful” for graduates.

I acknowledge Leef’s point that underemployment is an issue in the American economy, but the reality is we’re coming out of the worst recession in 80 years and it’s not just college graduates who are in precarious situations.

However, the tide is turning. Many states have already identified a skills gap that will have to be addressed through postsecondary education in the near future. When you obtain a college credential, it’s not just for immediate benefit, but it’s also about long-term planning. You have to look down the road. When the economy picks up, we will certainly need highly-skilled people to fill the roles either created by the emerging information economy or vacated by retiring Boomers. College graduates are an integral part of the new economy. My best advice to college graduates is to bide your time; writing off college entirely is shortsighted.

Tyrese Banner 2013/12/12 at 5:11 pm

Research suggests there is a growing gap between what employees know and what employers need. How does Leef propose we close this gap if individuals aren’t being trained to develop the skills they’re missing? If he doesn’t agree that college is the best vehicle for individuals to develop those skills, then he should suggest another one — and he failed to do that in this piece.

I think part of the problem is that Leef is conflating college education with a degree credential. I agree that there has been a push for students to pursue degrees when they’re not necessary for all jobs; in many cases, a certificate or diploma is sufficient. Perhaps it’s time to reassess whether we should be promoting degrees as the best type of higher education credential. But to write off college altogether demonstrates a glaring lack of foresight. I’m willing to read the second part of this series to see if this shortcoming is addressed.

Walter Pearson 2013/12/16 at 4:42 pm

For a set of counter-arguments to those made in this post, please see my post at

The contributor, George Leef, comes from a Republican-leaning foundation and this makes me wonder where he is going with this analysis.

Let’s state a few things we may agree on – not all college degrees provide the level of rigor needed, we need to find ways of making college more affordable and pay close attention to costs, some college graduates are underemployed, etc.

However, I worry about the tone of the argument. It smacks of “pulling up the ladder after me”. To quote,” Our colleges are already admitting large numbers of academically weak, disengaged students; further expansion could only come from scooping up lots of really sub-marginal ones.”

Higher education can serve to reify and strengthen the existing social order by the way it allocates opportunity, a position which Leef seems to prefer.

I prefer that higher education should open doors, particularly for adult students.

Victor Seddon 2013/12/16 at 5:17 pm

I agree and this paper has hit the nail on the head; again, because others are asking the same question. In USA, about 60 per cent of 19-year-olds are in college or university. In Europe it is somewhere over 50 per cent. In Australasia, it seems to be approaching 70 per cent. But why? What is the national purpose of designing programmes and qualifications that the majority can study, whether or not there is relevant employment at the end? Alison Wolf of London Univ wrote her book, “Does Education Matter?: Myths About Education and Economic Growth” in 2002 and most commentators have nodded wisely in agreement; but no politician is willing to query the basic fallacy about post-school education. Why not? Because the message, “Your kids can also get a degree” is more vote-worthy than the truth, “A degree can be a waste of time and money.” Twenty years from now, how shall we find a plumber, electrician, brick-layer, hairdresser, auto-mechanic, gardener? At the current rate of increase, almost all young people will have degrees in sociology, media-studies, philosophy, economics, music-history, etc. This is not the way to plan the future prosperity of the country.

Muvaffak GOZAYDIN 2013/12/20 at 9:57 am

Lots of misconceptions .
College does not pay .

60 % of the graduates Work in jobs that requires only high school diploma .( see the research above )
So what is the value of College education .

It is a marketing gimmick.
People are forced to college education by marketers .
Not everybody can make the college.
But marketers make the colleges so fantastic that people WHO can not even graduate from highschool decently try to go to colleges .

There is no need to get 20 million students in colleges . Free economy makes it possible .
Elite universities admit only students WHO can do college work . We do not need all those worthless colleges whose graduates cannot find a job but a high schools graduates do ..

From the numbers above ( 60 % do not need a college degree ) I deduce that we do not need 20 million students in universities .
Only .40 x 20 = 8 million students is enough for HE . And this is what we need .
Please think about it .

We are wasting our time and money for 12 million students now WHO cannot do the real college work and cannnot find a job after graduation .

They do not need college. They can get the same jobs after graduating from High School. They are wasting their 4-5 years and $100,000-200,000 Money of the taxpayers .( Think of loans WHO provide college to everyone , $ 1 TRILLION now )

+ World needs more and more skilled graduates every day . .

Muvaffak GOZAYDIN 2013/12/20 at 10:04 am


I do not say colleges must be closed.
But I say 60 % of the colleges are unnecessary . Their graduates cannot find jobs . That simple .
They are wasting times of people and Money of the taxpayers thru LOANS of $ 1 trillion .

Let them train for vocational jobs like in Germany the richest country in the World for time being. ( As manpower wise. )

Muvaffak GOZAYDIN 2013/12/20 at 10:08 am

60 % of the college graduates are not good at all according to a survey made among graduates years 1992 to 2008 .
They work as if they are not graduates of a college .

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