This is the time of year when high school seniors apply to college, and when I get lots of mail about whether college is worth the cost.
The answer is unequivocally yes, but with one big qualification. I’ll come to the qualification in a moment but first the financial case for why it’s worth going to college.
Put simply, people with college degrees continue to earn far more than people without them. And that college “premium” keeps rising.
Last year, Americans with four-year college degrees earned on average 98 percent more per hour than people without college degrees.
In the early 1980s, graduates earned 64 percent more.
So even though college costs are rising, the financial return to a college degree compared to not having one is rising even faster.
But here’s the qualification, and it’s a big one.
A college degree no longer guarantees a good job. The main reason it pays better than the job of someone without a degree is the latter’s wages are dropping.
In fact, it’s likely that new college graduates will spend some years in jobs for which they’re overqualified.
According to the Federal Reserve Bank of New York, 46 percent of recent college graduates are now working in jobs that don’t require college degrees. (The same is true for more than a third of college graduates overall.)
Their employers still choose college grads over non-college grads on the assumption that more education is better than less.
As a result, non-grads are being pushed into ever more menial work, if they can get work at all. Which is a major reason why their pay is dropping.
What’s going on? For years we’ve been told globalization and technological advances increase the demand for well-educated workers. (Confession: I was one of the ones making this argument.)
This was correct until around 2000. But since then two things have reversed the trend.
First, millions of people in developing nations are now far better educated, and the Internet has given them an easy way to sell their skills in advanced economies like the United States. Hence, more and more complex work is being outsourced to them.
Second, advanced software is taking over many tasks that had been done by well-educated professionals – including data analysis, accounting, legal and engineering work, even some medical diagnoses.
Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written 13 books, including his latest best-seller, “Aftershock: The Next Economy and America’s Future;” “The Work of Nations,” which has been translated into 22 languages; and his newest, an e-book, “Beyond Outrage.” His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His new movie “Inequality for All” is in Theaters. His widely-read blog can be found at www.robertreich.org
