Thursday, August 26, 2010

Does Education Pay?

. Thursday, August 26, 2010

Emmanuel, striving for a "compelling narrative", implies that seeking higher education isn't worth it:

The white collar life was supposed to promise the land of milk and honey.

Certainly, academia has had an interest in propagating this story since it provides fodder for ensuring a steady stream of tuition-paying students in law, commerce, and business. Various American commentators like former Fed Chairman Alan Greenspan have constructed an entire narrative out of "knowledge workers." In recent times, that has meant training to be a software engineer or some other lofty position that makes the most of conceptualizing abstract ideas and similarly high-faluting rhetoric. The truth, though, is much less compelling. Take America (please). Not only are there scores of unemployed college graduates there, but wages of college graduate have been on a downward trend since 2000. So much for the college myth.

As the graph above shows (via David Leonhardt), this is simply not true. (The data presented above contradicts that in the link in Emmanuel's quote, probably because the latter reports a mean while the former reports a median.) The college wage premium has expanded over time, and college graduates now make more than double what high school graduates make. Moreover, as the below chart from the BLS shows, more postgraduate education generates an additional, large, premium along with a pretty significant amount of job security.

The recent unemployment crisis has not changed this trend; it has exacerbated it, as less-educated workers have been hit especially badly:

So when you see breathless articles questioning the wisdom of pursuing higher education, or claiming that you can do nearly as well without it, remember the stats. A compelling narrative is no substitute for a few facts.


Emmanuel said...

Again it is you, my friend, who doesn't look up the numbers. First, you use another data series. Ever heard of apples and oranges? Second, you rely on someone else's presentation of the numbers, not yours. Whether on a median or mean basis, those with a bachelor's degree have had declining annual income since 2000. Same for those with a bachelor's degree or higher.

I have updated my post accordingly.

Kindred Winecoff said...

Does Education Pay?
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