Education and Employment: Some Thoughts Against the Conventional Wisdom

A lot of us are concerned about the jobless nature of this recovery, at least in America, about wage stagnation, and about the fact that the economic gains of today seem to be going primarily to capital, not labor. You don’t have to be a raving Marxist to agree with Franklin Roosevelt that

The test of our progress is not whether we add more to the abundance of those who have much; It is whether we provide enough for those who have too little.

Almost every one I hear these days, including all the speakers I caught at last week’s Aspen Ideas Festival, advocates more education as a solution to our vexing problems of unemployment and underemployment. And by ‘education’ they often (but not exclusively) mean ‘higher education.’ President Obama, for example, wants America to have the world’s highest proportion of college graduates by 2020.

This seems smart and reasonable, especially since so many jobs now require a college education or more. But maybe we’re looking at the problem the wrong way.

More than 35 years ago the economist and social theorist Thomas Sowell wrote about what we might call ‘degree inflation:’

The widespread use of high school diplomas and college degrees as employment screening devices by employers has led to a belief that increasing education will increase opportunities, and/or that the reason for escalating educational “requirements” is a corresponding increase in the knowledge necessary to perform a given job. The well-organized education lobbies exploit these beliefs to the fullest. In fact, however, educational ”requirements” are often used by employers who are wholly unconcerned about the specific content of the education, but who regards a diploma or degree as an indication of the job applicant’s willingness to persevere and his grades as a rough index of his mental capability. The educational requirements are a hurdle which eliminates enough job applicants to narrow the employer’s choice down to manageable proportions. By making it possible for more young people to go over a given hurdle, society also makes it necessary for employers to raise the hurdle in order to weed out the same proportion of applicants. The result has been an upward spiral of credentials and requirements with more and more young people being forced to endure more and more years of education that they do not want in order to qualify for jobs where the education is not needed. As more and more jobs have been put beyond the reach of those without the necessary credentials, whether or not such individuals can do the work itself, those ethnic minorities who are not traditionally oriented toward formal education are particularly hard hit.

– Race and Economics, 1975, pp.231–2.

Haven’t we seen a lot of evidence in support of this viewpoint in the last couple generations? Higher education has become much more expensive, student loans now account for more debt in America than do credit cards, and a lot of diploma mills (by which I do not just mean for-profit universities) have sprung up. In short, a lot of what’s going on in the higher education industry these days strikes me as something between a bubble and a scandal.

We need to think long and hard about whether Sowell was on to something fundamental. And if he was, we need to come up with other ways that allow workers to signal their qualifications to potential employers —  ways that do not take years from their lives and saddle them with mounds of debt that can’t be discharged even by bankruptcy.

It’ll come as no suprise to readers to hear that I think technology can be a big part of solutions here. There are wonderful free online resources available now that let people educate themselves (just look at the Khan Academy), and digitally-administered tests could show employers who’s got the right stuff for any particular job.

Why aren’t we seeing a lot more of both low-cost online education and digital testing? Is it because of good old inertia? Legal restrictions on the use of employment testing? Other factors? Leave a comment, please, and tell us what you think. And what you think of the general problem of degree inflation. Was Sowell right about its existence, and the harm it does precisely to those who have too little?