A college degree is “the ticket to the middle class,” according to President Obama, Education Secretary Arne Duncan and most parents and high school counselors, write Richard Vedder and Christopher Denhart in a Wall Street Journal commentary. But the college bubble will pop, they predict. As college costs rise, graduates’ earning advantage is declining.
Since 2006, the gap between what the median college graduate earned compared with the median high-school graduate has narrowed by $1,387 for men over 25 working full time, a 5% fall. Women in the same category have fared worse, losing 7% of their income advantage ($1,496).
A college degree’s declining value is even more pronounced for younger Americans. According to data collected by the College Board, for those in the 25-34 age range the differential between college graduate and high school graduate earnings fell 11% for men, to $18,303 from $20,623. The decline for women was an extraordinary 19.7%, to $14,868 from $18,525.
Meanwhile, the cost of college has increased 16.5% in 2012 dollars since 2006.
A 2013 Center for College Affordability and Productivity report, found many more college graduates are working as retail sales clerks, cab drivers and janitors. Underemployment has risen for recent college graduates since the recession, the Federal Reserve Bank of New York reports.
Employers want to hire graduates of top universities and graduates with master’s degrees, write Vedder and Denhart. But a bachelor’s degree no longer signals “best and brightest.”
Today, with over 30% with degrees, a significant portion of college graduates are similar to the average American—not demonstrably smarter or more disciplined. Declining academic standards and grade inflation add to employers’ perceptions that college degrees say little about job readiness.
As demand for a high-priced not-so-higher education falls, colleges will have to “constrain costs,” they write. In addition, “colleges must bow to new benchmarks assessing their worth.” There’s too much competition from online education to resist, even if it means “poorly endowed and undistinguished schools may bite the dust.”
Enrollment continues to rise at traditional four-year universities, notes Jordan Weissmann in The Atlantic. “All of the declines happened in the troubled for-profit sector, which has cut back somewhat on enrolling clearly under-qualified students in an effort to clean up its image, and community colleges, which have been grappling with overcrowding in recent years.”