Higher Education Subsidies Scam?

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Economist Richard Vedder has written a piece for the Chronicle of Higher Education entitled “The Great College-Degree Scam.” Using data from the Bureau of Labor Statistics, Vedder found that “approximately 60 percent of the increase in the number of college graduates from 1992 to 2008 worked in jobs that the BLS considers relatively low skilled—occupations where many participants have only high school diplomas and often even less.” 

Vedder acknowledges that his data has limitations, and so he redid his analysis with alternative assumptions and still found that “a majority of the increased college graduate population is doing jobs that historically have been filled by persons with lesser education.” Vedder’s results undermine the argument made by policymakers and special interest groups that higher education subsidies are needed to increase college enrollments. 

Vedder offers some cogent observations:
 
  • The data suggest a “horrible decline” in the productivity of American education: it takes 18 years of education to earn a degree to do jobs that past generations could do with a third less time in school. 
  • The declining productivity of an American education is problematic because our aging society is going to become increasingly reliant on younger taxpayers to fund their retirements.  
  • A college diploma has become more of a “screening or signaling device” to potential employers. “Credential inflation” is occurring as more individuals chase a “piece of paper” that they believe demonstrates “employment competence.” 
Vedder says that “some in higher education KNOW about all of this and are keeping quiet about it because of their own self-interest.” Politicians also have an interest in keeping quiet. The average voter likely assumes that putting more people in college is itself a good idea. Politicians know this, and thus have an incentive to support higher education subsidies. Of course, the subsidies also garner politicians favor from the direct beneficiaries. As a result, finding a politician who is publicly opposed to higher education subsidies is like finding a needle in a haystack.   
 
If counterproductive handouts championed by politicians are to be reduced or eliminated, Americans will need more education when it comes to public policy. A good start is this Cato essay on why higher education subsidies should be abolished.