Arnold Kling  

The Plight of the Unskilled College Grad

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I am just beginning to explore the issue of sorting out the economic value of college at the margin, rather than on average. One aspect of this is to distinguish between college graduates with skills and college graduates without skills, with the further distinction between private sector and public sector employment. I suspect that the average salaries of college graduates are boosted by those of skilled college graduates (engineers) and public-sector-employed college graduates (teachers). I wonder what the average salary looks like in the private sector for the unskilled college graduates (communications majors, majors with the word "studies" in them, etc.).

We can start with a year-old story in Forbes listing the top ten jobs for college graduates.

1. Network Systems and Data Communications Analyst
2. Sales Agent, Financial Services
3. Sales Agent, Securities and Commodities
4. Market Research Analyst
5. Public Relations Specialist
6. Cost Estimator
7. Educational, Vocational and School Counselor
8. Actuary
9. Paralegal and Legal Assistant
10. Computer Support Specialist

Of these, 1,6,8,9, and 10 require separate training and do not require a general liberal arts background. 4 requires some knowledge of statistics. 2,3, 5, and 7 could be jobs where having a general undergraduate degree might provide some experience in writing and communication that could prove useful.

What I would like is much better data that would help me estimate the salaries for unskilled college graduates.


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COMMENTS (31 to date)
Sean A writes:

The evolution of the internet has lowered the value of college incredibly, as simply a source of learning. Even lectures can be accessed online by non-students. At this point I view the investment hinging on two factors: 1) the college "experience;" and 2) the extrinsic validation--that is, the fact that employers can view someone with a degree and know they have been (or at least should have been) trained in a specified field. We also see, however, many individuals going in to jobs that had nothing to do with their major.
With the cost of college rising and the overall quality decreasing college seems to become a less worthy investment each year.

david writes:

Payscale.com has a table of career income by assorted undergraduate degrees. This makes the usual things like law, medicine, dentistry etc. conspicuously absent (and makes engineering correspondingly overrepresented at the top). Likewise, I presume Biology only ranks so low because most successful biology undergraduates go on to graduate education. The remaining undergraduates earn the same as Film Production and Advertising.

Finer-grained data that sorts by private/public sector employment is, alas, harder to find. As is data that includes graduate education.

Beyond that, I strongly caution you against looking for data with a conclusion you are clearly emotionally attached to in mind. The risk of assorted biases should be obvious. At least calm down first.

Josh writes:

I completed a liberal arts degree (history, ugh) in 2004. Was completely unemployable, despite being #2 in my class. Went to Japan and taught English for 3 years. Saved oodles of money (compared to my peers at home in Tampa). Then I decided I hated teaching and went back to school. I'm in my final semester of a joint masters of accounting/masters of economics degree.

My question: Am I skilled now? I'm asking in complete seriousness. I don't feel skilled.

Steve writes:

Josh:

As an accountant, you're probably about as skilled as a lawyer, right? You possess a technical ability, even if it is based purely on man-made rules.

PrometheeFeu writes:

As a recent college grad, I think the primary advantages offered to me by college are not employable skills. They are:
1) Signaling: My college degree shows I made a significant investment in myself which I expect to pay off. If I had expected to never work hard at a job, I would not have gone to spend $120k in tuition fees. (Yes, my parents paid for me, but if that money had not gone to college, I would have received part of it upon their passing most likely).

2) Screening: I went to a fairly selective school. The school spent some amount of time and resources in making sure that I am not a flake before admitting me and I had to continuously demonstrate that by not screwing up in enough of my classes and not drop out. (College is a lot of fun, but in my brief experience, it is a lot more work than a full time job)

3) Trainability: While few of the skills I learned in college were applicable in my job, I feel that I am a lot more trainable. For one thing, I studied a lot of different things. That means I am entirely new to few things. Also, in order to go through college, I had to develop many learning skills. That is very helpful when learning something on a new job.

kebko writes:

I'm going into a graduate finance program, and I have been struck by the wall street job openings I see that are looking for PhD's in math, statistics, or finance, with very high salaries. It seems like a PhD in humanities-type degrees almost limits your options & income expectations. It seems like there is a clear distinction between areas of study where more schooling increases your income & those where it doesn't. In education it does, but I don't know if that is really a market phenomenon.

It seems ironic, too, that the greatest innovation in the history of the world is upon us, and this innovation is the automation of mathematics, yet the value of human mathematicians has skyrocketed. There must be a lesson there about the complementary nature of technological advances. And, adding to the irony, while this advance is happening, it appears to be nearly impossible to convince any significant number of Americans to populate the schools of math & hard sciences in our universities.

Also, I would second David's last point.

John V writes:

"At least calm down first."

???

I found this rather perplexing.

I didn't see that he was getting "excited" in any way.

Weird.

Douglass Holmes writes:

Arnold, like you, I want to know the value of a college education. Personally, I have no problem as my son got an engineering degree (and no student loans). But I am concerned about the education bubble. Lots of people are spending a lot of money on college educations and they are frequently borrowing to do it. That borrowing must crowd out other borrowing that could be starting businesses, building bridges, or making capital available for infrastructure.
How can anyone determine if it is wise to borrow huge amounts of money for college if they don't know the value of the education that they will get? Looking at the oft quoted statistics of pay rates for ALL college graduates versus non-graduates doesn't really tell me whether someone should go into debt to get a BA in English.

Ironman writes:

Here is some starting salary data for 2008 for a number of academic majors. Starting salaries can be a good proxy for relative lifetime income, assuming the individual degree earners parallel the overall average.

You might also look to see which departments are being "subsidized" through academic requirements to support less highly valued departments within institutions.

Finally, here is the ever popular ranking of school smarts by major, to help better identify the skilled from the unskilled.

Les writes:

The economic value of college at the margin would be relatively easy to determine if we had a limited government, and were not in a severe recession due to irresponsible politicians.

But government is running large sectors of the economy, such as health care, banking and government motors, and the average public sector salary is well above the average private sector salary.

Therefore prices and salaries no longer reflect market conditions, but are polluted by political forces. So they no longer serve as informative signals of economic values.

Fabio Rojas writes:

If you are serious about income and college experiences, including major, you should try NELS, GSS, and a few other surveys that specifically ask about college degree and income. I also belive that CPS asks about college degree and major.

Another trick might be to look at reported salaries of grads from selected schools and compare. For example, among elite colleges, MIT, Cal Tech, and the military academies award mostly technical degrees. You could then compare with schools that are equallly competetive and award mainly liberal arts degrees (or non-engineering) like Swarthmore and Bennington.

The problem with college major research is that major surveys don't have enough people in specific majors. Remember, less than a majority of people graduate from college. Throw in college grads who volutnarily drop out of the labor market, like moms. So you can't get precise estimates, except when you lump people into broad categories. If you start with a major survey of 2,000 people like the GSS, you end up, maybe, with one or two hundred people who provide enough information. If you are computing marginal effects, you may not have enough information.

If you are really serious about this, email me (frojas atsymbol indiana). I've worked on a project like this before for my grad school adviser.

Alan P writes:

A few issues:

1. The benefits of College Education have a lot to do with signalling – where you studied and what you studied and how you fared academically. Qualitatively, this is not diametrically different from school, albeit at an entirely different degree, so why single out university degrees.

2. Yes there are probably a large number of students who have an unrealistic expectation of future salaries that are not linked to their area of study or their Alma matter. If you graduate from an Ivy League University with honours in Maths, Physics, Finance or Economics and don’t land the job you wanted – you are entitled to feel disappointed.

3. However, if you barely graduate from an unknown community college after piling up debt with a 4 year degree in communications and marketing – and you don’t land a job with New York Times – you are not entitled to be disappointed. A significant time and financial commitment – be it a college degree or a car purchase assumes you did your research before paying up.

4. The vast majority do not graduate from Ivy Leagues.

5. High Incomes in general, as with everything in life will go to those who have skills that are in high demand and provide a competitive advantage. So even I do not understand Arnold’s obsession with the plight of an unskilled graduate. I think everyone who does a non-technical liberals art degree understand they are not going to receive an industry qualification – like a CPA, CFA etc – that is the part of the choice they make (love of subject, future choice of job).

Andy writes:

I'd look at the NLSY (either the 79 or the 97). It has very good ability measures (AFQT), educational histories, and job/wage histories.

However, I should note that there is a wealth of papers in labor economics that try to estimate the collegiate return for the `marginal' collegiate attendant. They still find massive returns, using both simple and complex econometric methods. Heckman has several papers on this - some with Lochner and Todd and some with Cunha, if I recall correctly.

It has long been settled that tests by employers are unfair. The law prevents employers from testing for general ability, and discourages testing for job-specific knowledge. If employers could describe and give their own tests, then prospective employees could qualify by acquiring knowledge in any way they wanted, including self-study. There would be much more competition for colleges.

Formal degrees and prior experience are highly valued as a way to validate a person's knowledge without giving a specific test.

I hired programmers as part of managing a software group. The HR department told me that I could ask technical questions, but to never write them down in any "formal" way. They were worried that someone would claim I was giving a "test". Any test was illegal unless proven to be non-discriminatory in effect when applied to different races.

James Taranto of the Wall Street Journal: [edited]

Most professional jobs require basic intellectual aptitude. Since the 1970s the Court has developed a body of law that prevents employers from directly screening for aptitude.

In Griggs v. Duke Power Co. (1971) a black coal miner claimed discrimination because his employer required a high-school diploma and an intelligence test as prerequisites for promotion. The court ruled 8-0 in the miner's favor. "Good intent or absence of discriminatory intent does not redeem employment procedures or testing mechanisms that operate as 'built-in headwinds' for minority groups," Chief Justice Warren Burger wrote.

This became known as the "disparate impact" test, and it applies only in employment law. Colleges and universities may use aptitude tests. Elite institutions lean heavily on exams such as the SAT in deciding whom to admit.

For a prospective employee, a college degree is a very expensive way of showing that he has, in effect, passed an IQ test.

College is an Expensive IQ Test

Fabio Rojas writes:

@ Andy: Arnold's question was about college majors specifically, not college attendance or completion in general. Does NLSY have the N that would allow you to parse out college major effects?

Here's back of the envelope: NLSY has field of study in college. NLSY 79 started with 12k respondents, but got down to 7k in recent waves. That means you'll have 2-3k college completers. That's enough to work with, even if you have missing data. You'd probably have to stick with broad categories of majors (e.g., probably not enough statistics majors). Since you have data on high school performance, you can probably compare people who were good at math/science but who chose non-technical majors. College attended might be restricted, but if you got access, you could also control for school attended.

Bill Drissel writes:

Dr K
Your Forbes data is bogus. From http://www.bls.gov/oco/ocos027.htm :

As a group, engineers earn some of the highest average starting salaries among those holding bachelor's degrees. Average starting salary offers for graduates of bachelor’s degree programs in engineering, according to a July 2009 survey by the National Association of Colleges and Employers, were as follows:

Petroleum $83,121
Chemical 64,902
Mining and Mineral 64,404
Computer 61,738
Nuclear 61,610
Electrical/electronics and communications 60,125
Mechanical 58,766
Industrial/manufacturing 58,358
Materials 57,349
Aerospace/aeronautical/astronautical 56,311
Agricultural 54,352
Bioengineering and biomedical 54,158
Civil 52,048

I'm surprised that a high rating for "Network Analyst" and computer support didn't trip your BS alarm. Maybe you should get out more :-)

Regards,
Bill Drissel

Troy Camplin writes:

You know what, I would like to help you with this project. And the reason I would like to help you with this project is entirely selfish. I have a Ph.D. in the Humanities, a M.A. in English, and a B.A. in Recombinant Gene Technology. The B.A. is the closest thing I have to a skilled degree. Certainly the other two are unskilled. I have had my Ph.D. since 2004, and I am currently writing this at the hotel where I work, at almost 11:30pm. I have this job because it was what I was doing to get myself through my M.A. I teach English adjunct, and that only requires a M.A. Other than teaching at a university, I have no earthly idea what I can do for a living -- and nobody else seems to know, either. So I don't know exactly how I could help you with this project, but it sounds like something I would like to help you with. I think salary would only be part of the story, though. What is it people are actually doing with their degrees?

MernaMoose writes:

Arnold,

Something to consider. To what extent have modern technological advances made it possible for us to afford the luxury of this vast army of humanities educated people? Who, in any earlier era of history, would have been so much dead weight?

In fact, in earlier times, the wealth with which to educate this army of humanities majors didn't even exist, hence the army didn't exist.

Some people major in the humanities because they like it. But I believe many of them go there because, they either don't want to work hard (as they'd have to in science, math, technology), or else they really don't know what they want to do in the first place. But they can afford college so they go, under the idea that they "should".

Modern wealth allows many more people to major in "unskilled" field just because they want to. But that same wealth, allows us to educate many people who simply haven't found their direction in life.

To an extent, the problem is a consequence of our (historically recent) success in producing vast sums of wealth.


For what it's worth, I'm an engineer and I love what I do. But my first love will probably always be history. Which I did not major in, because I'm greedy and I wanted to get paid after I got out of college. :)

MernaMoose writes:

kebko,

It seems ironic, too, that the greatest innovation in the history of the world is upon us, and this innovation is the automation of mathematics, yet the value of human mathematicians has skyrocketed. There must be a lesson there about the complementary nature of technological advances.

There is, so long as the advances result in things that people want to buy. There's probably a neat economic term for all this, but I'm an engineer and don't know it.

I could write a small book on what computers have done, and are still doing, for us. The "computer revolution" is far from over. But such books have already been written.


And, adding to the irony, while this advance is happening, it appears to be nearly impossible to convince any significant number of Americans to populate the schools of math & hard sciences in our universities.

Yes, but there are very good reasons for this. I'm an engineer (PhD) and I now lead small multi-disciplinary R&D teams of engineers and scientists. It's a bit complicated.

The problem with the science and technology fields is that, while you can probably get a job if you've actually got skills -- at the same time, you probably won't have people knocking your door down wanting to hire you. Unless you happen to be in one of those "flavor of the week", top-of-the-pop-chart disciplines. But these disciplines are like a Madonna song, at the top of the charts today and old hat tomorrow.

Computer engineers, for example, went through a several year phase in the late '90's where the demand for them was insatiable. That came and went, and now they're more like the rest of us. The demand for chemical engineers has always been cyclical. Physicists, on the other hand, are facing very dim job prospects in today's world. Many graduate level physicists jump over to engineering along the way, so they can actually get a job when they graduate. I'm not sure chemists have it much better. Biologists might even have it worse.

So there are winner and looser disciplines but the science and technology job market demand has historically been okay in general. But rarely stellar. You'll probably find a job, but most of the time it won't be particularly easy. I've theorized that something(s?) impose limits on the rate of scientific and technological innovation, which damps job demand. But I've got 20 years in the field and I'm still not sure I understand what those limitations really are.

Curious truth: many scientists and engineers I've known, have found themselves in far greater demand after they went into technical sales, than they ever did as scientists and engineers. But not all of us have the personality to do sales work. OTOH, people without the technical background typically could not do this kind of technical sales work. Though I've seen a few exceptional individuals over the years.


Combine this with the fact that, if you've got the brains and the fortitude to get a degree in engineering or the hard sciences, there are other fields that offer better job prospects and/or far better pay. Doctors, lawyers, and financial analysts, being the main ones. It has been said that engineers are the lowest paid "smart people" around. I've seen lots of engineers make the jump over to medicine, law, or finance, either during or soon after their college years.

Technology people also face a big market obstacle that doctors and lawyers don't. Poor quality doctors and lawyers can go on for years screwing up, and screwing people, and continue to get away with. While they continue to draw their big salaries. Because, doctors and (most) lawyers screw them, one person at a time.

When an engineer really screws up the design of some automotive part and it gets out of the factory to the customers, the engineer usually doesn't get away with it. They, and their company, end up facing a class action law suit. How'd you like to be the engineer who designed a bridge or building wrong, and it collapsed and killed people? A doctor can screw up so bad as to kill patients, one at a time, and still get on for years. But if you designed a bridge that collapsed, it'd be all over the global news before sundown. Your career would be over by the next sunrise.


Every time I hear politicians talk about how "we've got to get more people to major in math, science, and engineering", it makes me laugh. I look at the job market that I've always known and ask: if you trained this big additional army of them, where the heck are they going to get jobs? And how much are "we" collectively going to get paid, after they've been absorbed into the market? I just don't see any real, overall shortage of technology people (barring the flavor-of-the-week disciplines, which is what the CEOs always gripe and moan about when on stage with the politicians).

I get involved with hiring new engineers and scientists. Barring shortages in the occassional flavor-of-the-week disciplines, I've rarely seen times that we just didn't have enough job applicants when we posted job openings. Usually, we end up swimming through a sizable pile of resumes and try to pick out which of them are the best and brightest. There are (usually) temporary spot shortages of particular disciplines. But a catagorical, across-the-board shortage of science and technology people in the US? I haven't seen it yet.

The only one other thing that can make it hard for you to hire science and technology people, is location. Either because the job is in an area where the cost of living is too high (SoCal and NYC for example), or because it's in the middle of nowhere, and nobody wants to live there. Otherwise, finding a pool of qualified job applicants is generally not a problem.


Asia may be graduating more technology people than the the West is. But Asia has a far bigger population. As their economies advance, you have to expect they'll need roughly the percentage of the population doing science and technology, as we've got in the West. So sure enough, China and India are going to be putting out more science and engineering degrees per year.

Will that give them a bigger brain pool for developing innovations? Yes, but they've still got many other limitations relative to the West.

Such is life.

The Cupboard Is Bare writes:

@ Troy,

With a background in English, science and the humanities, you might want to consider submitting your resume to educational publishing companies that have divisions in your areas of expertise.

Worst case scenario, you might have to start out as a proofreader, but I suspect that with your diverse background, they might be able to use you for editing/research.

Just a thought.

Babinich writes:

"When an engineer really screws up the design of some automotive part and it gets out of the factory to the customers, the engineer usually doesn't get away with it. They, and their company, end up facing a class action law suit. How'd you like to be the engineer who designed a bridge or building wrong, and it collapsed and killed people? A doctor can screw up so bad as to kill patients, one at a time, and still get on for years. But if you designed a bridge that collapsed, it'd be all over the global news before sundown. Your career would be over by the next sunrise."

All true... ...except when applied to government. :')

Troy Camplin writes:

MernaMoose,

I would think that the glut of humanities people has more to do with the ready availability of education funding than anything technological. English and literary studies I know attract a lot of people looking for the easy degree (a real shame, too, because it could and should be the most difficult degree, seeing as it deals with things of extremely high complexity), but the same cannot be said of philosophy, for example.

As for myself, I have a friend who is working on his Ph.D. in engineering who one day saw me working on an analysis of a play by Aeschylus, and he asked me what I was doing. After I finished telling him what I was doing for the paper I planned to write, his response was, "Dear God, how on earth do you keep so many variables organized in your head?" After that he stopped arguing that what he does is more difficult than what I do. Of course, I also use Hayek's spontaneous order theory and evolutionary psychology in my work, too.

I tried to get a job at Cato, but David Boaz said he didn't know what to do with me. It doesn't seem that anybody does.

Floccina writes:

Richard Vedder might be a source of some information. I liked his book "Going Broke by Degree".

Dan Weber writes:

I hired programmers as part of managing a software group. The HR department told me that I could ask technical questions, but to never write them down in any "formal" way. They were worried that someone would claim I was giving a "test". Any test was illegal unless proven to be non-discriminatory in effect when applied to different races.

I've done lots of technical interviews and never heard this. We asked technical questions all the time and were very open about it being a test. Google is infamous for doing this.

Brian writes:

@MernaMoose

I think you are looking at things from an absolute not relative prospective. Engineering out of college have a easier time finding a job than other. After that it is all job experience.

But to validate your argument, business week years ago has a series of articles on engineering jobs. One explained with engineering jobs companies are looking for very specific skill sets. The hiring managers s were complaining not that they could not get people with engineering experience, they just could not get it in areas they needed. If after a while they could not find what they were looking for they would end up hiring someone with the background they could then train. So Engineering is a highly fragmented and specialized.

In my industry this is very true. It takes three to four years to train a electrical engineering to do decent controls/software for baggage handling systems in airports. If they had conveyor controls experience before it might knock off a year and a half of training, if they had done some types of controls experience before it might knock off eight or nine months at best. Best case with a lot of prior conveyor control experience and being top of the class it takes at least a year and a half to train.

It is experience that has the most value in the job market. I do not care how smart you are or you’re your experience e in other areas is. There are huge sections of the job market were only after years of specific experience can you put out a decent quality product, like experience in many cases help only a little. College is beneficial in that is present basic a tools set, common terminology, and ( if the student is challenged) help increase critical thinking in some areas.

Tom writes:

Speaking from experience, the "legal assistant" part of #9 does not require any specialized training and is often filled by "unskilled" college graduates.

Dirck Noorman writes:

Having a college degree in the US is really more of an indicator of social class than of intelligence. With the proliferation of "Studies" majors, and the lowering of standards for the erstwhile venerable BA, having a college degree doesn't even mean someone has a rigorous education at all anymore.

Proposal - consider degrees that require some post-high school level math or natural science courses. Engineers, physicians, scientists.

I think the discussion of "skilled" would be much clearer if you clear out the basket weaving major undergrowth.

Sorry economists, the vast majority of your undergraduate students may not make the cut. Most econ majors get by with basic stats and calculus below the level of high school advanced placement courses.

Troy Camplin writes:

Math is not education. Math only describes the simplest elements of reality. It is necessary, but hardly sufficient. It cannot describe anything of reasonable complexity, such as the workings of a cell, or anything more complex than that. Statistics are all you can use, or complexity models that are nothing but that, abstract models.

We do need major reform, to be sure. But that reform would mean more logic, grammar, poetics, literature, philosophy, complexity and systems science, biology, etc. -- as well as more math, chemistry, and physics. As far as I can tel, the mathematicization of economics has done far more harm than good. Hopefully complexity approaches (including the mathematical models used in complexity science) will work to overcome and overturn all that.

Douglass Holmes writes:

Ironman,
This is totally off Arnold's subject, but your link to the GRE scores was interesting.

I worked with engineers for 30 years. They have horrible writing skills. So, I'm not not surprised that their GRE Verbal scores are below the average. What's sad is that Education majors score even lower. What hope is there if our Education majors have lower analytical capabilities than Political Science majors or English majors? What hope is there if our Education majors cannot communicate as well as engineers?

Maybe some Chemistry majors will open Mathnasium or Kumon franchises.

Troy Camplin writes:

Twenty years ago, when I was an undergrad at Western Ky Univ, the education majors had the lowest GRE scores of any department. We in the Recombinant Gene Technology major had the highest (physics was second to us). I wonder if education majors are still the lowest of any major. I wouldn't doubt it. If you knew what they were(n't) taught, you'd be truly horrified.

Simon K writes:

Andrew: I hired programmers as part of managing a software group. The HR department told me that I could ask technical questions, but to never write them down in any "formal" way. They were worried that someone would claim I was giving a "test". Any test was illegal unless proven to be non-discriminatory in effect when applied to different races.

Dan: I've done lots of technical interviews and never heard this. We asked technical questions all the time and were very open about it being a test. Google is infamous for doing this.

Well that's the most extreme possible interpretation of the law. If someone takes you to court for racial discrimination, they have to show (usually statistically) that the test had "disparate impact" on different races. You'd then have to show that the test in question was job related and necessary for the business.

I don't believe the specific case of asking technical, mathematical or just general intelligence questions in interviews for technical positions has ever been tested, probably because showing business necessity ought to be so easy I suspect no lawyer would take the case. But the fact its never been tested does give scope for HR managers and right-wing journalists to imagine all kinds of things, and there is scope for things to back-fire. Some general intelligence or programming questions I've heard asked at interviews do contain cultural assumptions (eg. to know why manhole covers are round you have to know what they are and how they are used) that you probably couldn't prove business necessity for.

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