Bryan Caplan  

Does College Pay Off for Cashiers? Yes & No

Reply to James Pethokoukis--an... On Sweatshops: They're Better ...
Two years ago, David Leonhardt argued that B.A.s pay, even for careers that don't require them.  The title: "Even for Cashiers, College Pays Off."  Is this true?

I've spent the last two weeks tracking down the data.  Leonhardt relied on Anthony Carnevale and Stephen Rose's The Undereducated American plus some of their unpublished data.  When I tracked down the unpublished data, Steve Rose generously gave me updated numbers unavailable to Leonhardt.  Those are the data I rely on below.

So does college pay off for cashiers?  The answer turns out to be Yes and No.  Before you can answer the question, you must refine it.

If your refined question is, "Do college-grad cashiers make more money than high-school grad cashiers?," the answer is Yes.  In Carnevale and Rose's updated numbers, the median wage for B.A. cashiers is $18,200, versus $14,000 for high-school-only cashiers.  That's a college premium of 30%.  Not bad.

However, if your refined question is, "Do college-grad cashiers make more money than high school grads?" the answer is No.  In Carnevale and Rose's updated numbers, the median wage for all high school grads is $25,316.  The cashier with a bachelor's degree therefore makes 28% less than the typical high school graduate.  Four years of college for that?!

Which comparison is more relevant?  It depends. 

In a world where workers have an unchangeable occupation, the first comparison is what matters.  Any cashier who wants to rise in the cashiering profession can go college to ring up sales for posher customers. 

Otherwise, though, it's the second comparison that matters.  Any high school graduate with the right stuff to get a B.A. should, at minimum, expect to earn as much as his high-school-only classmates if he skips college.

On the first story, a college grad cashier tells himself, "My wage may seem low by B.A. standards, but thanks to my years of study I have become an unusually well-paid cashier.  So it all worked out."  On the second story, though, a college grad cashier tells himself, "My wage may seem high by cashier standards, but despite my years of study I earn less than the typical high school grad."

I'm a notorious Pollyanna.  But even I couldn't say the first story with a straight face.  Can you?

P.S. Note: Correcting for ability bias, the college-grad cashier's situation is even less enviable.  If you have the right stuff to get a B.A., you ought at least somewhat outearn the typical person who skips college.

Comments and Sharing

COMMENTS (15 to date)
Neal W. writes:

I have a Master's degree and make $14 per hour, part time. I graduated over one year ago.

I hate my life.

J Storrs Hall writes:

Duh. Or perhaps double duh. You can't compare the income of the college cashier with the high-school one, or whatever the best high-school outcome is. You have to compare the net present value of the delayed college income, measured from the decision point, which is high school graduation time, with the NPV of the 4-years-earlier best high-school career income PLUS the money that would have been spent on college.

Tom E. Snyder writes:

Or to put J Storrs Hall's comment in other terms, you overlooked opportunity costs of a college education. By that standard, the college route is vastly more costly. [You are an economist, right? ;-)]

BC writes:

It makes sense to compare college grads to high school grads across all occupations or college-grad cashiers to high-school grad cashiers, but comparing college-grad cashiers to high-school grads across all occupations does not seem right.

Suppose that the 10th percentile college grad income is less than the median high school grad income. We could not claim on that basis that there was no college premium. The college premium exists if college education shifts the distribution of income in the positive direction even if the college and non-college distributions partially overlap. Conditioning on the event "became cashier" creates a selection bias similar to conditioning on the event "earns at the 10th percentile".

If one compares college-grad cashier to high-school grad cashier and all college grads to all high school grads, the story is, "College won't guarantee that you won't become a cashier, but whether you become a cashier or something else, you will likely earn more than if you hadn't gone to college."

Your second story, "My wage may seem high by cashier standards, but despite my years of study I earn less than the typical high school grad," is flawed because you are comparing a conditional distribution with an unconditional distribution. Conditioned on the event that the person becomes a cashier, he would have earned less than a typical high school grad even if he had not gone to college (and less than he is now earning as a result of having gone to college). Your second story phrasing would only be appropriate if going to college somehow increased the likelihood of becoming a cashier rather than a higher earning high-school grad occupation.

john hare writes:

I think the short version is that spending four years of your life and serious money on a degree you don't use is terrible for your financial present and future.

Kevin writes:

The first story makes far more sense to me because I can't construct a convincing narrative in which attending college reduces a person's ability to pursue any career that a high-school-only person can pursue. So at graduation, all these future BA-holding cashiers have available to them all the choices available to HS grads, plus the option to be BA-holding cashiers, plus maybe some others. That they do not choose higher-paying occupations indicates to me either a preference against or an inability to do the jobs that account for the higher median wage of all HS grads. So accounting for ability and preference, I see no reason to think they are not maximizing their affairs by using their BA's to be cashiers.

The only way I can see that this isn't the case is if getting a BA at, say 23, makes a person less marketable but no less unwilling for the same jobs (s)he could have gotten AND would have accepted at 18. What's the narrative for how that works?

Ricardo V writes:

BC has already pointed out the methodological illegitimacy of the second question.

Either one compares B.A. grads working as cashiers and high-school grads working as cashiers, or one compares B.A. grads with any occupation with high-school grads with any occupation.

Controlling for ocupation in the case of B.A. grads, but not for high-school grads is methodologically wrong.

What possible research question could be answered by such comparison?? Certainly not the research question in the cited paper!!

Furthermore, there is no point to "refine" the question, as the question in the title of the paper is pretty much clear : "Even for Cashiers, College Pays Off". Evidently, "even for cashiers" means "controlling for occupation".

You either look exclusively for cashiers, or you control for whatever job, or you look to the pool of BA grads and HS grads irrespectively of occupation.

Hence, there is no "yes and no": there is one clearly defined question, the answer of which is "yes", and then there is a second "refined" question which is a methodological error, and is only meant to force a contrarian view where such view is not supported by the data.

Having a BA leads to a wage premium even if you are a cashier. As simple as that.

Ricardo V writes:

There is an even weirder methodological non-sense there.

"In a world where workers have an unchangeable occupation, the first comparison is what matters. (...)

Otherwise, though, it's the second comparison that matters."

The first sentence is right. Now, otherwise, that is, in a world where workers have changeable occupations, why should we assume a BA grad would be locked in a cashier position???

In a world with changeable occupations, which is the one we live in, a BA grad hopes to get a better job than being a cashier, and will get it with a greater likelihood than a high-school only grad.

Why is there the assumption that in a world of changing occupations only BA grads are locked in cashier positions, but not the high-school graduates?

Then, again, the second question which really matters is comparing all BA grads across all occupations with all high-school grads across all occupations.

"The cashier with a bachelor's degree therefore makes 28% less than the typical high school graduate. Four years of college for that?!"

But who says the BA cashier will be stuck at that position??! Actually, if anyone is supposed to be locked in a cashire position *in a world of changing occupations*, that is the high-school graduate, not the one with a BA!

Yes: that is what the 4 years are for (beyond the wage premium, this is, the premium *keeping the occupation the same*): they allow BA grads to access other, better-paid jobs than "cashier" without excluding them (!) from the low-paid jobs.

Hazel Meade writes:

If I was a college grad working as a cashier, I would be spending a lot of time asking myself "What did I do wrong?"

Surely one does not spend four years in college with a plan of eventually end up standing behind a cash register.

Ben writes:

My guess is that a college-educated cashier is younger, more likely to work in a larger city, more likely to be pursuing a second career, and more likely to have turned down higher-paying jobs to create flexibility. Does this analysis account for any of these factors?

Glen Smith writes:


On your first item, a college-educated cashier may TEND to be younger but I know a whole lot that are in their 40s and older. I would also disagree with your last statement. College graduates pursuing cashier jobs are not significantly more likely to have turned down higher paying jobs for more flexibility. Many of the non-college grads are the ones who want flexibility (going to school, second/third/fourth job, extra income, etc.). The only time a college-educated cashier usually needs a flexible job is for the adult version of "beer money".

djc263 writes:

The problem I see is trade specialists and small family businesses, a union electrician is a pretty good job, or a plumber, or manager of the family restaurant. I don't think it's reasonable to lump in these moderately successful careers with the generic high school graduate, they required dedication, a work ethic, and opportunity to get, the same as a college degree salary position. Of course a cashier is going to make less money by comparison. These careers are also in limited supply, so it's reasonable to assume that they are as selective as desirable post college employers.

JOS writes:

It's always tricky to compare distribution and means are rarely a sufficient statistic. However, I can understand the claim that the left tail of the BA earnings distribution should be above the mean of the HS-Grad only distribution, even if I disagree with it.

As a check, do the lowest earning HS-Grads earn more than the mean HS-dropout? If not, would they have been better served by dropping out of HS?

Do the distributions account for the probability of being employed? (That is, do the means include zero-earners?)

I also wonder about the age distribution. Are you comparing 23-year-old BS cashiers with 50-year-old HS grads across all occupations?

These sorts of questions don't lend themselves to easy analysis. Perhaps the HRS would let one look at lifetime earnings along with a transition matrix to account for occupational switching. Then it should be possible to see if one "path" dominates the other.

Glen S. McGhee writes:

We need to go back to the very first post -- "I hate my life" -- because Ivar Berg showed that college graduates that are placed in jobs NOT requiring a degree, below their expectations, are unhappy and miserable -- REGARDLESS of whether or not they are making more than the high schooler cashier. The 'relative deprivation' subjective perceptions mean MORE than an objective assay of income (cf. opportunity cost issue above). Just ask Neal.

Next, there are more unemployed or partially-employed college-goers than those unemployed or partially-employed with a high school diploma, and this creeps into the analysis as a hidden assumption -- the analysis assumes employment. Big mistake!

Lastly, where's the causal relationship? Correlation is not the same as causation, right? Why would you even compare high school with college, unless you had some insight into the causal connection?

MingoV writes:

No matter how you slice it, working in an unskilled job after acquiring a bachelors degree is a net loss. Let's look at the cashier example in 2012 comparing two people who graduated high school in 2006. (I'm assuming no inflation to simplify the calculations.) The two people, while working as cashiers, live with generous parents who pay all their living expenses so they can keep all earned money.

HS to cashier: $14,000 per year; $84,000 net worth at 2012

HS to state university 4 yrs: -$16,000 per year; -$64,000 total

Assuming a 15 year student loan at 0.5% per month, the annual payment will be approximately $6,400.

BA to cashier: $0 per year x 4 yrs, $18,200 per year x 2 yrs; $36,400 - $58,200 remaining loan = -$21,800 net worth at 2012

The annual loan payments of $6,400 more than wipe out the "college premium". The net worth difference six years after high school is $106,800. It will take decades for the BA cashier to catch up to the HS Cashier.

Comments for this entry have been closed
Return to top