Thursday, September 20, 2012

The Dwindling Value of a College Education

Real earnings for young college grads have fallen by over 15% since 2000, or by about $10,000 in 2011 dollars. That is if they have a job in the first place. The unemployment rate for recent college graduates continues significantly higher than for the population as a whole.

A few things are going on here. Given the unkowns of Obamacare and other regulations, it is very risky for an employer to take on new employees, since the cost of the hire can not be completely be determined. Second, you have the roller-coaster economy because of the stop and go manipulations of the Federal Reserve, which adds uncertainty for businessmen. Finally, you have the devaluation of a college degree by the government as they make it easy through loans and state education for near anyone of any educational ability to get a degree.

(Via Tyler Cowen)


  1. A degree in something useful makes all the difference. Engineering and science definitely maximize employment prospects.

    Regardless, I think that chart is b.s for all years. Definitely inflated and not accurate. I think BLS is more accurate and if you look at earnings by age on BLS it doesn't align at all with this.

  2. If the economic return on a college degree is falling so sharply, you would think the tuition costs of a college degree would likewise decline, or at the very least major changes would be occurring in higher education to address this situation. Of course, it isn't. College costs continue to explode even as their grads collect unemployment checks. Like government involvement in health care, government with all of its subsidizes and guarantees of student loan debt has totally screwed up higher education. Market forces that normally would encourage efficiency and enhancement of consumer value have been undermined, so that college costs can continue to skyrocket even as the value of the college degree plummets.

  3. I keep reevaluating Jim Roger's affirmation that the farmers will be driving the Maseratis, while the financial sector declines. I think he is on the right track, but I'm not sure it's the small farmer who is going to prosper.

    I think most of college education is a waste, except for whatever critical thinking, writing and speaking skills it can enhance for a non-technical student. All of these can be obtained for far less costs, or only the cost of time. I plan to join Toastmasters myself, because I would like to speak publicly which is a great fear for me. I know that if you help people sell/market something, you will "always eat." But to sell what? What I would really like to sell is Boeing's new jet. Haha. Wish me all the luck in the world on that one.