The “Tuition Bubble” and Degree Oversupply

There’s a lot of neat stuff in Carnevale and Rose’s The Undereducated American  (and if you can’t read the whole thing, the first ten or so pages are essentially a Powerpoint of the findings — they will take you all of two minutes to flip through; you have no excuse).

One of my favorite pieces is on page 29, specifically this graph:

One of the arguments of those who claim we have a tuition bubble is that one in three graduates of college do not hold jobs that require a bachelor’s degree. If there really is such a demand for college graduates, the argument goes, then where are the jobs?

But requiring a degree and putting a premium on a degree are two separate things. If we believe the market is rational in this case then this figure

…indicates just the opposite. It shows the median earnings of full-time, full-year workers in the occupational tiers for those with only a high school diploma and those with a Bachelor’s degree [in those professions where a Bachelor’s degree is not required]. Within each occupational tier, those with Bachelor’s degrees earn between 37 to 45 percent more than those with only high school diplomas.

In other words, employers place a premium on college degrees, even in the lower and middle-skilled jobs that don’t technically require such credentials.

There’s certainly questions about what happens to this gap when you control for a variety of factors — how much of this holds when you control for race, or education level of parents? How does it look comparing within jobs at a more granular level?

But I think at this point the onus is on the Tuition Bubblers to ante up.

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