The Least Generation.

A BA may not guarantee you a job, but not having a BA will guarantee that you don’t get a job.  Since the 2008 recession, the American economy has created 11.6 million new jobs.  Of  those new jobs, 99 percent went to people with at least some college and predominantly to people with a BA.[1]  A lot of those jobs probably were as managers, supervisors, and support staff.  Between 1983 and 2014, those job titles increased in number by 90 percent, while other occupations grew by only 40 percent.[2]

Since 1981, more than half of all BAs have been earned by women, rather than men.  Thirty-odd years of that trend has shifted the balance in the population at large.  Now, 29.9 percent of all men hold BAs, while 30.2 percent of all women hold BAs.  Obviously, at this rate the gap will become ever more stark.[3]

Back in 2005, about 40 percent of the graduate students studying science and mathematics in the United States came from foreign countries; in 2015, about 50 percent of the graduate students studying engineering came from outside the United States.[4]

According to the bipartisan commentator Juan Williams, the public schools have failed minority children.[5]  In 2015, 18 percent of black and 21 percent of Hispanic fourth-graders scored as “proficient” readers.  Among those aged 25-29 years, only 15 percent of Hispanics and 20 percent of blacks had BAs.  The Dallas sniper, Micah Johnson, had a high school GPA of 1.98.[6]  In turn, 2.00 is a “C” grade or “Average.”  At the same time, the Micah Johnson, graduated 430th out of a class of 453 seniors, in the bottom 5 percent of his class.  So, 95 percent of students in his class had a GPA of 2.00 or higher.  His GPA is emblematic of things that have gone wrong with American education.  A lot of grade inflation has taken place.  It looks like grades are almost entirely meaningless as an evaluation of work-ethic, knowledge, or intelligence.  Problematic kids get passed along by teachers.

However, two-thirds (68 percent) of Americans do not have a college degree.[7]  When the “Great Recession” hit in 2008, employment slumped.  Kinfolk said “Jed, improve your skills!” So, college enrollments jumped by 25 percent, from 2.4 million in Fall 2007 to 3 million in Fall 2009.  By Fall 2015, 52.9 percent of these students had graduated with either an AS or a BS.[8]  But why didn’t the others graduate?   Over a third (38 percent) of people with college loan debt didn’t graduate.  Almost half (45 percent) of people with college loan debt think that college wasn’t worth the price.[9]  Better than three-quarters (78 percent) of those who think that the game wasn’t worth the candle earn less than $50,000 a year and better than two-thirds (68 percent) are having trouble paying their debt.

You need a BA for success.  Women do college better than men.  Whites do college better than blacks or Hispanics.  Americans don’t do math, science, or engineering.  Money shouldn’t be a barrier to talent, such as it is.  It would be easy to join the pack and throw all this on the schools and on the teachers.  However, there is a lot of parental malpractice evident.

[1] “Noted,” The Week, 15 July 2016, p. 16.

[2] “The bottom line,” The Week, 15 July 2016, p. 31.

[3] “Noted,” The Week, 30 October 2015, p. 16.

[4] “Noted,” The Week, 15 July 2015, p. 18.

[5] Juan Williams, “The scandal of our failing public schools,” The Week, 15 July 2016, p. 12.

[6] Dan Frosch and Josh Dawsey, “Dallas Shooter Bought Weapons Legally,” WSJ, 12 July 2016.

[7] “Noted,” The Week, 15 July 2016, p. 16.

[8] “The bottom line,” The Week, 4 December 2015, p. 36.

[9] “Poll Watch,” The Week, 15 July 2016, p. 17.

Edjumication 2.

The Wall Street Journal ran this interesting—and terrifying if you give a rip about our country—story.[1]  Back in 2012, the Organization for Economic Cooperation and Development (OECD) ran a big survey of a lot of member states.  The International Assessment of Adult Competency tried to figure out how well different advanced counties do at “problem-solving in technology rich environments” (AKA “using digital technology to perform practical tasks”).  The U.S came last among 18 advanced countries.

Japan, Finland, Sweden, and Norway headed the list.[2]  Poland came 17th, just ahead of the U.S.  (On the other hand, Poles have a tremendous work ethic that has made them deeply unpopular in much of Western Europe.[3]  In contrast, car thieves in the U.S. will not steal American cars made in the 1970s and 1980s because the cars are garbage as the result of poor workmanship.  Foreign cars, like a Honda or a Mercedes?  That’s a different matter.[4])

Why is this?  A Harvard B-School professor opined that “when you look at this data it suggests the trends we’ve discerned over the last twenty years are continuing and if anything they are gaining momentum.”  What are those trends? American workers demonstrate “flagging literacy and numeracy skills, which are the fundamental skills needed to score well on the survey.”  Many Americans have a lot of trouble with any kind of math problem.

Why does this matter?  It matters because most middle-class jobs in the future will require numeracy and literacy skills.  What we think of as “manufacturing” jobs, for example, are simple, repetitive, boring jobs on an assembly-line.  The substitution of machines for manpower by management and investment allowed both high wages and high profits.  The rise of cheap labor in Asian economies entering the global market since the collapse of Communism has destroyed those jobs.  American manufacturers have adapted by introducing far more mechanization and computers.  Future manufacturing in the U.S. will involve far fewer workers with far greater skills.[5]

It isn’t just blue-collar workers who are “in a queer street.”[6]  For those aged 16 to 34, the study found that “even workers with college degrees and graduate or professional degrees don’t stack up favorably against their international peers.”  So, taking on a lot of debt to get a college degree in order to gain some safety isn’t necessarily a wise move.

What are the sources of our malaise?  Without any doubt, they are many.  However, perhaps one of them is “cultural,” rather than institutional.  “This is the only country in the world where it is acceptable to say ‘I’m not good at math’.” said one observer.   The same is probably true for reading.[7]  One measure: is there a “no shush” rule posted in your local library?

Perhaps there is something to be said for a reassertion of traditional values.

[1] Douglas Belkin, “U.S. Ranks Last in Tech Problem Solving,” WSJ, 10 March 2016.

[2] OK, but when is the last time you saw a Scandinavian block-buster movie about a crime-stopping hero in a spandex suit?  No, Scandinavian crime-stopper movies are full of aging, morose alcoholics and enraged victims of sexual abuse.  So there!

[3] See:  Or talk to people who prefer cheap, high-quality, readily-available Polish workers to the lay-abouts who make up much of the French and British labor force.

[4] See:

[5] See:

[6] It isn’t a sexual-orientation reference.  In Evelyn Waugh’s Brideshead Revisited, the protagonist’s father recalls—during a dinner-table conversation of the son’s poor job prospects—that his Uncle Malachi “got into “a queer street.”  As a result, “He had to go to Australia.  Before the mast.”

[7] It is difficult to nail down just how many books the average American reads in a year or owns.  However, some research backs up intuition.  See:

Sell Order.

The American public schools are in trouble by several measures. (See: “Edjumication.”) One measure is public confidence in the public schools. Only 37 percent of Americans say that public school students get a “good or excellent education.” In contrast, 60 percent say that children who are home-schooled get a “good or excellent education”; 69 percent say that children who attend a parochial school get a “good or excellent education”; and 78 percent say that children who attend a private school get a “good or excellent education.”[1] On Wall Street this would be called a “sell order” for public schools.

How can we interpret these figures?[2] Well, curriculum for all schools are pretty much the same because they are mandated by state Departments of Education. So, that isn’t the key. Public school teachers and parochial school teachers are drawn from pretty much the same pool of job candidates. So the “quality” of the teachers isn’t the key. So, why do 37 percent of people believe that students get a “good or excellent education” while 69 percent believe that students in parochial schools get such an education?   I conjecture that there are two factors/beliefs that play a role. On the one hand, public schools have to take anyone who comes along, then try to get them through. It’s difficult in the present environment to permanently expel or fail a troublesome or weak student. They just disrupt or slow-down the progress of whatever classroom they happen to inhabit. In contrast, the parochial schools can either reject or shed problematic students. What constitutes “problematic” is up to the schools themselves.

On the other hand, parochial school really means “Catholic school” in almost every instance. In 2014, 48 percent of Americans believed that government should “promote more traditional values,” while 48 percent thought that government should not “favor any values,” and 4 percent didn’t know. In 2015, 43 percent thought that government should “promote more traditional values,” while 51 percent think that government should not “favor any values,” and 6 percent didn’t know.[3] “Spotlight” aside, the Catholic church stands for “traditional values,” while—in the mind of many people—the public schools stand for no values or corrosive values.[4]

What explains the high regard for home-schooling? I conjecture that it is motivation. Home-schoolers may be deranged or fanatical, but they’re also committed to doing the best they can for their students because they are also their children. This may reflect a judgement by home-schooling parents that public school teachers are under-motivated and under-prepared, but also that the environment in both the public schools and the Catholic schools are toxic. On the one hand, many home-schooling parents are evangelical Christians to whom a secular or Catholic environment is obnoxious. On the other hand, many are secularists who think the current obsession with testing and preparation for being a “productive member of society,” rather than an independent thinker, is obnoxious.

Finally, what explains the very high regard for private schools? That’s simple. They are the most selective institutions other than home-schooling. They are rigorously academically-oriented. The teachers usually are not products of mud-sill teacher preparation programs. Rather they are people with real BAs in academic subjects from real places. They get paid a lot less than do public school teachers, but have much heavier demands on their time. The trouble is that they are few in number, really picky about who they let in, and they cost an arm and a leg.

So, there are several possible lessons here. One is that the public schools are the victims, rather than the perpetrators, of larger social forces. A second is that picking on public school teachers isn’t going to solve the problems. A third is that the public schools bleed public support for the schools in parallel with their loss of students. A fourth is that trying to coerce students back into the public schools isn’t going to work unless and until the schools address the issues that caused so many people to despise the public schools.

[1] “Poll Watch,” The Week, 14 September 2012, p. 19.

[2] My own perspective is shaped by the following factors. I went through the Seattle public schools from K through 12. I teach at a little Catholic college, where I serve on the Teacher Education Committee. As a result, I meet a lot of Education students. Some of the students in the program go on to teach at public schools and some go on to teach at parochial schools. I don’t see a dime’s worth of difference between the two sets of teachers. One of our sons went through the public schools from K through 12; the other spent his last four years at an “elite” private school. Public school teachers today don’t seem to me to be much worse than when I was in school.

[3] “Poll Watch,” The Week, 16 October 2015, p. 17.

[4] There’s this Gahan Wilson cartoon from a ways back that shows some balding guy in a tweed jacket and horn-rimmed glasses getting sworn in as a witness. The clerk holds out the Bible and says “Do you swear to tell the Truth, the whole Truth, and nothing but the Truth—and not in some sneaky, relativistic way?”


Is college worth the price? Oh absolutely! In the late 1970s, a college degree earned you about 25 percent more than did just a high-school diploma. In the late 1980s, a college degree earned you about 50 percent more than did just a high-school diploma. In 2000, a college degree earned you 70 percent more than did just a high-school diploma.[1]

On the other hand, if a student attends a college or university that is ranked in the bottom 25 percent of all colleges and universities, then they are likely—on average—to earn less than a high-school graduate who did not attend a college or university. But which are these schools? Google “ranking of colleges and universities” and the next thing you know, you’re in a morass. What I’m—defensively—guessing is that the list includes a lot of for-profit schools which the Federal government is intermittently dragging down a dirt road chained behind a pick-up truck.  Still, if you think about it, there are a bunch of schools where a BA earns you just as much as not having gone to college, and a bunch more schools where a BA earns you somewhat more than not having gone to college in the first place. All of this costs students and/or parents money.

Not everyone is a loser in this stupid game, but the success of some disguises the relative failure of many. Currently, the average annual income for college graduates ten years after crossing the stage to the cheers of family members is $35,000.[2] On the other hand, after the same span of time, Ivy League graduates average $70,000.[3] So, all you’ve got to do is work real hard in high-school, get into one of the Ivies, and you’re on Easy Street, right? Well, it turns out that “no, man, there’s games beyond the game,” as “Stringer” Bell advised Avon Barksdale on “The Wire.” For the top ten percent of Ivy League graduates, the average income ten years out is $200,000 a year. We’re talking about 31-32 year-olds here.

Why did the gap between a high school diploma and a BA open? Did the economy develop in a way that created an increased demand for whatever higher order intellectual skills and contextual knowledge one acquires in college? Did the economy develop in a way that eliminated well-paying jobs that did not require a college education? Did the high-schools decline as institutions of foundational learning, shifting the burden to colleges?

Well, yes. Back in April 2008, American high-schools trailed many other countries in their graduation rate. Norway (100 percent), Germany (99 percent), South Korea (96 percent), Russia (87 percent), and Italy (81), among others, all out-performed the United States (75 percent).[4] In June 2015, many young Americans graduated from high-school. Their average composite SAT score was 1490 out of a possible 2400. That is the lowest level since 2005. The country has been pursuing essentially the same educational reform policy under different names (No Child Left Behind, Race to the Top) all those years. It has achieved nothing. Furthermore, the commonly-accepted bar for college readiness is 1550. OK, not everyone needs to go to college (regardless of what President Obama once hoped for) and it’s only an average. So, how many high-school graduates were ready for college? Of all students, 42 percent scored at least 1550. However, only 16 percent of African-Americans scored at least 1550.[5]

The problems are with the schools and with parenting. Sad—and rare–to say. Read to your kids. Let them see you reading.   Praise hard work. You know, Puritanism.

[1] “Noted,” The Week, 14 January 2005, p. 14.

[2] When welders are making $100K a year.

[3] “Noted,” The Week, 25 September 2015, p. 16.

[4] “Noted,” The Week, 4 April 2008, p. 16.

[5] “Noted,” The Week, 18 September 2015, p. 16.

More degrees than a protractor factory.

Senator Bernie Sanders favors making a BA at the 629 public four year colleges a free good for all “qualified” applicants. He says that this would be on the European model.

What is the American model?

  Number Enrollment
Public 4-year institutions 629 6,837,605
Private 4-year institutions 1,845 4,161,815
Public 2-year institutions 1,070 6,184,229
Private 2-year institutions 596 303,826
Total 4,140 17,487,475
Undergraduate 14,473,884
Graduate 2,097,511
Professional 329,076


What is the European model?

European universities.

Country.          Universities.   Students.        Percent.[1]         Cost.               Drop-out rate.

Britain.           115                  2.6m.               43                    E10,500.          8.6 percent.

France.            80                  2.3m.               39                    E     177.          42.0 percent.

Italy.                79                  1.8m.               43                    E1.5-3,000      45.0 percent.

Germany.       108                  2.4m.               42                    Free.               28.0 percent.

Poland.            98                  1.8m.               54                    N.A.                24.0 percent.


The obvious lesson to draw here is that if something costs you something, you value it more. Where college costs are high, the drop-out rate is low; where college costs are low, the drop-out rate is high. “Eh, I’ll take a shot at it instead of looking for work, but if the professors want real work (or if the girls won’t come across), I’ll bag it.”—Anonymous.

So, France, Germany, and Italy all have virtually free tertiary education, BUT they spend one-third to one-half of what the USA does. How do they make it work? They admit a lot of kids from good schools, then throw them in the deep end of the pool and tell them to swim for it. No hand-holding. No office hours with professors. No counseling. No Writing Centers and Math Centers for free tutoring. No “second chance” when young Bobby messes up. You need help writing a paper? Hire a grad student with your own money. Short of money and you don’t want to admit to your parents that you’ve messed up? Try dealing hash. (I’m told that the “Milkweg” in Amsterdam used to be a good place to go, but how would I know? See: ). Also, no sports teams. No dorms and dining halls. No marching bands. Just cafes on the Left Bank and Gitanes.

So, one follow-on question is which countries have people with degrees, rather than just having attended college?

Germany and Italy have lower graduation rates than does Britain or the United States.

Obviously, there is a lot more that can be done with this data, but this is a start. For one thing, why isn’t Sanders going off on the Finnish model? Nokia and mink ranches: let’s build our future on that.

Your thoughts?

[1] Percent of “young people” (otherwise undefined) in tertiary education of any sort.

Some American Public Opinion in Spring 2015.

Standardized testing has been all the rage among educational reformers for more than a decade.[1] Only 20 percent of Americans think that it has done more good than harm to the students or the schools; 49 percent think that it has done more harm than good; and 31 percent “don’t know.” However, “don’t know” isn’t one of the options on a standardized test. Would it count as a correct answer if it was an option?

Americans frequently “don’t know” where they stand on public issues, but that isn’t the case with gay marriage. Today 61 percent favor allowing gays and lesbians to marry.[2] Opposition to gay marriage rallies 35 percent. That leaves just 4 percent who don’t know.

Reading the statistics above can obscure, rather than clarify, where Americans stand on the issue. Liberal media and public figures heaped abuse on Indiana’s “religious freedom” law on the grounds that it permitted discrimination against gays. Polls revealed that 49 percent of Americans agreed with the law’s critics. However, 47 percent believed that wedding-related businesses should be able to refuse their services to gay couples. Naturally, the vast majority of the dissenters were Republicans (68 percent), but a third of Democrats (33 percent) also supported business’ “right to choose.”[3]

Support for capital punishment has been slipping in America in recent decades. In 1988, 78 percent favored the death penalty for murder. In 2015, 56 percent support the death penalty for murder. Slightly more of the nation, 60 percent, supports imposing the death penalty on Dzhokar Tsarnaev, the surviving Boston Marathon bomber.[4] However, opposition to the death penalty is stronger among some groups than among other groups. Thus California juries are more willing to assign someone the death penalty than are California judges to allow the penalty to be carried out. Currently, there are 751 people on death row in California, but there have been no executions in almost ten years.[5] In a remarkable demonstration of core values, in early April 2015, 62 percent of Boston voters favored sentencing Dzhokar Tsarnaev to life in prison, rather than to death, if/when he was convicted for his part in the Boston Marathon bombing.[6]

The following is no new thing, but it has come to the attention of white America as a reasonable possibility. While 61 percent of all Americans express “great” or “fair” confidence in their local police, the number plummets to 36 percent among African-Americans.[7] That means that 39 percent don’t feel “great” or “fair” confidence in their local police. Who are these people? They can’t all be members of the ACLU. Since African-Americans make up about 11 percent of the population, that would suggest that 7-8 percent of the American population (the two-thirds of the 11 percent who are African-American) lack “great” or “fair” confidence in their local police. If 39 percent of Americans over-all lack “great” or “fair” confidence in their local police, then 31-32 percent of Caucasian, Asian, and Hispanic Americans also lack “great” or “fair” confidence in their local police. The crisis of confidence in local police reaches far beyond high school students rioting in Baltimore when they should be in study hall.

[1] “Poll Watch,” The Week, 3 April 2015, p. 15.

[2] “Poll Watch,” The Week, 8 May 2015, p. 17. Of course the phrasing of the statement allows for the comic possibility that many Americans think that gay men want to marry lesbians. “Marriage means one man and one woman.”   So that would be—you know—OK.

[3] “Poll Watch,” The Week, 17 April 2015, p. 17.

[4] “Poll Watch,” The Week, 1 May 2015, p. 17.

[5] The Week, 10 April 2015, p. 14.

[6] “Poll Watch,” The Week, 3 April 2015, p. 15.

[7] “Poll Watch,” The Week, 8 May 2015, p. 17.

Inequality 4.

By and large, in recent years the upper income groups have collected most of the profits from economic growth while everyone else has lived with stagnant incomes. How much effect in monetary terms has that monopolization of growth had? According to one calculation, if the top one-percent still received the same share of income that they received in 1979, then every other family could have received a cheque for $7,105.[1]

However, compare this with another form of inequality. If incomes have stagnated for most people, so has educational attainment.          In 1900, about 11 percent of Americans aged 14 to 17 attended high school. By 1950, 75 percent of that age group attended high school. That was about double the European rate. The G.I. Bill (1944) carried the American lead forward into college education by financing college education for veterans (among other things). Then something started to go wrong in the 1970s. Male graduation rates for four-year colleges began to decline. Essentially, women have taken up the slack in educational attainment. Unfortunately, this coincided with the decline in heavy industry that paid good wages for people without a college education.

The educational differential both is and isn’t generational. Of Americans born between 1950 and 1959, 42 percent have a college degree. Of Americans born between 1980 and 1989, 44 percent have a college degree. However, only 30 percent of Americans reach a higher level of education than did their parents. Among 25-34 year-olds, 20 percent of men and 27 percent of women have made the big jump from parents who didn’t finish high school to having a college degree.

The differential is linked to social class. From the mid-1970s and the mid-1990s, college graduation rates for those in the top 25 percent of income groups rose from 36 percent to 54 percent; rates for those in the bottom 25 percent rose only from 5 percent to 9 percent. Between the early 1980s and the early 2000s, college attendance rates for people from the top 25 percent of income groups rose to be 15 to 25 percent higher than for those in the bottom 25 percent.

Why do these figures matter? They matter because, on average, Americans with a college degree are paid 74 percent more than those with only a high school degree. Between 1979 and 2012, the difference between the incomes of families headed by college graduates and families headed by high-school graduates grew by $30,000.

Education isn’t working as a vehicle for social mobility. It is starting to do the opposite.

The causes of this stagnation are complex. For one thing, middle class students go to much better schools than do lower class students. The middle class students come out less unprepared for college than do lower class students, usually markedly less unprepared. For another thing, college costs more in the United States than it does most places, and cuts in already inadequate support for public colleges have thrown even more of a burden on families.

If you think that a BA or more makes for a highly skilled work force, then expanding the percentage of Americans who are college graduates is vital for improving the quality of the American work force. If you think that international competitiveness in a globalized economy is vital for American prosperity, then improving the quality of the American labor force is essential.

Which of these two forms of inequality is worse for the country? This isn’t an attempt to divert attention from one form of inequality on behalf of the “one-percent.” It is an effort to get people to pay attention to complex fundamental problems.

[1] Eduardo Porter, “”Equation Is Simple: Education = Income,” NYT, 11 September 2014.

Does Paul Krugman eat lunch alone?

Paul Krugman[1] (1953- ) is one of the smartest guys alive. He got a BA in Economics from Yale (1974) and a Ph.D. from M.I.T. (1977). He taught at M.I.T. from 1979 to 2000, then moved to Princeton. He has won both the American Economic Association’s John Bates Clark Medal (1991) and the Nobel Prize in Economics (2008). He is a prolific author and a columnist for the New York Times.

Krugman presents himself as a scald to “politicians and pundits who solemnly repeat the conventional wisdom that sounds tough-minded and realistic.” He argues that “some of those seemingly tough-minded positions are actually ways to dodge the truly hard issues.” He cites “Bowles-Simpsonism”[2] as an example of this problem. Elite discourse is diverted from the immediate problem of high unemployment by obsessing over how to pay for Social Security and Medicare/Medicaid in the distant future.

His latest target is efforts to “divert our national discourse about inequality into a discussion of alleged problems with education.”[3] Krugman argues that “soaring inequality isn’t about education; it’s about power.” The conventional wisdom holds that rapid technological change has divided the labor force into those who have adapted (and reaped the rewards) and those who have not (and have suffered the losses). (See: Inequality )

The evidence doesn’t support the contention that “educational failings are at the root of still-weak job creation, stagnating wages, and rising inequality.” First, there’s no sign of high demand for skilled-workers, so the “skills gap” argument doesn’t hold water. Second, the inflation-adjusted incomes of highly-educated people have stayed flat for almost twenty years, so the differentiated income argument doesn’t hold water either.

Krugman sees something different happening. Corporate profits are up without the rate of return on investment having risen. He sees this as a sign of monopoly power. Companies are just squeezing consumers, rather than letting competition drive down prices. Furthermore, incomes are rising sharply for people with “strategic positions” in corporations and Wall Street.

He recommends redistribution through higher taxes on corporations and the rich, spending on programs to help working families, raising the minimum wage, and support for organizing labor to bargain effectively with employers.

There’s a lot to like in Krugman’s arguments. His assault on the inadequate Obama stimulus bill certainly proved correct. However, for someone with such extraordinary intellectual fire-power at his disposal, it’s odd that he doesn’t have more effect. Writing for the NYT is preaching to the converted. It is, perhaps, revealing that he called the British Labour Party leader Gordon Brown “more impressive than any US politician.” Brown is a brilliant man with sadly deficient political skills. The far less capable Tony Blair maneuvered Brown into delaying his claims to the prime ministership for years; then Brown put his foot in his mouth once he had the job. Krugman has explained his own absence from government by saying that he’s “temperamentally unsuited for that kind of role. You have to be very good at people skills, biting your tongue when people say silly things.”

It’s hard to persuade people if they turn down the volume when you start to talk.

[1] Curiously, Krugman’s middle name is Robin. His first wife’s name was Robin Bergman. His second wife’s name is Robin Weiss. This starts to sound a little like Lyndon Johnson.

[2] Krugman does not exactly attack the Commission’s Report itself, so much as a movement that makes use of the report. Erskine Bowles punched back effectively in a letter to the WSJ, 11 February 2015.

[3] Paul Krugman, “Knowledge Isn’t Power,” NYT, 23 February 2015.

College costs: the old eat the young.

It is always worth asking whether a consumer is getting value for money. Is a college education today worth the higher price than that paid by earlier generations?

Everyone knows that inflation-adjusted college tuition has more than doubled since 1992. Except that it hasn’t. Everyone knows that it can cost $60,000 a year for college. Except that it hardly ever does.

The real price of college has to include the financial aid (other than loans) supplied to the student. This gives the net price. Since 1992, the net price for community college has fallen; the net price at a private four-year college has risen 22 percent; and the net price for a four-year public college has risen 60 percent. The average of the two falls into a range between a 40 percent and 50 percent increase in net tuition. This puts college tuition in the same ball-park as medical costs (35 percent) or day care (44 percent).

The “sticker shock” tuitions beloved of the media and the politicians only apply to people from affluent families who are not eligible for financial aid attending elite schools that can charge what the market will bear for a prestigious degree.

Taking lower costs and higher aid into account, the average price for a student attending a four-year public college was $3,120 a year in 2013; the average price for a student attending a four-year private college was $12,460.[1]

Why has the net cost of a four-year public college risen so much more than the cost of a four-year private college? In the United States, about eighty percent of college students attend public colleges. Between 1988 and 2013, nominal tuition at these institutions more than doubled. This has created a terrible problem of debt for parents and students when most incomes have been stagnant. However, the revenue earned by these colleges stayed flat. In 1988 colleges earned an average of $11,300 per student; in 2013 they earned an average of $11,500 per student. If colleges aren’t getting rich, then where did the additional tuition go? To tax-payers, that’s where.

Traditionally, public colleges were subsidized by state legislatures. In 1988, each student at a public college received an average of $8,600 a year to subsidize his/her studies. The student and his/her family kicked in the additional $2,700 a year. In 2013, each student at a public college received an average of $6,100 a year to subsidize his/her studies. The student and his/her family now have to kick in $5,400 a year. A four year BA went from costing the state $34,600 to costing $24,400. That same four year BA went from costing students and parents $10,800 to costing $20,800. People who got a cheap BA paid for by others, now want to pay lower taxes.

The Obama administration has the idea that introducing ratings for colleges will help “education consumers.” They want to consider factors like affordability, drop-out rates, and the earnings of graduates. Federal subsidies—“Jump, boy, jump” versus “Bad dog, no biscuit”—would reward colleges which score well on the standardized test.[2]   People push back, saying that there is too much difference among students to make a single standard meaningful. The economist Susan Dynarski has suggested that the “risk adjusted” rating system used for hospitals might offer a useful means of adapting any rating system.[3] Better still, restore the state aid.

[1] David Leonhardt, “How Government Exaggerates College’s Cost,” New York Times, 29 July 2014.

[2] I can foresee the criticism that this will lead colleges to “admit to the test” just as schools “teach to the test.”

[3] Susan Dynarski, “Where College Ratings Hit the Wall,” New York Times, 21 September 2014.