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The Value of a College Education


In a piece entitled, “Even for Cashiers, College Pays Off,” David Leonhardt looks to throw cold water on the idea that college just isn’t worth it. Europe has it wrong that some kids shouldn’t even go to high school. Thank goodness America got it right, writes Leonhardt.

The evidence is overwhelming that college is a better investment for most graduates than in the past. A new study even shows that a bachelor’s degree pays off for jobs that don’t require one: secretaries, plumbers and cashiers. And, beyond money, education seems to make people happier and healthier.

Leonhardt says that The Hamilton Project studied the issue and found that college tuition provides a 15% return, much better than stocks (7%) and real estate (1%). Leonhardt claims,

Construction workers, police officers, plumbers, retail salespeople and secretaries, among others, make significantly more with a degree than without one. Why? Education helps people do higher-skilled work, get jobs with better-paying companies or open their own businesses.

The NYT provides a graphic to illustrate Leonhardt’s point. Dishwashers without a college degree pull down $19,000 a year, while dishwashers with a college degree make $34,000. The later number comes to over $16 per hour. But why would the local Appleby’s shell out $16+ for dishwashers when they could hire someone at minimum wage?

Hairdressers with a degree command $32,000 according to the Center on Education and the Work Force at Georgetown University, while those that start cutting and styling without, make only $19,000. Next time you’re in Great Clips for a trim look for diplomas on the wall next to the framed cosmetology licenses.

In the case of some government jobs, like cops and teachers, work rules require pay increases when an employee obtains a degree. But cashiers?

Maybe because some college graduates are working multiple jobs, the study wrongly credits a worker’s total earnings from all jobs to just one employment category.

For instance, in a more believable story in the Times, Hannah Seligson writes about a number of the college educated who must cobble together a number of part-time jobs to make ends meet. While some people do this by choice, many do it out of necessity.

“Young college graduates working multiple jobs is a natural consequence of a bad labor market and having, on average, $20,000 worth of student loans to pay off,” said Carl E. Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers.

“[T]he median starting salary for those who graduated from four-year degree programs in 2009 and 2010 was $27,000, down from $30,000 for those who graduated in 2006 to 2008, before the recession,” writes Seligson, who adds, “Try living on $27,000 a year — before taxes — in a city like New York, Washington or Chicago.”

Mia Branco graduated magna cum laude with a degree in musical theater from American University in 2009 and works four jobs in order to take home $1,300 in a good month.

“More college graduates are working in second jobs that don’t require college degrees,” Seligson writes, part of a phenomenon called ‘mal-employment.’ In short, many baby-sitters, sales clerks, telemarketers and bartenders are overqualified for their jobs.”

Nearly two million college graduates were mal-employed last year, up 17% from 2007. Nearly half of all college graduates are working at a job not requiring a degree.

Roger Fierro works four jobs and likes it that way. “I was working 12 hours a day and making $38,000 a year and it wasn’t making a dent in the $120,000 in loans I had to pay off. Plus, I was miserable.”

“Among the members of the class of 2010, just 56 percent had held at least one job by this spring, when the survey was conducted,” reported the Times last month. “That compares with 90 percent of graduates from the classes of 2006 and 2007.”

Leonhardt believes higher education skeptics are elitist. Maybe he should ask the class of 2010.


Doug French

Douglas French is former president of the Mises Institute, author of Early Speculative Bubbles & Increases in the Money Supply , and author of Walk Away: The Rise and Fall of the Home-Ownership Myth. He received his master's degree in economics from UNLV, studying under both Professor Murray Rothbard and Professor Hans-Hermann Hoppe.

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