Real earnings for young male college grads are down 19% since their peak in 2000.
Real earnings for young female college grads are down 16% since their peak in 2003.
These figures are for full-time workers, ages 25-34, with a bachelor’s degree only. See the charts below.
I’ll be posting more to this thread in the coming days. Suffice to say that I’m pretty convinced there’s a serious market failure occuring here. There’s no good reason for college costs to be skyrocketing the way they are even as the ROI on a college degree is plummeting.
Research. At least, that’s my guess. Even mediocre undergrad state schools want a piece of the research pie. Plus athletics, admin costs and declining state contributions. Plus the massive growth of “state states”, regional schools to take up the massive growth of demand. Which winnows out the upper level schools even further to the rich demographic.
For example, 20 years ago, at the end of the “60s” era of culture, the University of Texas still had a substantial “hippie” like demographic; kids got odd jobs, lived in coops, and generally lived the poor college student life going to a boring state school. Now, all that has been swept away, the local shops demolished and replaced with yuppie commercial properties, and most of the kids all live luxurious lifestyles in expensive off campus apartments, all given by dear ole dad. If you’re budgeting for 40,000$ a year, and you’re kids school only needs, say 15,000$ for tuition, suddenly everything is more affordable. OTOH, Texas State (San Marcus University) has grown by something like 4x it’s student body size in the same period; so have UTEP, UT Arlington, and University of North Texas, which are each an amazing 20,000+, more or less, and all of which can command similar tuition rates to the larger schools. And of course, private tuition costs has skyrocketed.
One thing I’m interested in: the amount of students attending schools has increased. But the per-student cost has also increased. Are schools scaling up to handle the increased number of students? From what I gather the job market for college professors sucks; not only are universities not hiring new professors, they’re actually downsizing on the professorial workforce. So what’s going on there? Where’s all this increased tuition money going? What expenditures are increasing?
In California tuition is going up because the state is no longer subsidizing the tuition to the extent it was 5-10 years ago. I forget the exact percentage but California was putting in 50-60% of the actual cost of each student whereas now that figure is much lower.
I really think, ultimately, it’s making hay while the sun still shines. Have you seen a run-down campus, anywhere? Except, perhaps, a few community colleges in declining areas, every single university campus i’ve seen in recent years looks fantastic. It’s a stupid measure of success, but schools have found a way to make money even when everything around them is in decline. These expenditures, what i’m saying, are not just going to “bare essentials” to keep the school going, they’re going towards constant renovations and improvements. It also helps that this market keeps growing (students entering university) by such large numbers; it means that by constantly improving their facilities and departments, a school can actually increase it’s academic profile and quality of student body, as the pool of kids to choose from is ever growing, the number of seats is growing much less quickly, and most of the “chaff” is being funneled the fast growing lower-quality, “new” schools popping up from their small, local beginnings.
Also, it’s worth asking if the decline in income from new college grads is equally distributed among all graduates? Do Yale grads also make 15% less? Or is it all graduates nationally? Because, like above, there are so many newer, lesser schools pumping out degrees, i’m very curious whether this is an averaging effect or a systemic problem. I’m also deeply suspicious of degree inflation, and degreed graduates working jobs that would normally be “beneath” a college grad 50 years ago because of it, such as semi-skilled managerial or misc. office staff, which brings down the average.
So, are there too many college grads out there doing jobs that don’t really require a college degree (at least a 4-year degree) while at the same time there are not enough college grads in the sciences and other majors that are needed. Do having all the extra lib arts majors make it any cheaper to become a doctor or scientist?
We are always being told that America is not producing enough of the highly trained graduates. Is that actually true?
Another good question. I’d love to see some stats showing who’s graduating with what degree over the past 20 years or so. Starting in 2000 did colleges just start churning out a LOT more liberal arts majors?
It seems unlikely (to me) that liberal arts per se have increased especially in 10 years. Though, part of me wonders if “generic” degrees like Business Administration have any marketable value… or if they are not a “default” degree to an average student with no particular aspirations, that might well have increased somewhat in the last couple of decades. (I see business administration as the poor man’s, or perhaps lazy mans, law degree, the degree to get when you want to make money, but don’t want to go into the science heavy engineering or medical programs, or can’t get into a decent law program).
Yes, I realize that it was somewhat stating the obvious, but it was in response to you suggesting that it was a market failure. I guess I was just pointing out that there isn’t necessarily some kind of shennanigans taking place, but rather that it was just based on the fact that there’s really nothing that links the tuition to the wages of folks who graduate.
I think that we’ve seen in previous threads that many college students do not really look at college as an investment towards future earnings. That is, folks aren’t really choosing their majors and stuff with the goal of necessarily finding a high paying career. I’m not sure how much that really even enters into the minds of many high school seniors when they enter college.
And if that aspect of the equation isn’t entering the decision making process of the buyers, then that means you can’t really expect declining wages on the tail end to have much impact on the demand for college educations, which means it wouldn’t have any impact on the tuition.
Seems like the only thing which would ever bring the tuition prices down would be if less people starting thinking they should go to college. I’m not sure what could result in that kind of change of mindset, since it seems like the general belief is that everyone needs to go to college. That’s pretty much what they tell high school kids most of the time.
When a long-term historical trend suddenly reverses itself, it’s often useful to try and understand why. Quite simply the introductory macro/micro stuff that you like to espouse isn’t going to cut it when you look at things like this.