The Value of a College Degree
Peter Orszag provides some clear and sobering commentary on the value of a college degree in a column for Bloomberg yesterday. The key message is here:
The effects of globalization are already moving up the wage scale, though, and that trend will likely continue. As Alan Blinder of Princeton University trenchantly noted in 2006, “Many people blithely assume that the critical labor-market distinction is, and will remain, between highly educated (or highly skilled) people and less-educated (or less-skilled) people -- doctors versus call-center operators, for example.” Instead, the crucial distinction is between those tasks that are easily digitized (and thus subject to substantial competition from workers abroad) and those that are not.
The college degree does not necessarily provide protection against having your occupation digitized in this way. The more important element of economic security is to be among the best adopters of the products and opportunities that are digitized. I suspect that it will remain the case well into the future that those who have college degrees will be on average better adopters than of digitized products and opportunities than those who do not have college degrees. The challenge for institutions of higher education is then to find ways to enable their students and graduates to be better adopters of these new digitized products and opportunities.
Is that adopters or adapters?
Is that adopters or adapters?
The other key, and I realize
The other key, and I realize I'm not breaking new ground here, is to get college degrees in things that matter. I certainly don't want to discourage the next Yo Yo Ma from going to the Berkely School in Boston to play the Oboe or whatever, but at most major universities there are far too many Liberal Arts majors and far too few Engineers, Physics majors etc. I was a Liberal Arts major myself, but that was 20 years ago.
In the current job market, if you are just going to go to State U because that's what is expected and major in Sociology either because that's what you really want or because you don't have the math skills to major in Chemistry - why bother really? You'd be better off learning to be a plumber, or electritian or some kind or medical lab technician. You will probably get paid more with those jobs as well. There will always be liberal arts majors that thrive, and the Ivy's will still feed high level people (either IQ or Social Status wise) into good, high paying jobs regardless of major. But for the majority of college graduates - you're probably wasting your time, and you and your parents money. Not because college is useless - but because you're not learning anything the world has use for.
I beg to disagree
If you're a young engineer, accountant, insurance adjuster, statistician, etc., it's probably the case that 90% of what you do can be done by a computer program. Which eventually will mean that there'es no employment for 90% of the would-be engineers, accountants, etc. out there.
OTOH, it's going to be difficult to replace film directors and artists and novelists and book reviewers and historians and street-walkers and courtroom attorneys and politicians with software. Liberal arts grads may have better long term employment prospects than STEM workers.
I'm pretty sure that a
I'm pretty sure that a street-walker, artist, politician, film director, novelist, book reviewer, etc do not need a college degree. Oh -- I'm sure there are a whole bunch of degreed people doing those jobs but that is because this country has simply added "credentials" as an often bogus job qualification (to avoid violating govt rules that would punish an employer for using qualifications that aren't as easily "fittable" on a govt form).
I think this author has it right when he talks about the impact of credential-seeking -- http://www.independent.org/publications/tir/article.asp?a=813
We risk turning into Europe -- with millions of unemployed Euro "philosophers"/"sociologists"/"psychologists" - while uncredentialed immigrants do the work of society - and those uncredentialed bear the burden of supporting both the unemployed/unemployable Euro-young and their retired Euro-parents. That will not end happily.
Education Equals Employment
Per statistics education equals employment, digitization or not -
http://statspotting.com/2011/05/education-equals-employment-statistics-s...
If it can be digitized a silicon worker can do it.
I would broaden the comment to say if it can be digitized it is also subject to competion from silicon workers (i.e. automation). This is at least as important as moving the job offshore, once you digitize it why not go all the way and let the computer do it. Assuming a job can move offshore is to short term, because once this happens someone will completly automate it and do away with the need for any human in the job. A silicon worker is much more cost effective, does not need vacations, needs a different far less expensive form of health care (no 12 year training program for the primary care person), only needs electricity to operate etc.
Almost anything can be digitized
If we eliminate stuff like the skilled trades or janitorial work where the activity must, by definition, be performed onsite, almost anything can be digitized. That includes the work done by doctors, lawyers, accountants, etc.
We're getting to a point where the divide is not skilled versus unskilled, but rather managerial versus non-managerial. The latter category includes everything including highly technical jobs that require lots of education. It all can, and will, be sent somewhere else, somewhere cheaper.
The only thing keeping more lawyer and physician work from being offshored is that the ABA and AMA are powerful lobbies that are using the force of law to restrict entry into their fields. Don't kid yourself into believing it's a market-based result.
Not Quite
Yes the ABA and AMA are powerful lobbies and they are looking out for their industries as they should, but fields like law and medicine have an additional layer of interpersonal relations that you fail to consider.
Offshoring won't work for these positions. You honestly believe that someone who needs critical medical attention is going to be happy talking to a doctor in Bombay as they suffer when they can talk to a (and physically see and meet with) doctor in their hometown instead? How does that doctor do their job when they can't even take the vitals of the patient because they are half a world away?
As for law, you honestly believe that a major corporation is going to be willing to allow someone in Shanghai to handle a major transaction that involves only US law? With so much on the line, they are going to want someone they can speak to and see in person to handle the deal. And as for the types of legal issues the average families encounter (divorce, real estate, personal injury, criminal, etc.), how is the lawyer in Shanghai going to make it to court appearances or real estate closings?
Yes it is true that some of the work in these fields may be outsourced. But at best they will be review of lab tests in the medical field and perhaps review of documents in discovery for a lawsuit. That's about it.
Quite
I didn't say ALL medical and legal jobs would be offshored, save for lobbying power, but you'd better believe most of them would. There will always be a need for client/patient facing professionals in the US, but work could easily be re-arranged to keep maybe 30-40% of the top doctors and lawyers here in the US while the heavy lifting gets done behind the scenes by offshore professionals at a fraction of the cost.
If it's a choice between
If it's a choice between seeing a Doctor in Bombay via internet link, or not seeing a doctor at all (because you can't afford anything else), Dr-in-Bombay will get the business.
We're going to have a two-tier healthcare system. Bottom of the barrel stuff for the serfs, and cost-is-no-object care for the MOTU. And as usual, the serfs will be expected to subsidize the MOTU system.
The ol' engineering degree trope again
Your big time engineering degree is subject to 1)outsourcing, which is already happening in every sector as folks like Boeing offshore aircraft manufacturing to China, Japan, Italy, and Taiwan and 2) virtualization of engineering-who is better at math than computers?
Engineering is going to be automated in the same way construction is being automated with GPS driven earthmovers, which are basically robots following programming to build roadways. 3d prototyping machines are being built for the home user, taking widget making into the 21st century. Software that can write new software is not far away.
What jobs for intellectuals lie in the future? The humanities and liberal arts, social sciences, literature and arts. Unlikely to be outsourced, expertise adds value to the knowledge worker, and software won't be written to replace workers.
More STEM Suckiness
It's worth mentioning that under 3% of US GNP is spent on R&D, the sort of thing that actually employes most of those STEM graduates. IT spending might be another percentage point or two. In other words, we need about four or maybe five percent of the kids entering college each year to go into science or engineering or programming or math and graduate to keep the technical workforce at par. That's about one 18 year old kid in 20, y'know, maybe one in 25.
That's assuming only American kids go to American universities, of course, and that absolutely frigging NOBODY from other countries ever wants to attend an American school and stay here, and that NOBODY comes to the US on an HI-B certificate and sticks around. Allow for those Really Very Unlikely Possibilities, and the numbers of American kids who ought to be majoring in STEM fields drops even more.
But never mind. We send 40% or so of American kids to college. At what point does it begin to dawn that if all those kids got STEM degrees there would not be jobs for them all? Let's ignore the inclinations of the kids, who don't all wish to be programmers or mechanical engineers. Let's ignore intellectual demands -- 130 IQ's and up -- and aquired skills -- calculus of variations, C++ programming -- which weed so many people out of STEM fields. Let's ignore the rather large flucuations of federal and corporate funding which make individual subbfields of STEM prominent for a handful of years (energy research, UP) and declining for yet other years (particle physic, DOWN DOWN DOWN) and unpredictable in others (climate research in 2014, UP or Down?). Given perfect conditions, with all American kids wonderfully inclined to persue careers in STEM, with no foreign interlopers, with assured stable federal funding of STEM research, etc., almost 90 % of the kids entering college each year would fail to find employment in STEM fields, because there just aren't that many jobs.
Is there some valid reason why this has escaped the attention of EVERY SINGLE ECONOMICS PROF WITH A BLOG AT GEORGE MASON UNIVERSITY? And what does this say about economics profession in the US?
The US graduates more
The US graduates more psychology/history majors each year than all STEM majors combined.
STEM and the declining value of a bachelors degree
Two things that get lost in these STEM discussions are differences across STEM fields and the difference between those who stop at the undergrad level versus those who go on to finish grad school.
A bachelors degree in physics/chemistry/biology gets you a job as a lab technician, not a job as a scientist. The latter requires a PhD plus a significant amount of post-doc work, and even then there are no guarantees. A bachelors in mathematics may give you more job options than a degree in art history, but it certainly won't get you a job as a mathematician.
Even in most engineering disciplines, an MS is rapidly becoming mandatory for entry level positions.
The good STEMish jobs that required no more than a bachelors degree were really centered around computer technology, so were mostly pertinent for CS, SE, and EE grads. That's rapidly changing with offshoring.
Even in business related fields, you need 150 credits (e.g., an MS in Accountancy or Taxation) to sit for the CPA exam, and an MBA is almost a requirement for most managerial positions.
All of the discussion on STEM vs non-STEM is missing the bigger picture, which is the rapid devaluation of the bachelors degree across the board.
Yes.
My recent college graduate daughter (in STEM) said, "a college degree is the new high school diploma".
She was right.
She spent a year working as a low level (and low paid, no benefits) lab technician, and then enrolled in a PhD program. The MS is the starting degree in her field, and even with an MS the job market is very competitive.
The world needs less
The world needs less psychology and humanities and more practical fields