In a recent New York Times article, conservative columnist David Brooks argues that giving college education to hard working folks is going to increase their income to $58000 per year. Some studies have suggested that the income disparity between college grads and high school grads is only going up. As of 2013, the income gap may be as high as $17,500 in the US. No doubt that it makes perfect sense to send your children for college. The answer to the “college or no college” question, of course, is a no-brainer, higher education brings home higher pay. Or it seems.
So shouldn’t we campaign for mass college education as well? Wouldn’t it be better for the common good to help another million or two to earn college degrees? On the surface it sounds like a logical thing to do but it may work out for worse. Here is why:
- It is well known that the US has pretty darn deep student loan dept. On an average, a college grad accumulates as high as $26,000 on student loans. Those who make to the higher paying jobs may or may not make enough money to justify the huge debt that otherwise they would carry around for a long time.
- Flooding with college grads would bring the average wages down. As a consequence, unemployment among college educated would go up. Good news for employers, who are constantly looking for cheap labor. Nothing exciting there for job seekers.
- Unemployed from college grads will inevitably compete for low income jobs. Even in low paid job sector competition increases resulting in lesser pay. You can see how quickly unhappiness spirals up.
- Creating a lot of college graduates will not make their lives easier. But creating a lot of jobs will. Before mass producing college grads, we need to create the demand first.
It is like selling stocks in a bullish market. If you own a hundred shares of a stock that’s doing very well on the stock market, yeah, you can make quick bucks by selling them on an uptick. Say instead, you are fortunate to own a million shares of the same stock. If you try to sell them all at once, that will force the prices go down and you lose.
You would still want to send your child to college. She / he will have better chances of a successful career. But as a public policy, mass college education, will create more debts, unemployment and unhappiness.
What we really need is to create a job market in which job seekers can find well paying jobs with a high school level education. These are the folks who work hard, spend all and keep the economy thrive. Unlike the conservative rhetoric, this will eventually help the economy grow.