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The Diploma Empire strikes back

By Michael J. Smith on Tuesday June 28, 2011 11:32 AM

The Credentialling Sector has been taking some hits lately; people have started to ask whether that sheepskin is really worth what you pay for it. But the credential police have a crack defense team, including the New York Times, in the person of David Leonhardt:

ALMOST a century ago, the United States decided to make high school nearly universal. Around the same time, much of Europe decided that universal high school was a waste. Not everybody, European intellectuals argued, should go to high school.

It’s clear who made the right decision. The educated American masses helped create the American century...The new ranks of high school graduates made factories more efficient and new industries possible.

That's pretty breathtaking, isn't it? A hundred years of bloody history, and it all comes down to mandatory schooling. The Battle of the Bulge was won on the gym floor of East Bumfuck High School -- never mind where Vietnam and Afghanistan were lost. And the "American Century", forsooth! Was ever a richer lode of mindless cliche struck than the New York Times?

The rest of Leonhardt's piece is equally slapdash. For example, he says, "A new study even shows that a bachelor’s degree pays off for jobs that don’t require one: secretaries, plumbers and cashiers." In a subsequent column, he backs this up with a graph, also attributed to what is apparently the same Georgetown U report:

Unfortunately, the links he provides don't lead to this info, as far as I can tell, much less to any indication of how these statistics were derived. The Georgetown report itself says, in its introduction:

When considering the question of whether earning a college degree is worth the investment in these uncertain economic times, here is a number to keep in mind:

84 percent.

On average, that is how much more money a full-time, full-year worker with a Bachelor’s degree can expect to earn over a lifetime than a colleague who has no better than a high school diploma.

But the Georgetown savants don't tell us what kind of "average" this is (mean or median? It makes a difference) or how the number was calculated. (The Georgetown report does contain some unsurprising and no doubt accurate information -- a major in petroleum engineering is worth more than a major in social work; stop the presses.)

Still, let's assume, arguendo, that it's all more or less true; that college graduates are either more likely to be hired, or to be paid more after they're hired, than non-graduates. It doesn't seem unlikely. We might quibble about the precise numbers, and will certainly quarrel about the precise mechanisms that explain the effect. But the effect, such as it is, seems consistent with everyday experience.

The bigger question, of course, is, What are the implications? For the credentialling sector's defense team, the answer is self-evident: all the people who don't now go to college should go to college. Presumably then everybody's income would be up at the BAs' level, right?

Well, wrong, of course. I call this the Bus Fallacy: Anybody can get on a city bus, but everybody cannot get on a city bus. A city bus isn't big enough for everybody.

There are a good many lemmata to this insight. A lot of bubbles are blown up with exhaust gas from the Bus Fallacy. Anybody can make money speculating in real estate; but if everybody expects to make money speculating in real estate, who are they going to make it from?

You get the idea.

The BA confers an advantage. Okay. But an advantage ceases to be an advantage if everybody has it. It's a little like the atom bomb that way.

The credentialling bubble, I think, is nearing the point of collapse, like the dot-com bubble and the real-estate bubble of recent memory, and the locus-classicus South Sea and tulip-bulb bubbles of more venerable memory.

Every college campus I've been on in the last ten years is frantically building new towers and dorms and Centers for This Studies and That Studies -- and above all, gorgeous "fitness" centers, staggeringly lavish and Sybaritic, stocked with hundreds of gleaming exotic exercise machines. I daresay there is no muscle in your body, however small or obscure, that doesn't have a machine specifically designed to exercise it; and the Unis, who presumably know their demo, are buying 'em by the bargeload.

Counsel for the Defense Leonhardt acknowledges that

the [college-noncollege] income gap isn’t rising as fast as it once was, especially for college graduates who don’t get an advanced degree
-- though amusingly, he doesn't provide a link to any "study" that explores this interesting fact. But it's consistent with the overstretched bubble theory -- as is the fact that advantage is now migrating from the BA to the "advanced degree". As the advantage of the BA diminishes, some other advantage must be found, and some other after that....

The real, interesting question is, why this preference for the accumulation of sheepskins on the part of the employer?

With petroleum engineering you can see it, or indeed with any job that requires a very specific set of skills. The employer would obviously prefer that the employee train himself, at his own expense, rather than expend the money to train him. And the more of these costs that the employer can offload -- if he can demand advanced-degree training rather than BA training, say -- the better the bargain for the employer. It's like expecting an employee to have his own tools or use his own car on the job.

Of course if you look at this phenomenon from a certain angle -- the angle I prefer, as a matter of fact -- then the demand for credentials looks like one means (among many) of exploitation. In effect the employer requires that the employee defray ahead of time what would necessarily otherwise be a capital expenditure on the employer's part; this pay-in on the employee's part becomes a precondition to entering the sweatshop door and being exploited further. The pay-in is so valuable to the employer that he might actually let up slightly on the back-end exploitation, and purely as a business proposition, this may in some cases work out to the employee's net lifetime balance-sheet benefit too, at least as compared with less fortunate or astute wage-slaves.

But here again we encounter the Bus Fallacy. It might work out for any given employee; but it can't work out for every employee. If you look at it group-wise, then it's a net loss for the employee group overall. The more capital expenditure the employer group as a whole can offload onto the employee group as a whole, the worse off the latter group is. That's just arithmetic.

Of course there will always be some individuals, perhaps a good many, who beat the odds, as in the real-estate bubble -- people who bought at the right time and sold at the right time. But for every win there's a necessary loss.

Unless I'm committing a Lump Of Something fallacy here? These lump fallacies have been much discussed on this blog and its linksisters of late. Suppose that if everybody got a BA, the world would change in wonderful and unpredictable ways? I guess we can't rule it out; but we can hardly depend on it either.

What's even more interesting than the straightforward petroleum-engineer effect is Leonhardt's argument that a degree brings the employee more money even if his studies were utterly irrelevant to his job. If there's really anything to that -- if we accept the implications of Leonhardt's poorly-sourced chart -- then some explanation is called for. Speculation on this topic might require another post. Leonhardt seems to think it's all about the character-building and mental-workout aspects of college.

Humph. From what I've seen of college, I doubt it.

Comments (25)

Your best in ages, Mr. Smith.

Almost anything worth learning in college could also be learned in apprenticeship. And by worth, I mean those "hard" skills such as petroleum engineering.

As for area studies and philosophy. That requires the ability to read. (Too bad the state commies are gone, because at least they were good for high baseline literacy. Capitalist public schools, not so much.)

Which anyone with working eyes can to for themselves. Only reason to read that shit head Plato under a professor's instruction is to learn suspend disbelief...

Jersey Patriot:

There's no mystery why people with a Blatherskite Studies degree do better in regular, non-Blatherskite work. Namely, the people who go to WTF State and study Blatherskite are smarter, more disciplined, and more manageable than your typical high school graduate. That says nothing about the value of Blatherskite Studies. It says something about the properties of the people who make their way through Blatherskite Studies as oppose to stopping after high school.

I have yet to figure out how we got here. The Blogfather's comment about off-loading training makes some sense. But what use is Blatherskite Studies to your typical paper-pusher wage slave? You have to train them from scratch, more or less, anyway. It's not like plagerizing your way through a 25-page paper on the Third-Wave Feminist Post-Constructionist Blatherskite tells you how to fill out forms and stand in line. (Petroleum engineering is something else entirely.)

I've seen it argued that it's because intelligence tests are banned, so college acts as a screening process. But again, it's not like bullshitting through WTF State tells you anything about intelligence, either.

And so we're right back where we started, needing six years of college to say, "You can choose the PPO or the HMO."

I agree with Jack that this is one of the best posts on here for quite some time, as well as his point about learning more under an apprenticeship. If someone wants to get good at petroleum engineering, they're probably going to get a lot better being surrounded by actual petroleum engineers doing actual petroleum engineering for 8 hours a day than spending 3 hours a week on the subject and spending four or five times that amount on unrelated subjects.

I've also wondered for quite sometime why if you want to be a doctor or a lawyer or whatever field of study you're interested in you can't just go to school to learn that particular skill or profession. I understand it's in the best interest of what Mr. Smith calls the credentialing sector to make students jump through hoops, I just don't understand why it's so difficult to get people who don't make their living in such a way to see that forcing someone to learn to American history isn't going to make them a better architect. I would never decide what mechanic to use based on their grades in American literature.


Apprenticeship is an interesting concept for comparative purposes.

In effect the master and the apprentice split the costs of the apprentice's training. The apprentice worked for nothing much more than room and board, and the master pocketed whatever the apprentice produced above and beyond the cost of his keep. This profit can't have been much, if anything, at first, but was no doubt a consequential amount toward the end of the apprenticeship -- perhaps a spectacular amount in some talented cases.

From the master's point of view, he made a significant investment in the apprentice, which paid off more or less well or badly. The apprentice made an investment too -- of his time and autonomy, which he could hardly have taken to market in any more advantageous way.

Not a great deal for the apprentice; but the modern employee's is worse. The employer makes no investment at all, if he can help it, and the employee invests not only his time and autonomy, but also a good deal of cash money, which he has to borrow, as often as not, from some vulture in the finance sector.

And yet there are people who still believe in... progress!


What sort of man person reads Playboy SMBIVA?

This would be interesting.... Put up a questionnaire, please.


And yet there are people who still believe in... progress!

Their belief remains unshaken by another century of progress. They may even have a point.


intern nation suggests
at least something of the good old days remains in several liberal professions

the modern duke of deception here is m,r spence
and his signaling theory


cheaper more effective job qualification screening
is obviously easily conceived
and realistic estimates of demand for certain
skill sets though shartply limited still suggest each type of hired skill heads
will find finite buses waiting for them

the compensation pressure can run either way of course

both buyers markets and sellers markets exist
in great profusion in
the job and profession markets

guilds abound on the seller side
guilds that pinch the buyers and squeltch
the wanna be sellers


spence of course is an elite stream product
princeton oxford
taught at harvard
and in essence
as cynical as voltaire

those that have done thru all
the green doors ...
gone all the way to the sanctum sanctorum
are afford the keenly worth while
at long last look
upon the naked small emperor in there
that ruleth theat particular flavor of ice cream
behold him !!!!
bub-bub-bub-ing his lips with an index finger
as he louchely lingers in languishment
on his toy thrown

need less to say
they --the chosen perfected ones --
leave that final scene of revelation
with several possible
quite distinct and contradictory
"reaction complexes " of course

one reaction complex
herr doctor spence
embodies prefectly
with his "education
that is formal measured credentialing education
ie schooling
is an arbitrary positivistic utilitarian
screen "

an instrumentality

an obstacle course

erected and maintained at serious social expense

intrinisically useless
in as much as it produces a sound signal

but precisely for that reason
a fine branding labeling
seperating sorting picking clubbing discouraging goosing shrinking expanding
human head gearing device

rule one :
many must start the course
and alas or alack
few must prevail !!!

and t'is fine sport too i might add
if you have the proper mix of
big many wheeled headpiece
and small unchambered reflexive heart
that suits you for the multi year climb
to one or other summit

now these school signaling systems
like much else institutionally speaking
have tendency to self elaborate
they in time take on a certain independent self centered self actualizing motivation

higher ed like the antlers of erie's elks
clearly has eleborated itself
far far beyond its instrumental value
to corporate amerika

comes a moment and ..pooof
antlers are knocked off
a bloody long process
but one that may start with
the nearest tree trunk
by the butting head beneath

i add on a lower front
a clear case of leaping the fatal limit

despite a call to reduce the mass torture of youth
by lowering the of age school emancipation
ie the "till 16 " kid draft
by a few years
and even in the face of utter failure
and squoozin budgets

the dauntless over certified
schooling lobby
are fast at work extending
the period
and making head way!!!!

more and more states are now
setting 18
as the draft ending age !!!!
including new hampshire !!

"granite state truants unite
live free or die in school "

how this conforms to charterization
and voucherization and home tending
will provide innocent amusement
for the credential giving elite like spence
i'm sure
they the demi gods
are safe regardless


Welcome back, SMBIVA!
Finally, complete and utter sense, from MJS and commenters - brilliant analysis.
What happened?
You cannot do justice to the collectivized insanity of the crendentialing boondoggle, except by reading an odious book by Richard Rushfield on his absurd neo-con days at Hampshire College and a slight memoir by Stephen Akey.
Trillions of dollars spent, and all we got was -
a graph?

Peter Ward:

Regarding the apparent irrelevance of the subject(s) studied; apparently (pretty obviously, I'd say) degrees serve as a class barrier and as more people have gotten them while "opportunities" have remained about the same or even dwindled "degree inflation" has had to happen.

But also,--on a more sinister level--good marks in college demonstrate to the recruiter that the applicant can adapt psychologically to the work environment--blindly devoting whatever critical faculties are needed for the "job" while shutting off all others; complying with or enforcing (if one is to be manager) arbitrary, contradictory decisions oozing out of the bureaucratic ether.*

*At any rate my experience has been, rarely are decisions passed down in a straightforward, dictatorial manner. What action one should or shouldn't take kind of has to be inferred from oblique, inconsistent signals that bounce off cubicle walls. It seems giving a direct order is something learned to avoid doing if at all possible in executive training--probably to protect oneself from responsibility should shit hit the fan.


What Peter Ward said. Yes, some of the effect can be chalked up to self-selection based on intellectual ability and curiosity, work ethic, etc, as suggested by Jersey Patriot. But more important, surely, is self-selection based on socio-economic status and the ability to conform to workplace discipline.

In addition, as Peter said, a BA is a peg on which a hiring manager can hang the hiring decision without fear of blowback.

Gotta love that NY Times, though: "Thank God we didn't go the way of Europe! People's lives look terrible over there! A 35 hour workweek and 7 weeks of vacation, with free healthcare and childcare -- it's hell on Earth!"

Al Schumann:

I think a Lump could be extracted from the credential bubble defense proposition. Implicitly, there's a limited amount of prosperity. To get a good piece of it, you need a degree. To get a bigger piece, you need an advanced degree.


"And yet there are people who still believe in... progress"

city bus model is indeed a lump model
employment buses are really a set of buses
of various sizes each more or less proprtioned to the requirements of the whole fleet

the fallacy comes in at fleet level
we can allows provide a seat on some bus fr everyone

that would be progress

now the point of all this is to increase folks absolute potential material productivity
all well and good but compensation is about relative shares of total value not product
a contradiction emerges

add this
jobs confine actual value productivity
and then father S's all of us can't be
on the same bus comes in ....

soooooo what to do ??

well the relative reward paid occupants
of diffrent buses
has nothing very serious restricting
its minimizing
once one considers socializing
the full cost of qualifying for an particular bus

however if skill aquisition
retains a healthy element of cottage industry
even if only oopurtunity costs
in forgone immediate income..


skill making remains largely
at the present level of partially
self making

the mean (not median ) reward
may balance quite a towering
even if
flat topped pyramid
with fairly acute slopes


who bares what part of the cost in commodities
of the commodity called
type x labor "power"


progressive thought
related not to material output per
labor hour max
but to equalization of rewards

only half of us can be above the median
so we might want to squish the spontaneous historically given bus structure as it deploys itself on either side of that median

make absolute differences of reward between buses
minimized without
err i hasten to add as an unreformed productionist
subject to minimum loss of incentive

==recall incentives take many forms
and can be both carrots and sticks ---


none of this is education of course

its training


subject matter irrelevent ??

perhaps schooling is a twofer

we aquire citizenship skills and cultural homegeneity as content
while as to form
we gain the job prerequisites
of dilligence careful attendance
and order following

of course by defying the school rules
by in fact brealkng the rules
like so much ass hole crockery
one learns rebellion

such is Clio's dialectic at work

truants of new hampshire unite
you have only your fact dump to lose
and a free spirit to win


"degrees serve as a class barrier"
a sorting partition is a better name

reserve class for the real struggle
and class is not soft casting either

capitalism might well use strict merit to sort
in fact i think the present trend back towards
class stratfied education
ivy is for the affluent
troubles thinking capitalists

why not max the flock screened
by socializing the cost of training
from age zero

recall the tax to pay for it all
can be culled from the elder members
of the exploitable herd
take the social cost
right out of their own produced va


fighting capitalism requires modern weapons
not those fit to demolish the 18th century estates system


i apologize for my extensive commenting

its a replacement for
lack of postings

perhaps that's better anyway
it confines me to topics
of greater relevence and interest here

even if i feel compelled to play the gradgrinder
to the near consensus nihilists

motto for site

progress.... bah humbug

pass the drugs sister george


degree inflation

is soft meritizing at work

as we require more layers
build ever more voluntary "earned " layers
and thus retain the sifting process
that we call discovering
scarce talents and unusual drive

such is the structure
so what is the product ??

i'm reminded of this brilliant line

" Poorly socialized, self-involved, arrogant, Type A cretins are not suffering. They're not sick at all. They're perfectly adjusted to their environment. That's the problem. They don't need therapy and we, God help us, don't need them."

that goes double for
our top academy reared meritoids


"rarely are decisions passed down in a straightforward, dictatorial manner. What action one should or shouldn't take kind of has to be inferred from oblique, inconsistent signals that bounce off cubicle walls. "

exactly put

that is until they walk you spanish
to the exit

"Gotta love that NY Times, though: "Thank God we didn't go the way of Europe! People's lives look terrible over there! A 35 hour workweek and 7 weeks of vacation, with free healthcare and childcare -- it's hell on Earth!"

sweet irony if savored too long
rusts in the mouth


two american modern necessities
like luxury items

hospital stays and college days

getting about the business of the busziness
at hand suggests much meat axing
of both up ahead


intern nation suggests / at least something of the good old days remains in several liberal professions

Another nice thing about interns is that when some of the tawdrier episodes from your vast PR (hasbara) campaign go awry, you can blame it all on the practically for free young 'un:

Mr. Seemann is a 25-year-old who is interning in our office. His tweet was a mistake on his part. It was done without authorization and without approval. His mistake has been pointed out to him.


"The real, interesting question is, why this preference for the accumulation of sheepskins on the part of the employer?"

This is a good question. An even better question is why do so many employers pay for these advanced degrees and actively encourage their employees to get them? No doubt it has something to do with the selection process alluded to above, given that promotions are often tied to obtaining them, but why send someone out to get a degree in advanced basketweaving when there are already all kinds of bogus "metrics" in place for determining which employees most enthusiastically embrace meaningless tasks? My current employer is a non-profit, so there's an incentive to burn off excess cash, but I've worked at for-profits with the same mentality. To some extent, these people must really buy into the idea that these degrees possess some kind of mystical qualities.

Re the bus analogy, the neighborhood where I live bears this out. It seems pretty evenly split between college-educated office drones and people with skilled blue collar jobs. The (implicit) reason for getting a college degree was supposed to be to put you above these people on the socio-econ scale. Without any difference in income, the only distinction left that I can see is that the blue collar folks have some actual skills.


This is, as one commenter said, not about "training," which would be one thing, but about the absurd enterprise billed as "higher education." The flimflammery in that notion reaches into the trillions - and is just pure nonsense. What is there to be educated about - cathedrals and monks? Folk ballads and German pottery? Who chooses the objet d'study?
If you want to learn, then read, write and discuss, but to live three a room and classroom-doze in Fairfield Inn splendor - and then go extract difficult oil from under the noses of Thirld-World babies - what a Rumsfeldian waste.
Meat axe it, perhaps, but what will be lost?
As the books I mentioned indicated, many students don't go to class at all.
Employers, if they actually exist in America, aren't looking for anything of note in the pile of 500 applications, just for the most inoffensive stooge who may able to help them win the volleyball tournament. They'll plow through with marathon interviewing sessions, then hire some cousin's tennis partner.
Enough nihilism? Well, it's a living.

Flood the streets so with buses that those who would otherwise drive their bubble buggies to the malt shop - not unaware of those shoehorned aboard the community schlepp-shuttles as they leave them in their rearviews, them, with faces more tense than sullen from gripping the overhead cold virus pole - would instead be crowded off the road by near-empty, bumper to bumper commuter vessels.

Sure, not everyone would get a clean seat, but there'd be great conversations and we could take turns driving.

But we know that none of this is gonna happen, because the primary reason one goes in debt for the sake of higher education is so that they can borrow more money so they don't have to take the bus.

Nothing like fucking up a perfectly good analogy. Sorry.


fighting capitalism requires modern weapons
not those fit to demolish the 18th century estates



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