If we are over-educating our workforce, then why don’t entrepreneurs find and train non-college workers at lower lifetime salaries?
Very good question. Equivalently, why don’t non-college workers try to convince entrepreneurs that they can do the same work at lower pay?
Some possible answers:
1. The Caplan answer is that the non-college worker is attempting to work around the system, and thereby signaling a non-conformist personality that will be difficult to train and integrate into the firm.
2. The Cowen answer is that the college-educated individual is better able to deal with authority–knowing when to question and when to keep silent–and will therefore be more productive. In other words, college makes someone more productive even in a job that does not “require” a college education.
3. I would suggest another possible answer. Perhaps college-educated workers do not get higher salaries than non-college workers in the same jobs.* Perhaps the goal of attending college is to maintain or raise one’s social status. Getting a “college-appropriate” job would be nice, but it is not absolutely necessary in order to feel that you have raised your status, or at least made the attempt.
*Note: I believe that studies that have looked at this *do* show college-educated workers earning higher salaries, even in the same jobs. But I think it is hard to do this quasi-experimentally, which you would have to do in order to control for cognitive ability and conscientiousness.
I am reminded of the various posts here:
http://www.cato-unbound.org/2008/10/08/pedro-carneiro/ba-work-devil-its-not-best-work
One factor must be that in the USA one cannot study Law or Medicine as a first degree. And in the meantime, if people make it into college, some people aim for the four year degree simply because it is better to have it than to drop out (or so they are told).
We need a college level GED, just like we have one for high school.
If we had a college level GED, what would the differences be between people who got the normal BA / BS and people who successfully test for it but were too impatient / restless / difficult to make it through?
That distinction would be dependent variable, a dummy variable, to put into a model studying, say, income or professional status.
I think it is important to consider different cases, each with their own reason for pursuing college.
1) The standard human capital case: To become a programmer, engineer, nurse, or to go to graduate school (med, law, PhD). These folks are not over-educated, nor is there a glut–to my knowledge.
2) The compensating differentials case: Younger people seem to want more perks and less salary (relatively speaking). So the return on college investment doesn’t show up because it is reflected in compensating differentials: a cooler job, more freedom, perks on the job etc.
3) The College as consumption, not investment, case: Many students do not seem to study much (10 hrs a week average?) and indeed hardly improve their skills during college. I think for many, college is a consumption good. It’s four years of having fun and delaying adulthood. Parents foot the bill because of Keeping-up-with-the-Joneses.
So the only area where entrepreneurs could break the inefficient model is Case 4: none of the above. But it’s not clear to me how they could do so.
Because of Griggs vs Duke Power. Employment tests are not allowed, so employers use educational attainment as a proxy. Non-college educated prospects really have no good alternate way to demonstrate their high quality.
With respect to TC’s #2 — is there any evidence that college actually develops a capacity for dealing with authority vs just providing a mechanism for signalling that one already has that capacity?
To be honest, though, I tend to doubt it even does that. My experience with high-school vs undergrad is that high-school is a much, much stronger test of the ability to follow many arbitrary rules and tolerate the demands of omnipresent authority figures. In comparison, the undergrad experience is one of comparative freedom from authority (institutional and parental). Big lectures halls, nobody taking attendance in class (and no supervision at all during the rest of the week) whether you succeed of fail is up to your own initiative — your ability to keep it together when nobody’s really watching and probably in the midst of a the social chaos and constant temptations of the dorm environment.
In comparison, the undergrad experience is one of comparative freedom from authority
Modern work environments are lot more free than years ago and employers want somebody that knows how to produce without as much constant authority.
That may be so. And if it is, then what employers may be valuing in the undergrad degree is demonstrating conformity and deference to authority but rather something more like persistence and self-control in a noisy, unfamiliar environment filled with distractions and temptations.
The military hires tens of thousands of high school graduates a year, gives them all IQ tests, and then allocates them on that basis to training programs and occupational specialties where they often preform normal quality work in fields comparable to civilian professions (e.g. emergency medicine, paralegal services, IT, etc.) which are, as a practical matter, simply closed to those without college degrees.
Indeed, many enlisted veterans with proven track records of experience, good performance, conscientiousness, and amenability to taking orders will tell you that they cannot get a single foot in the door anywhere on that basis unless they also go through the motions and just through the resource-wasting hoops of obtaining the culturally required educational credentials. That’s true even for other government jobs in the civil service. And it’s even if they’d prefer not to, and are not very sensitive to the prospect of a status upgrade because of the more indifferent attitudes of their social scenes.
Sometimes societies just get themselves stuck in these sorts of traps and can’t unpaint themselves out of that corner.
I think the paint brush is current employment law.
Duke/Griggs, as noted above
Objective (if useless) credentials provide something for HR staff to point at to justify hiring, raises, promotion when legal action is threatened.
It is very hard to fire someone, so the approach of ‘try them and see if they work’ is out
It’s also not preferable to provide training that will just be taken to another employer, or just wasted, when someone doesn’t work out.
“Employment law” sounds plausible to me. Employers cannot give IQ tests.
But the hypothetical ex-military applicant *does* have credentials: a referenced resume and probably some military/government certifications on file. He just doesn’t have a degree from a college.
I dealt with this when I was in the service. Say you had a sergeant with ten years of experience doing something. Well, obviously that means nothing, what really matters is that he grind out some online classes to get a degree in “military studies” from some “college” no one has ever heard of. Worse, this was actually required for advancement within the military, and had to be done on the soldier’s own time.
Same thing for officers. There were ways to get a “real” graduate degree as a serving officer, but the majority of them do some kind of correspondence course to get a “strategic studies” or “organizational psychology” degree or some nonsense around eight or ten years into their career and, again, this was taken into account for promotion.
I wonder if it is some kind of “plausible deniability” for the employer.
Let’s say Steve gets a promotion over Joe. It is easier for the employer to justify this based on a degree Steve has that Joe doesn’t than on experience, even if Steve’s is military experience.
Handle’s comment about ex-enlisted military is really interesting. I suppose there might be a research literature on this.
If the pattern he describes is true, it is indeed a puzzle. One simple explanation might be that there aren’t enough of these people around for HR departments to learn about them. A solution might be for all the ex-enlisted military to cluster in one place, where they would be a known quantity and could even hire each other. I suggest they should all move to San Antonio. Maybe they do already?
Every job application I’ve ever filled out asked about military service. I can’t imagine that was just out of curiosity. HR Managers must have some kind of theory on the subject, right or wrong.
Where I used to work they liked ex-military. But it wasn’t a replacement for the requisite engineering degree. So, I wonder if the level of job that military would be a bonus for, it is more of a tie-breaker than a stand-alone.
As a thought experiment level, it seems like military experience would be a real bonus for management. But if you are going into management, that’s a pretty high level.
1) The employer and employee relationship is still viewed as short term and therefore, neither wants to invest in much other. I believe with most long time entrepreneurs have hired somebody really good only to find them leaving after 18 months for a better position. (I am assuming most enterpreneurs are not Google but local businesses.)
2) In the immediate post-WW2 period (up until 1968 when the Boomers and most women enter work force), we had a labor shortage and companies had to signal lifetime benefits (unions, benefits, pension) to get good workers at lower wages. I wonder with retiring Boomers and falling labor supply we see the return of some of the programs for workers.
3) The military after High School was a ‘signal’ to employers in the immediate Post-WW2 period. Actually it still is today for a lot companies but the number is much more limited.
4) In the modern world with more on-line communication, college still teaches how to improve writing. People don’t need the degree as much, but they need the writing training.
I think search costs could be a the main barrier to such an entrepreneur. Even if a college credential is useless to the job, if the vast majority of capable individuals get that credential anyway then finding capable individuals is much easier if you only search those that are credentialed. Allow me to make up some numbers.
Imagine 20% of the population is capable of a job and 90% of that population goes to college. If 40% of the population attends college, then your success rate searching that population is close to 50% – 18 out of 40. Conversely if you search the non college population, you have only 2 capable individuals out of every 60. The entrepreneur needs more than a wage differential, a hyper efficient mechanism for optimizing that search is required and as others have noted, some parts of that mechanism might be illegal.
Speculative and the numbers are fabricated, but if it’s true it’s a difficult equilibrium to break. The capable people will keep earning the useless credentials because they want to stay in the searched population which in turn reinforces the value of searching only that population.
Yes, search is enormously expensive and time consuming so the first thing done is to screen to reduce the possibilities to a manageable number. High unemployment makes this so much worse that employment itself is used for screening. The most an employer can benefit from search is avoided cost of a mistake. Also the college educated will be presumed to offer greater growth potential and offer future options for their placement whereas the lesser educated, even if entirely capable, will be viewed more or less as a dead end.
Yes, Griggs vs Duke is a big part of it from the employer’s side.
From the employee side, college has been dumbed down so much that those who are smart enough find it easier to get the degree than convince employers to hire them without it. Of course, that’s employers who aren’t looking for an elite degree, which signals not so much intelligence but a person with the right networks.
1. Kevin Carey noted that to get admitted to certain schools and make it through to degree is to “have won a tournament.” For the highly selective Ivies / Stanford, the tournament starts with admission.
Getting admitted to Harvard and Stanford is hard–it’s winning a tournament. If you have the degree from one of those schools, you won a tournament.
Getting admitted to SUNY Buffalo or the University of Iowa (I have a degree from each) is not the same thing. They are both respectable “Research I” Schools–but that’s not enough. It often seemed to me that making it through engineering in four years at SUNY Buffalo was difficult, just because I met so many people who didn’t do so (for whatever reason).
2. What’s the tournament? What does it consist of? I’m not sure what the “tournament” (let’s use Stanford as an example) actually measures. Some mix of ambition, social grooming, contacts, raw intelligence, ????.
3. One interesting attribute of the Thiel Fellows is that they have also won a tournament–it’s a different one than having gone to Harvard or Stanford.
4. Has anyone studied other tournament winners such as West Pointers? It’s possible that getting into West Point and then making it through is harder than getting into Stanford and then making it through in a “soft” discipline.
(I understand that West Pointers have uniformly demanding course requirements–you can’t study English or Anthropology and skip most math and science.)
You could look for a variety of tournaments:
*West Point.
* SEALS / Army Rangers
* .Thiel Fellows.
What are some others? Presumably it should be of some duration–not “just a test .” Not “just a week of tests, or two weeks, like the old Foreign Service General Knowledge screening.
Someone who has talked about the distribution of winners in difficult events is Charles Murray, in _Human Accomplishment_. For example, it is difficult to win even a single U.S. PGA Championship.
It is difficult to write a single symphony or opera that someone (or a company) still wishes to perform 150 years later.
Murray quotes Galton about “The concrete triple event: Ability, plus zeal, plus capacity for hard work” (I’m paraphrasing).
it’s further discussed at one of Bruce Charlton’s blogs:
http://iqpersonalitygenius.blogspot.com/2014/07/the-lop-sided-genius-summarized.html
“making it through engineering in four years at SUNY Buffalo was difficult”
Yeah, it’s no joke. 142 is a number I will never forget. That was the hours required to graduate where I went. That’s ~18 a semester. Almost none of my AP credits transferred, which was a good thing because the one that did, Calculus ended up screwing me because I wasn’t ready for Calculus 2. I ended up having to take 21 hours one semester. It was insane. Half the people quit to be education majors, which is kind of a shame. Maybe they should have a BA in engineering. Who knows how many took the 5 year plan. They have substantially reduced the required hours because it was just ridiculous. I’m not sure what my reward was for finishing in 4 other than a jacked up GPA.
If we are over-educating our workforce, then why don’t entrepreneurs find and train non-college workers at lower lifetime salaries?
Well, for one thing, no court would enforce that for a lifetime. In fact, no Anglo-American court would enforce that for a day. Law students learn that in the first year. In certain circumstances, the employer may be able to get some damages but she will never be able to get even one forced day of work.
“*Note: I believe that studies that have looked at this *do* show college-educated workers earning higher salaries, even in the same jobs. ”
Either there is a problem with the “same jobs” definition, or those employers are paying above market and therefore might also employ men at higher wages over women for the same job, which is often cited as not likely.
Of course, this supposes that they do filter out government jobs, especially federal, which do pay based on education even for the same job, e.g., GS-9 for experience, GS-10 for undergraduate, GS-11 for Masters, etc.
Someone with a more valuable degree may be more likely to leave so they would put the degree to use elsewhere. That would explain some of the disparity. So, their market value is higher. One might also presume that their “net present marginal value” would be higher.
Btw, is there really this notion of “the same job?” That seems like a very simplistic way of looking at things. Not as bad as “A BA is a BA is a BA is a BS” kind of false equivalency, but still.
I think the main reason this doesn’t happen is that if a large high profile company were to take in a person and train them up, as soon as that worker showed they were competent the company would have to raise their salary to market rate or else that person would move on. I would wager that the average company would consider a “graduate” of a large company’s training on par with a college graduate, so the wage would not be held down much, if at all.
For a smaller firm, they need to get as much as possible out of each employee, so spending time training someone, even if they are cheap, isn’t going to be a cost they can easily absorb.
Once I worked Avigdor, an Auschwitz survivor. He was the chief economist of the team, although he had no formal education at all (because of the wars). He did not accept my excuse that I can’t finish a report for tomorrow because of a coming exam: “An exam? I am taking exams every day all my life.” What I am trying to convey is that people has no faith in its own opinion about your capability or intelligence, they need the stamp of an university or having worked for another company in the same capacity or some other external signal. No one will give you the job and risk being blamed for an obvious mistake if you appear to be failing. Everybody is watching and hunting for something to say “I knew it”.
Some guy wrote a thin book (maybe a scholarly journal special supplement) about how to be a Department Chair at a university–I can find the title later, maybe, if it matters. He was in math–the book has a blue cover. He must have chaired a math department, where he learned that “As department chair you will make one additional enemy in your department every year.”
He said that in some colleges, sometimes, Deans can help to save a department that is spiraling downward. That’s one function they sometimes perform. Deans can veto the 3d rate scholar that the 2d rate scholars want to add to their department.
He said that the key problem deans could sometimes overcome, in the circumstance, was that “First rate scholars like to hire other first rate scholars.” The problem was that “second rate scholars like to hire third rate scholars (because emotional insecurity, he implied) and third rate scholars liked to hire fifth rate scholars.”
A question for Arnold (it seems like he skims these comments in his spare time)
QUESTION:
Are there fields where “people hire people smarter than themselves” (smarter, better, faster, tougher, sexier, whatever) and conversely, fields where decision makers are afraid to do so?
Do we have theories for this?
Why, for example, are many history Ph.D.s driving cabs (now Uber) and not teaching high school? (occupational licensing plus health care costs monotonically increasing with average age of the employee roster, maybe).
Can this have an effect? Presumably in marketing they hire people because they can increase sales. But some fields, it seems the organization has no clear objective function where you hire someone who probably is good for the bottom line–because you can’t measure an increase to the bottom line. There is no bottom line.
An odd conversation I had with my elderly mother–she pointed that symphony violinists can battle it out for the position of first chair. If the second chair thinks he/she is better, that person can try to usurp the position. Is this actually true? More generally, how many fields are like that, even remotely?
“Why, for example, are many history Ph.D.s driving cabs (now Uber) and not teaching high school? (occupational licensing plus health care costs monotonically increasing with average age of the employee roster, maybe).”
A number of reasons.
1. Union contracts–school districts generally won’t hire inexperienced teachers with graduate degrees because they have to be paid at the top of the scale.
2. Teaching skills — History PhD programs don’t select for or develop good skills in the classroom.
3. The good-old-girls network. The way you get a job in high-paying desirable school districts is much like the way it worked in unionized auto plants — you have an ‘in’ with the administration which often consists of relatives already teaching there. Or you pay your dues through several years of being on the sub. Or both.
4. A PhD may make you an undesirable colleague. You’re a risk to make the other teachers look bad by being too smart and working too hard.