University Education - Do you need it and what should you study

Not all inequality is created equal

Income gap a problem but bigger issue is divide between grads and non-grads

David Brooks, New York Times, 2 Nov 2011

WE LIVE in a polarising society, so perhaps it's inevitable that our experience of inequality should be polarised, too. In the first place, there is what you might call Blue Inequality. This is the kind experienced in New York City, Los Angeles, Boston, San Francisco, Seattle, Dallas, Houston and the District of Columbia. In these places, you see the top 1 per cent of earners zooming upwards, amassing more income and wealth. The economists Jon Bakija, Adam Cole and Bradley Heim have done the most authoritative research on who these top 1 per cent are.

Roughly 31 per cent started or manage non-financial businesses. About 16 per cent are doctors, 14 per cent are in finance, 8 per cent are lawyers, 5 per cent are engineers and about 2 per cent are in sports, entertainment or the media.

If you live in or around these big cities, you see stores and entire neighbourhoods catering to the top 1 per cent. You see a shift in social norms. Up until 1970 or so, a chief executive would have been embarrassed to take home more than US$20 million (S$25 million). But now there is no shame, and top compensation zooms upwards.

You also see the superstar effect that economists have noticed in the income data. Within each profession, the top performers are now paid much better than the merely good or average performers.

If you live in these big cities, you see people similar to yourself, who may have gone to the same college, who are earning much more while benefiting from low tax rates, wielding disproportionate political power, gaining in prestige and contributing seemingly little to the social good. That is the experience of Blue Inequality.

Then there is what you might call Red Inequality. This is the kind experienced in Scranton, Des Moines, Naperville, Macon, Fresno, and almost everywhere else. In these places, the crucial inequality is not between the top 1 per cent and the bottom 99 per cent. It's between those with a college degree and those without. Over the past several decades, the economic benefits of education have steadily risen. In 1979, the average college graduate made 38 per cent more than the average high school graduate, according to the Federal Reserve chairman, Ben Bernanke. Now the average college graduate makes more than 75 per cent more.

Moreover, college graduates have become good at passing down advantages to their children. If you are born with parents who are college graduates, your odds of getting through college are excellent. If you are born to high school grads, your odds are terrible.

In fact, the income differentials understate the chasm between college and high school grads. In the 1970s, high school and college grads had very similar family structures. Today, college grads are much more likely to get married, they are much less likely to get divorced and they are much, much less likely to have a child out of wedlock.

Today, college grads are much less likely to smoke than high school grads, they are less likely to be obese, they are more likely to be active in their communities, they have much more social trust, they speak many more words to their children at home.

Some research suggests that college grads have much bigger friendship networks than high school grads. The social divide is even starker than the income divide.

These two forms of inequality exist in modern America. They are related but different. Over the past few months, attention has shifted almost exclusively to Blue Inequality.

That's because the protesters and media people who cover them tend to live in or near the big cities, where the top 1 per cent is so evident. That's because the liberal arts majors like to express their disdain for the shallow business and finance majors who make all the money. That's because it is easier to talk about the inequality of stock options than it is to talk about inequalities of family structure, child-rearing patterns and educational attainment. That's because many people are wedded to the notion that our problems are caused by an oppressive privileged class that perpetually keeps its boot stomped on the neck of the common man.

But the fact is that Red Inequality is much more important. The zooming wealth of the top 1 per cent is a problem, but it's not nearly as big a problem as the tens of millions of Americans who have dropped out of high school or college. It's not nearly as big a problem as the 40 per cent of children who are born out of wedlock. It's not nearly as big a problem as the nation's stagnant human capital, its stagnant social mobility and the disorganised social fabric for the bottom 50 per cent.

If your ultimate goal is to reduce inequality, then you should be furious at the doctors, bankers and CEOs. If your goal is to expand opportunity, then you have a much bigger and different agenda.

College Has Been Oversold

Alex Tabarrok, Investors.com, 19 Oct 2011

Education is the key to the future: You've heard it a million times, and it's not wrong. Educated people have higher wages and lower unemployment rates, and better educated countries grow faster and innovate more than other countries.

But going to college is not enough. You also have to study the right subjects. And American students are not studying the fields with the greatest economic potential.

Over the past 25 years the total number of students in college has increased by about 50%. But the number of students graduating with degrees in science, technology, engineering and math (the so-called STEM fields) has been flat.

Moreover, many of today's STEM graduates are foreign-born and taking their knowledge and skills back to their native countries. Consider computer technology. In 2009 the U.S. graduated 37,994 students with bachelor's degrees in computer and information science. This is not bad, but we graduated more students with computer science degrees 25 years ago.

The story is the same in other technology fields. The United States graduated 5,036 chemical engineers in 2009, no more than we did 25 years ago. In mathematics and statistics there were 15,496 graduates in 2009, slightly more than the 15,009 graduates of 1985.

Few fields have changed as much in recent years as microbiology, but in 2009 we graduated just 2,480 students with bachelor's degrees in microbiology — about the same number as 25 years ago. Who will solve the problem of antibiotic resistance?

If students aren't studying science, technology, engineering and math, what are they studying? In 2009 the U.S. graduated 89,140 students in the visual and performing arts, more than in computer science, math and chemical engineering combined and more than double the number of visual and performing arts graduates in 1985.

The story is the same in psychology, which graduates about 95,000 students a year, more than double the number of 25 years ago and far in excess of the number of available jobs.

Perhaps most oddly, despite the decline in the number of news media jobs, especially in the print media, the number of students in communication and journalism also has nearly doubled since 1985.

There is nothing wrong with the arts, psychology and journalism, but graduates in these fields have lower wages and are less likely to find work in their fields than graduates in science and math.

As a result, more than half of all humanities graduates end up in jobs that don't require college degrees. Baggage porters and bellhops don't need college degrees, but in 2008 17.4% of them had at least a bachelor's degree and 45% had some college education. Mail carriers don't need a college education, but in 2008 14% had at least a bachelor's degree and 61% had some college education.