Side View Of Young Technician Repairing Fuse Box With Screwdriver
On average, Los Angeles is warmer than Boston. But Boston’s temperature in July exceeds that of Los Angeles in January. Simply looking at the average temperature in the two cities obscures the considerable overlap between them.
A new report from the Manhattan Institute’s Connor Harris reminds us that the same is true for education and the labor market. It is true that college graduates, on average, are the highest earners in our society. The median college graduate earns 67% more than the median individual with only a high school degree. This widely-cited earnings gap is the main reason policymakers emphasize sending students to college, and back up their words with hundreds of billions of dollars in taxpayer-backed aid.
But large earnings gaps at the median don’t imply that people with only a high school degree are condemned to low incomes. Many people with only a high school degree out-earn the typical college graduate. According to Harris’ analysis, the top third of high school graduates earn more than the bottom third of college graduates. A quarter of high school graduates earn more than $51,000 per year, and a tenth earn more than $78,000.
Importantly, the earnings overlap between high school and college graduates is not due to differences in age or geographic location. Workers aged 25 to 34 have virtually the same degree of overlap between high school and college graduates as the entire workforce. That is, the typical young high school graduate can expect to find roughly the same labor-market opportunities (relative to college graduates) as the typical older high school graduate.
Harris finds that high school graduates with relatively high incomes tend to cluster in “occupations where entry-level positions offer a pathway to advancement.” These include truck drivers, electricians, and a variety of workers in supervisory or managerial roles. While these occupations are not a guaranteed ticket to the top of the earnings distribution, they offer enough opportunities for advancement to launch many of their workers above the typical college graduate’s income level.
Meanwhile, so many people have gone to college in recent years that the value of a bachelor’s degree towards the bottom of the earnings distribution has begun to falter. While the median college graduate can still expect a comfortable middle-class lifestyle, that is not true for everyone. New data from the Department of Education shows that college majors such as English literature and theater generally do not pay off, even if the student graduates from a prestigious university. The cost of these low-value majors shows up in the earnings distribution for college graduates, where many B.A. holders fall below the typical high school graduate.
Harris argues that while college is a good bet for many students, policymakers have over-emphasized it and devalued non-college career paths. “Many who pursue college today might be better served by alternative pathways toward occupations that require less formal education and offer a chance for advancement,” writes Harris. “This is true despite a monomaniacal focus on college preparation and attendance in the American education system.”
Indeed, while pathways to skill acquisition beyond high school do exist, they often serve as a complement rather than a substitute for a traditional college education. Researcher Rooney Columbus finds that 35% of bachelor’s degree holders have participated in an on-the-job training program, compared to just 6% of high school graduates. Non-college skills training academies such as coding bootcamps are great, but they mainly serve people who already have a college degree.
But if so many high school graduates can out-climb college graduates on the earnings ladder, there must be scope to develop better non-college pathways to replicate those outcomes for future generations. At the very least, policymakers should consider that massive subsidies for universities are pushing too many students onto the college track, while leaving good non-college opportunities on the table.
Disclosure: The Manhattan Institute is my former employer.
