Explaining the Diminishing Returns to Non-STEM Higher Education

As Generation Jobless tries to figure out where its job possibilities went, we might consider possible relationships between higher education and return on investment.  I want to limit these possibilities to graduates of four year institutions in non-STEM subjects, rather than the important but separate issue of college non-completion rates.  Consider the following, noting that they are not incompatible with each other as explanations of the relationship between liberal arts college degrees and return on educational investment.

  • Demand for liberal arts graduates has dried up, because of structural changes in the broader economy that have reduced the need for these job categories.  The structural reasons range from greater automation of production in lower-professional white collar positions; secular shifts downward in the economy overall and a lower long-term growth rate.  The overall point is shifting demand in the overall labor market.
  • Labor markets seek liberal arts graduates with skills in the traditional subject matters of analytic skills in verbal and basic quantitative areas, but higher education fails to teach those skills.  The problem in this case is not demand as such – assuming away the short and medium term scarcity of jobs – but instead that the workers supplied lack the necessary skills.  The problem lies with what the university teaches or, more exactly, fails to teach.  Within non-STEM areas, colleges are not teaching generalist analytic skills.  The traditional promise of the quality humanities or liberal arts major – not a technical skill set, but generalist analytic skills in reading, writing, basic maths, and strong communications skills – has somehow eroded and colleges fail to convey those skills.
  • Colleges continue to supply liberal arts graduates with the traditional skill set, and labor markets continue to seek them – but the cost of college has simply gone far above the wages that these skills and the associated jobs can bear.  It’s not the skills and it’s not the jobs, it’s the cost of education – priced as though everyone would become a Wall Street banker or lawyer.
  • Specialization in the university has reached the point where colleges cannot produce the true generalists needed in the economy – traditional liberal arts skills in analytic reading, writing, and communication, but combined with generalist technical knowledge in areas of the modern economy – STEM plus economics.  STEM departments are not interested in educating generalists, and traditional liberal arts departments assumes that the purpose is to go on to graduate or professional school, hence the exclusive focus on GPA, and grade inflation to try and maintain enrollments.
  • Society is trying to put people through the higher education, four year college system, who intellectually have no business being there.  Their future lies in blue collar work, not white collar work.  This is a popular meme at this moment, but it has two distinct flavors.  One is that there is significant population that, just because of its bell curve placement, will never successfully become “knowledge workers.”  This would be so in good times or in bad, but is masked during good times.  This is to say that it would always be inefficient and suboptimal to educate this group to white collar knowledge worker jobs for which they are ill-suited.
  • A second version of the “too many people go to college” is that the economy is permanently downshifted.  This low growth economy, which has come about because of the consequences of an aging population without replacement workers combined with the profligacy of the last few years that have deprived future generations of investment capital toward new innovations to create growth.  Or whatever explanation for it one cares to give; the point is long term lower growth.  In that lower growth economy, the returns to higher education are long term lower as spread across some larger than otherwise population cohort.  It makes less sense to educate people for a knowledge economy that, while once within our reach, is not achievable any longer.  They could have found a place in it, but we’re now too poor to create it, even though it would produce greater social wealth.  Which is to say, in the world that might have been absent poor social investment decisions in earlier years, the failure to send these kids to college would be inefficient and a misallocation of resources – but in the actual low growth world of today, there’s no positive return to doing so, considered against the substantial costs (which are also a legacy of earlier poor social choices).

Note that there is a group of people with a vested interest in pushing the agenda that too many people go to college, especially borrowing money for it – rich people’s children who don’t need loans for university. Reducing the competition is a dandy idea from their view.  And even if they don’t think that way – the fact of reducing the number of kids in higher education is almost certainly a recipe for creating not just greater income inequality, but increasing the harsh qualitative fact of class division, particularly between sectors of white collar workers, the lower and upper elites of the New Class that I discussed several weeks ago in another post.  What else would one call the loss of upward mobility as a possibility?  “The rich really are different from you and me – they went to college.”  In our world, that sounds so 19th century Britain, people of great intelligence, drive and possibility, stuck “below the stairs” because of class rigidity.  We thought we had been doing away with that starting with the rise of the post-war Baby Boom; its return upon its children and grand children is a dismaying thought.

In general, I agree entirely with the many commentators who have argued that the United States needs to produce more STEM graduates.  But I also take note of the many people who have written to me to argue that the only truly employable STEM fields at the moment are engineering and computer science, and only certain disciplines within those.

It’s also worth keeping in mind that the United States could easily produce an excess of engineers – yes, even engineers.  The labor market of a complicated, division-of-labor society means many, many specializations, and most of them are not STEM.  We need lawyers, human resources staff, janitors, communications specialists, and many things that too-reductionist a view might lead one to believe are purely frivolous intermediary occupations.  Maybe they are parasitical, and maybe they will get squeezed out of existence over time.  But there is a sometimes incorrect tendency these days to believe that since innovation is the heart of all increases in productivity and hence in long run growth and wealth, STEM must be responsible for it and that because STEM is the root of innovation, only STEM jobs are truly value added.  I exaggerate for effect, but you see the point.

That’s a little bit like the error of the ancient Physiocrats, who believed that agricultural work was uniquely special because it was the root source of all wealth, since everyone had to eat.  (I simplify.)  But in a complex, specialized, highly intermediated economy, that’s not how it works.  Of course everyone needs to eat – but if we want to have things available to nearly everyone, consumption more than just eating, we have to accept a highly specialized economy with many diverse intermediaries – not all of whose functions will seem obvious to those assuming that only STEM innovators count.

I invite you to suggest other possible explanations for the declining returns to higher education I might have missed.  Please be civil and on-topic and no rants. Ideally, I’d like to see the range of possible reasons, and then one can assess how much various ones contribute overall.  They do not seem mutually exclusive by any means.

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