The Dwindling Power of a College Degree

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A drafter at work, 1952.

By ADAM DAVIDSON, Published: November 23, 2011, NYTimes

The 2012 presidential election can be seen as offering a choice between two visions of how to return us to this country’s golden age — from roughly 1945 to around 1973 — when working life was most secure for many Americans, particularly white, middle-class men. President Obama said his jobs plan was for people who believed “if you worked hard and played by the rules, you would be rewarded.” Mitt Romney explained his goal was to restore hope for “folks who grew up believing that if they played by the rules . . . they would have the chance to build a good life.” But these days, many workers have lost a near guarantee on a decent wage and benefits — and their careers are likely to have much more volatility (great years; bad years; confusing, mediocre years) than their parents’ ever did. So when did the rules change?

Deep Thoughts This Week

1. The economic rules have been changing since the ’70s.

2. The U.S. produces a large number of workers whose skills aren’t needed.

3. Inequality is even more rampant than you think.

4. Time to consider getting a master’s.

It used to be that if you worked hard, you were guaranteed a certain kind of life. There are reasons success is no longer a straight shot.

It has been hard to keep track. Over the past four decades, we have experienced the oil embargo, Carter-era malaise and a few recessions. Mixed in were the thrills of the late 1990s and mid-aughts, when it seemed as if you were a sap if you weren’t getting rich or at least trying. But these dramas prevented many of us from realizing that the economic logic was changing fundamentally. Starting in the 1970s, labor was upended by a lot more than just formal government work rules. Increased global trade devastated workers in many industries, especially textiles, apparel, toys, furniture and electronics assembly. Computers and other technological innovations had an arguably greater impact. While factories continue to make more stuff in the United States than ever before, employment in them has collapsed.

Computers have hurt workers outside factories too. Picture the advertising agency in “Mad Men,” and think about the abundance of people who were hired to do jobs that are now handled electronically by small machines. Countless secretaries were replaced by word processing, voice mail, e-mail and scheduling software; accounting staff by Excel; people in the art department by desktop design programs. This is also true of trades like plumbing and carpentry, in which new technologies replaced a bunch of people who most likely stood around helping measure things and making sure everything worked correctly.

As a result, the people whose jobs remained valuable in that “Mad Men” office were then freed up to do more valuable things. A talented art director could produce more work more quickly with InDesign. A bright accountant could spend more time thinking of new ways to make and save money, rather than spending endless hours punching numbers into an adding machine. Global trade works much the same way. It’s horrible news for a textile factory worker in North Carolina, but it may be great for a fashion designer in New York.

A general guideline these days is that people are rewarded when they can do things that take trained judgment and skill — things, in other words, that can’t be done by computers or lower-wage workers in other countries. Money now flows around the world so quickly, and technology changes so fast, that people who thought they were in high demand find themselves uprooted. Many newspaper reporters have learned that their work was subsidized, in part, by classified ads and now can’t survive the rise of Craigslist; computer programmers have found out that some smart young guys in India will do their jobs for much less. Meanwhile, China lends so much money to the United States that mortgage brokers and bond traders can become richer than they ever imagined for a few years and then, just as quickly, become broke and unemployed.

One of the greatest changes is that a college degree is no longer the guarantor of a middle-class existence. Until the early 1970s, less than 11 percent of the adult population graduated from college, and most of them could get a decent job. Today nearly a third have college degrees, and a higher percentage of them graduated from nonelite schools. A bachelor’s degree on its own no longer conveys intelligence and capability. To get a good job, you have to have some special skill — charm, by the way, counts — that employers value. But there’s also a pretty good chance that by some point in the next few years, your boss will find that some new technology or some worker overseas can replace you.

Though it’s no guarantee, a B.A. or some kind of technical training is at least a prerequisite for a decent salary. It’s hard to see any great future for high-school dropouts or high-school graduates with no technical skills. They most often get jobs that require little judgment and minimal training, like stocking shelves, cooking burgers and cleaning offices. Employers generally see these unskilled workers as commodities — one is as good as any other — and thus each worker has very little bargaining power, especially now that unions are weaker. There are about 40 million of these low-skilled people in our work force. They’re vying for jobs that are likely to earn near the minimum wage with few or no benefits, and they have a high chance of being laid off many times in a career.

Global trade and technology are significant trends, but they’re not laws and policies. The actual rules have also changed notably since the 1970s. Back then, there were all sorts of stabilizers that pushed working-class wages up and kept rich people’s wages lower. The minimum wage, at its pre-1970s peak, was almost 50 percent higher than it is now (inflation adjusted, naturally). Unions were stronger and had more government support. The United States taxed the rich much higher relative to the working class. (The top bracket was taxed at 70 percent in 1978; now it’s 35 percent.) It’s hard to imagine, but regulations largely limited the profitability of banks and kept bankers’ financial compensation low.

The new rules, combined with the other major changes, have effectively removed both the floor and the ceiling. It’s easier for some to make a lot more money and for others to fall much further behind. That has meant a huge increase in inequality. The top 1 percent of families now makes 26 times the average of the other 99 percent (the ratio was 11 to 1 in 1979). The top 0.1 percent makes 130 times the bottom 99 (up from a 38-to-1 ratio 40 years ago). And the inequality is not just between classes. The average wages of the average American have stayed largely flat for decades, but those averages hide a lot of volatility, as more people find themselves at the extremes of wealth or poverty. A successful plumber who has mastered all the new water-flow sensor technology and pipe-fitting innovations (and is probably in a union) can make more than $100,000 a year, while other plumbers, who just know the basics, could make less than $20,000.

The increasingly vicious battle between left and right is, at the most basic level, a dispute over how to respond to these new rules. Republicans largely claim that the new rules will make the country richer and, in the long run, will be beneficial to everyone willing to put in the hard work. Few Democrats call for a return to record high taxes and trade barriers — after all, the free flow of cheap goods has helped many, particularly the poor. But many do want a return to the spirit of the old rules, when the government sought to make life more equal, more stable and, for some, less rewarding. The rest of us, meanwhile, should go to school, learn some skills and prepare for a rocky road.


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