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There are two dominant views concerning the value of a college degree currently circulating in American culture.  One view is that on average, people with college degrees make much more money over their lifetime than people without degrees.  The other view is that the over-production of college degrees has deflated their value, and we now have taxi drivers and baristas with PhDs.  I have often presented a third view, which is that a value of a college degree should not be equated with future earning power or job prospects, and instead of seeing higher education as a private good, we must see it as a public good.

The first problem with the idea that a college degree means higher earnings is that this correlation can have multiple causes.  We know that on average, students with wealthy parents and more social connections to high-paying jobs graduate from college at a higher rate.  Likewise, SAT scores are highly correlated with the wealth of the parents, and college rankings are highly correlated with SAT scores, and even financial aid is now often linked to SAT scores. The system as a whole thus reinforces class privilege, and so it may be that people who attain college degrees earn more because they start off with more and are given more opportunities and advantages as they move through the education and job systems. 

On the other side of the coin, the over-production of college degrees can be directly related to the under-supply of good jobs.  What we are seeing in many different job markets is that due to the lack of unionization, the increase in automation, and the globalization of labor and consumption, employers are able to depress wages and benefits.  One interesting test case for this theory is in higher education itself where we have witnessed a significant decrease in “good” jobs.  In just a few decades, we have moved from a system where the majority of the teachers had full-time, tenure-track positions to a situation where the majority of the faculty have part-time, non-tenure-track positions.  During this period, enrollments have increased, so we cannot say that there is a decrease in the demand for people with PhDs.  Instead, universities and colleges have decided to de-professionalize the professoriate.  As I have pointed out before, one cause for this problem is that the same institutions that produce the PhD degree do not require a PhD to teach undergraduate students. 

In other fields, this casualization of the labor force has been pushed by the use of technology to reduce compensation.  Due to the Web and the new media economy, professionals in journalism, entertainment, and other services have been replaced by citizens who are willing to work for little or nothing.  This reduction in earnings was once countered by the recognition that workers in a domestic economy must be paid enough to participate in the local consumer economy, but now in a globalized economy, there is always another person willing to consume our products.

What this analysis tells us is that we cannot expect higher education to fix our employment problems since so many of the labor issues are derived from the power of employers to reduce the compensation and benefits of their workers.  Just as the current funding model of higher education is rigged to reinforce class inequality, our failure to protect workers from destructive labor practices functions to enhance economic stratification.  When we throw high student debt into this mix, we see that our entire economic and social system is programmed against the future.    What we need is better labor laws and better employers.  Once all of the income gains stop going to the top 1%, we will see more good jobs, but education alone cannot fix this issue.