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College: Worth It?

And now for a human capital related issue.  “College is a waste”, says a recent Businessweek article, “but not going is worse”.  According to Bureau of Labor Statistics, 48 percent of US college students are in jobs that require less than a four year college education.  15 percent of taxi drivers have a college education now, versus 1 percent in 1970.  However, while the value of going to college seems to be diminishing, the gap between the college educated and not is ever widening.

Unemployment rates in January “for people with a bachelor’s degree was 3.2 percent, vs. 6 percent for people with some college, 6.5 percent for people with just a high school degree, and 9.6 percent for people with less than a high school degree” according to the BLS.  According to a recent Pew survey, from 1965 to 2013, college educated, full-time, 25 to 32 year old employees had a rise in income of about $7000, calculated in 2012 US dollars, while their high school educated counterparts have seen a $3000 fall.

The discussion then is, do people do better with a college degree because they learn valuable skills (increase in human capital), or for other reasons?  One theory is that college degrees and names of schools are convenient for employers when hiring.  Busy employers cannot afford to look through every application to try to discover the person, a grad/no-grad sorting mechanism weeds out and makes their task easier and shorter.

How the internet fits with modern education is also worth exploring.  EdX, Harvard and MIT’s non-profit that puts free courses online is partnering with Google to create Open EdX to make it easier for anyone to take online courses.  This could mean a change in competition for the best teachers, who could become “free agents” as global teachers, rather than confined to a university.  Google exec, Eric Schmidt, a leader of Open EdX cautions that this does not mean people should stop going to college and only learn online.  Of entrepreneur, Peter Thiel, who pays kids to launch start-ups rather than going to college, Schmidt says its “just fundamentally wrong.  We want more educated people.”  While straight out of college, grads may not be any more useful than non-grads, down the road after training programs they become “phenomenal” employees Schmidt concluded, building that perhaps going to college has measurable contributions in employee quality, and therefore human capital.



  1. gjeong gjeong

    I think college gives you more options and higher probability of getting a “good” job.
    However, as you mentioned, the name/reputation of college also plays an important role in job search. There are also other factors such as experience, GPA, etc.
    For some people, college education may not be worth it. However, it gives you a higher probability of getting a good job.
    I personally consider the time and money spent on college education as investment for the future, which will eventually return. However, it may not be the case for the others.

  2. maxstadts14 maxstadts14

    Man, I wish that I could get this blog post to be in regular font and spacing… Any ideas?

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