Dear Fed Researchers: Please Spare Us the ‘Average College Graduate’

Today’s quandary is posed by Mary C. Daly and Leila Bengali of the San Francisco Federal Reserve Bank in “Is It Still Worth Going to College?” The authors write:

Media accounts documenting the rising cost of a college education and relatively bleak job prospects for new college graduates have raised questions about whether a four-year college degree is still the right path for the average American.

But we’re not concerned about the “average American,” which I suppose is a stand-in for the “average college graduate.” We care about college graduates who end up in occupations that don’t require four-year degrees and whose earnings aren’t boosted. Instead of such an inquiry, the authors conduct yet another “college premium” analysis that assumes that the average college degree is like Facebook common stock. Predictably, the authors miss the hypothesis that college might signal preexisting abilities more than foster new ones.

One interesting twist the authors add is cutting up their longitudinal panel data into 20-year cohorts.

Nevertheless, it still doesn’t tell us whether the widening of the “premium” is due to a growing need for better-trained people or substantial wage declines for working-class occupations.

The authors conclude, “These findings suggest that redoubling the efforts to make college more accessible would be time and money well spent.” Translation: Long live the positional goods rat race!

For the record, 12.8 million jobs that require a high school degree or less are filled by Americans with four-year degrees. The same goes for millions of other jobs requiring only associate’s degrees, like nursing. Moreover, unlike the “average college graduate,” roughly 20-25 percent of college grads earn less than the median high school graduate in the same age bracket. Unless the authors are willing to tell them that they’re so stupid that they would be unemployed or enslaved if they hadn’t gone to college, then clearly college does not pay off for everyone and Fed researchers with time on their hands should investigate the circumstances that bring this about.



  1. “Moreover, unlike the “average college graduate,” roughly 20-25 percent of college grads earn less than the median high school graduate in the same age bracket.”
    Matt this point you make is so important and yet continues to be widely misunderstood or not understood at all by students and their parents. . Current trends in tuition inflation and personal income suggest that the number of students that are in the words of the real-estate market “upside down ” on their education debt will continue to grow.

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