College Doesn’t Pay Off for Everyone

Why has college enrollment edged downward in recent years? After all, the college premium is still pretty handsome, which makes a university degree a pretty good investment. Dean Baker thinks the answer might lie in how the college premium is distributed:

Work by my colleague John Schmitt and Heather Boushey shows that a substantial proportion of college grads, especially male college grads, earn less than the average high school grad. They found that the lowest earning quintile of recent college grads (ages 25-34) earned less than the average high school grad. The implication is that many young people may be reasonably assessing their risks of not being a winner among college grads and therefore opting not to get additional education. To get more young people to attend college it is important that most can predictably benefit from the additional education, not just that the average pay of college grads rises.

I’m not sure I buy this. Schmitt and Boushey present the chart on the right, and sure enough, the lowest ten percent of college grads (red line) earn less than the average high school grad. But this has always been true. What’s more, it’s actually less true today than in the past. Among both men and women, even the lowest-achieving college grad is relatively better off now than in 1980.

Even if the bottom 10 percent are still worse off than an average high school grad, I’m not sure how a rising trend could lead to lower assessments of the value of college paying off. It seems like there must be more going on here than that.