“The College Payoff” Debate: Day Two
How would more college graduates in the workforce affect the value of a bachelor’s degree? Stephen J. Rose and Richard K. Vedder tackle that question in day two of our debate about “The College Payoff,” a new report from the Georgetown University Center on Education and the Workforce that says “over a lifetime, a bachelor’s degree is worth $2.8 million on average.”
Is the premium on college graduates merely a matter of supply and demand? Does your research suggest how the lifetime earnings of those with degrees would be affected if the percentages of those with diplomas increased?
Rose: We do believe that supply and demand play a key role in determining the relative wages of [bachelor’s] workers to [high school] workers. In our paper “The Undereducated America,” we track the evolution of supply and demand from 1915 through projections for 2025. Our preferred path forward is to increase the number of BAs by extra 14 million over today’s situation and conclude that the BA premium would decline from 74 percent today to 46 percent (which would be accomplished by a 6 percent rise in BA wages and 24 percent of those with HS diploma).
How much of the wage premium described in “Payoff” for those with college degrees is merely a matter of supply and demand? If higher percentages of workers had college degrees, do you think the reported premium would decline considerably?
Vedder: Clearly, wages, and thus wage premiums, are determined by supply and demand, although government policies can impact these market forces on both the supply and demand side. A super-abundance of college graduates, promoted by policies recommended by President Obama, the Lumina Foundation and others, likely will increase supply relative to demand, narrowing the existing wage premium. Thus present or past experiences are NOT necessarily a gauge to what the future will be, and those graduating from high school now should view the college commitment from a long-term (40-year employment lifetime) perspective.
What do you think? Would more college graduates be better or worse for those with bachelor’s degrees?
This post originally appeared on EWA’s now-defunct online community, EdMedia Commons. Old content from EMC will appear in the Ed Beat archives.