College: important, but not magic bullet

Original Reporting | By Greg Marx |

“We need to get away from the claim that low wages are the result of insufficient human capital,” Lind said. “What’s left out of this in the journalistic accounts is sheer, naked power.” He offers an alternative way to understand the impressive income gains for workers with advanced degrees, one rooted in their stronger institutional protections rather than the intrinsic value of their education: “If you smash the service workers’ unions and the manufacturing unions, but you leave the doctors’, the lawyers’, and the professors’ guilds intact, you get a more polarized society.”

“I don’t even understand what the labor market side of things can possibly do.” — Claudia Goldin

If this account is correct, the economy of the post-war years is indeed gone for good. But what awaits us is far different from the vision often outlined by leading policy-makers. Presidents of both parties typically embrace, as Obama has done, the idea that most Americans will be competing in the global labor market in the future, and that to succeed they will need an ever-greater number of years of education. But “both of those statements,” says Lind, “are just wrong.”


Emphasis on education diverting attention from other policies?

Even observers who conclude that higher education will not be, by itself, the solution to stagnant incomes agree that there are gains to be made in that field. Many of the people interviewed for this story, while disagreeing about other subjects, emphasized that schools, policy-makers, and students themselves can do a better job of steering students toward the fields of study, and the occupations, that are most likely to deliver returns on an investment in education. Several spoke of the need to make internships and cooperative education programs — in which students spend up to six months working for a prospective employer — more central to the college experience. And all agreed that lowering barriers to college, and supporting public investment in research and education, were worthy goals.

There is also support among a range of policy thinkers for strategies to bolster skills training programs outside the classroom. Ideas in that vein include coupling unemployment insurance to mandatory retraining, or providing employer subsidies to support on-the-job skill development — an effort, Lind said, to move away from a status quo in which “the burden of guessing what the industry structure is going to be in 40 years is on the 18-year-old student.”

Real Value of the Federal Minimum Wage, 1968 to 2009

Map & Data Resources


View chart

Still, the debate over what education can achieve is closely connected to far-reaching differences over policy, especially when it comes to helping workers who do not have degrees. In short: the more powerfully someone believes in the education answer, the less likely he or she is to support other strategies to boost wages or improve job quality.

Claudia Goldin is a professor of economics at Harvard University; along with her co-author Lawrence Katz, she has been a key voice arguing that a shortfall in educational achievement is leading to widening inequality. In a recent interview, Goldin called for stricter standards in education, but recoiled at the idea of interventions in the marketplace. “I don’t even understand what the labor market side of things can possibly do,” she said. “Make the American workforce a better workforce. And I’m not saying all will be solved, but we’ll certainly be better off.”

Goldin describes her conclusions as deriving from her research findings — “just the facts,” she said. But an emphasis on education holds natural appeal for analysts who approach the question of economic development and income growth with hostility toward labor market regulations or other interventions. Jason Fichtner, a senior research fellow at the Mercatus Center, a free market think tank, explained in an interview last month that he and his colleagues were worried that growing inequality would lead to increasing demand for redistribution, regulation, and government services. Mercatus has begun to explore ways to improve primary education and expand college access, he said, as a way to “avoid those policies.”

Skeptics of the education argument take a very different view, embracing a range of policies from temporary wage subsidies during downturns, to support for unions, to a dramatically higher minimum wage.

Their strategies reflect a belief that trade and technology may shape the mix of employment opportunities in an economy, but that the value assigned to those jobs is more fundamentally a function of a set of political choices. Lind, for example, supports a gradual increase in the minimum wage to perhaps $15 per hour. (The chart above shows the inflation-adjusted value of the federal minimum wage at selected points over the last four decades.) Such a move is consistent with his view that many of the jobs of the future will not require a degree, but that we can make them middle-class jobs nonetheless.

“Every labor market in every nation, including ours, is rigged,” Lind said. “It is a question of rigging labor markets in a progressive rather than a regressive direction.”

There is little space for that sort of approach in a policy regime that focuses only on education — and to critics of the education answer, that’s the problem. “Advocating for more education has always been the lowest common denominator that everybody can agree we ought to do,” said Lawrence Mishel, director of the left-leaning Economic Policy Institute, who has written about the limits of education. “But what it really does, especially around issues of inequality, is avoid tackling the really tough questions.”

Send a letter to the editor