Want Income Equality? More for Vocational Ed, Less for Colleges

The major American political developments of recent years have been the ascendancy of far left socialist thinking characterized by the Sanders-Warren-AOC-”The Squad” wing of the Democratic Party, along with Black Lives Matter and a push to end inequalities that are perceived as racial and capitalist-based. Much of the political rhetoric has focused on reducing social and economic inequalities; promoting economic growth and expansion is “out” politically, while militantly pursuing the goal of income and racial equality is “in.”

Increased income inequality has occurred fairly continuously for decades, simultaneously with growing college educational attainment. Despite their liberal political orientation, the elite private universities are perceived as bastions of white elites, playgrounds for an academic aristocracy centered around white privilege. Getting a college degree is expensive, largely an unintended consequence of federal student loan programs that have scared many low income Americans, disproportionately ethnic minorities, away from college. Stealing partly from the late Milton Friedman, the two most anti-Black federal statutes are the ones setting minimum wages and the one providing for federal student loan assistance.

On top of that, as Bryan Caplan, myself, and others have said: college is mainly a very expensive screening device separating the best and brightest in terms of vocational potential from others, while at the same time providing relatively few specific practical vocational skills. College educated highly productive Americans got most of their labor market edge through innate intelligence and drive, network connections from college, even on the job training not directly related to their collegiate learning.

Enter my friend George Leef of the James Martin Center, who told me about some new research by one of America’s foremost labor economists, Edward Lazear of Stanford. Prof. Lazear is a former Chair of the President’s Council of Economic Advisers, serving admirably during the 2008 financial crisis.

Lazear notes that there has been a growing gap worldwide in recent years between high and low wage earners, in countries with widely different approaches towards relieving poverty (e.g, the U.S. and Sweden). The reason, Prof. Lazear notes and I heartily concur, is that the productivity of the high wage earners has risen faster over time than that of those receiving lower compensation. If you want to reduce employment-induced income inequality, you try to increase the productivity of the lower wage workers relative to higher wage ones.

Lazear suggests that Americans invest relatively little in true “vocational education,” educating students either in high school or those with high school diplomas needing some training to gain an employable skill, lasting anywhere from a few months to perhaps two years. I have interviewed heads of some private, often for-profit institutions, training students for highly specialized nicely paying jobs, such as serving as court reporters or computer coders. Some community colleges also do this sort of training well and relatively cheaply. The evidence is that some of these schools have a pretty good record of providing employable, relatively high paid skills to trainees at a cost far less than that associated with earning a bachelor’s degree.

Americans have often stigmatized kids going to vocational high schools, or those skipping college and going to some form of trade school, unlike the Germans who consider learning a “blue collar” skill to be honorable and respectable, often leading to jobs paying almost the same as what college graduates earn after graduation. Why don’t we stop promoting “college for all” when it is clearly inappropriate? Why don’t we provide subsidies for kids wanting to go into court reporter or welding training, or become computer programmers via coding academies? Why don’t we give vouchers directly to students (unlike Pell Grants), usable in paying fees for non-degree work training programs?

A cautionary note. As bad and inefficient as higher education can sometimes be, K-12 schools, with far less competition, monopoly providers and large monopoly suppliers of labor services (teachers unions) and no discipline imposed through market prices, is even worse. It would be critical that expanded vocational education initiatives be opened to all providers, including proprietary ones. I ask: Why should we subsidize upper middle class kids getting sociology degrees from the University of Last Resort when some lower income kids hungry to learn usable skills go without funding?

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Google’s Plan to Disrupt the College Degree

My wife and I recently hired a financial advisor who is helping us map out our financial future. He seemed stunned that we didn’t want to take advantage of the US tax code’s 529 provision, which helps parents save for their children’s education.

“You have three kids,” he said. “Odds are at least one will go to college. It’s a no-brainer.”

We nonetheless demurred. I like shaving my tax liability as much as the next guy, but the truth is both my wife and I have serious doubts about higher education. Though we both attended college ourselves, options today look less promising than they once did.

College might have been a “no-brainer” at one time for parents and students who could afford it, but that is no longer the case. Soaring costs, grade inflation, diminishing degree value, the politicization of campuses, and a host of other issues have made the once-clear benefits of college less clear.

Despite all this, a large part of me still wants my kids to go to college because it feels like so few other options are available. That could be changing, however.

Google’s Effort to Disrupt the College Diploma

In July Kent Walker, Google’s Senior Vice President for Global Affairs and Chief Legal Officer, announced on Twitter that the company was expanding its education options.

It was a direct salvo at America’s higher education industry.

“College degrees are out of reach for many Americans, and you shouldn’t need a college diploma to have economic security,” Walker wrote on Google’s blog. “We need new, accessible job-training solutions—from enhanced vocational programs to online education—to help America recover and rebuild.”

To be sure, it’s hard to imagine anyone taking on America’s $600 billion higher education industry. Nevertheless, a quick look at Google’s model shows why colleges should be worried.

Google is launching various professional courses that offer training for specific high-paying jobs that are in high demand. Program graduates can earn a “Google Career Certificate” in one of the following positions: Project manager ($93,000); Data analyst ($66,000); UX designer ($75,000).

While Google didn’t say how much it would cost to earn a certificate, if it’s anything close to Google’s IT Support Professional Certificate, the cost is quite low, especially compared to college.

That Google IT support program costs enrollees $49 per month. That means a six-month program would cost about $300—about what many college students cough up on textbooks alone in a semester, Inc points out.

Compare that price tag to that of college, where students on average pay about $30,000 per year when tuition, housing, room and board, fees, and other expenses are factored in.

Unlike college, Google won’t just hand you a diploma and send you away, however. The company has promised to assist graduates in their job searches, connecting them with employers such as Intel, Bank of America, Hulu, Walmart, and Best Buy.

Graduates will also be eligible for one of the hundreds of apprenticeship opportunities the company is offering.

Is College ‘Worth It’?
In economics we use a simple term to talk about something’s worth: value. We know that value is subjective. But if consumers freely purchase something, it suggests consumers place a value on that good higher than the price.

Judging the value of a degree is tricky, however. It’s not like buying steak at a grocery store. Buyers are mostly shielded from the costs in the short term, and the benefits of the purchase are extended out over many years.

We know that for many students, college is a wonderful investment that increases their earnings, while for others it will turn out to be a poor investment because they don’t graduate or they acquire job skills that do not translate into increased earnings. (For example: I was a bartender after I received my undergraduate degree; I didn’t make more money because I had a degree.)

We also know that the prices and value change over time. In the case of higher education, prices have increased sharply in the last 30 years while the value has diminished.

As Arthur C. Brooks pointed out in The Atlantic in July, from 1989-2016 university costs in tuition and fees increased by 98 percent in real dollars (inflation-adjusted), about 11 times that of the median household income.

At the same time, there is compelling evidence that while the price of college is increasing sharply, the value of degrees is diminishing because of a surplus of college diplomas.

For parents like myself, the idea of spending $350,000 to send my three children to university is, to be frank, slightly nauseating. All things being equal, I don’t see the value there. (As I tell my wife, however, this doesn’t mean I won’t send my child to Princeton if he or she is admitted and I believe college is the right fit for that particular child.) Over the last couple of years, whenever I’d think about my children’s futures, I’d find myself growing more and more nervous.

If not college, then what? Why are there not better options? There’s a huge need.

The beautiful thing about free markets is that needs do not go unmet for very long. In a free system, innovation has a way of filling the gaps to fulfill what consumers want.

Google’s expansion of its accreditation system offers two things young people (and their parents) highly value: 1) job training skills; and 2) prestige.

Do not underestimate the power of the latter. Prestige mattes a lot. In fact, when you look at actual education many college students receive today, prestige is what they’re purchasing, not education.

The value of degrees might have been diminishing for years, but parents and kids could still rationalize the excessive costs because there was a certain amount of status and recognition conferred simply for being in college and then graduating.

Major corporations like Google have more to offer than they realize. In today’s marketplace, having Google on a resume can offer the same prestige as a university—and arguably far more in terms of job skills.

Once corporations figure out their brand can offer commodities consumers want—job-training and validation—it could disrupt the current education model. It’s possible corporations could also bring on a resurgence of the once-popular apprenticeship-style learning that can be traced back to the Code of Hammurabi in Ancient Babylon through to business-training programs of today like Praxis and Google.

At the very least, programs like Google Career Certificates will offer much-needed competition to the university system and additional options to young people looking to take their next step in the world.

Parents of the world, rejoice!

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Not a single healthy child has died from Covid

This is the key finding of a new study, which has confirmed what we already knew: the risk posed to children by Covid-19 is miniscule.

Of the children the British Medical Journal (BMJ) report considered, six tragically died in hospital with Covid. Importantly, all of those had underlying health problems. This is equivalent to one per cent of child hospital admissions for coronavirus – a ‘strikingly low’ figure when compared to the 27 per cent figure for other age groups.

Researchers added that the likelihood of children needing hospital care for Covid is ‘tiny’ – and ‘even tinier’ for critical care. Indeed, 82 per cent of those admitted to hospital as virus cases did not require intensive care.

These findings add to those of a previous study which reported most children who catch the virus suffer either only mild symptoms or none at all.

With the evidence mounting that kids are largely safe from Covid, it is clearer than ever that schools are safe. Those who want to hold up the return to education are massively over-stating the risks. In fact, they are causing harm to children by restricting their lives in the name of protecting them from a negligible threat.

Let’s stop scaremongering and get schools back to normal.

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Australian PM's plans to double the cost of humanities  degrees to $14,500 a year while slashing the price of maths and engineering qualifications face a huge setback

The future of the Morrison government's university fee changes is uncertain after a vote in the Senate showed a lack of majority support for the idea.

The draft legislation, which also reduces the price of 'job-relevant' courses, was introduced to federal parliament last week and is being debated in the lower house.

While a Greens bid to have the bill referred to a committee for an inquiry failed in the Senate because of an even vote, if senators vote the same way for the draft laws they would fail.

The future of the Morrison government's university fee changes is uncertain after a vote in the Senate showed a lack of majority support for the idea    +2
The future of the Morrison government's university fee changes is uncertain after a vote in the Senate showed a lack of majority support for the idea

Cross bench senators Jacqui Lambie, Rex Patrick and Stirling Griff sided with the Greens and Labor, leaving the committee vote tied.

Labor's education spokeswoman Tanya Plibersek says the government is hiding from scrutiny by voting against an inquiry into the bill.

'Whenever there are tough questions to answer, the Liberals run from scrutiny,' she told AAP. 'If Scott Morrison thinks his plan to cut unis and jack up fees is so great, why is he trying to stop an inquiry? What has the prime minister got to hide?'

The proposed laws would more than double the cost of some humanities courses in a bid to encourage people to enrol in courses it argues lead to higher employability    +2
The proposed laws would more than double the cost of some humanities courses in a bid to encourage people to enrol in courses it argues lead to higher employability

The proposed laws would more than double the cost of some humanities courses in a bid to encourage people to enrol in courses it argues lead to higher employability.

Science and maths would be among the degrees made cheaper, along with psychology, agriculture, environmental sciences and health.

Under the plans, nursing qualifications will cost just $3,700 per year while IT, science and engineering degrees will drop by $2,000 per year.

Meanwhile humanities degrees are expected to jump from $6,804 per year to $14,500. Teaching and nursing degrees are expected to drop by 45 per cent, while a law degree will cost 28 per cent more.

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