Did You Know? Trade Schools Showing Strong Enrollment Growth

As students are pushed to attend college more than ever before, many of them are beginning to push back. Many students struggle with that predetermined outcome of their lives and have become more open to other options such as vocational education or trade schools.

For people with some college or an associate degree, the unemployment rate was 3.5 percent at the end of 2018, according to the U.S. Bureau of Labor Statistics. Workers used to hands-on labor or IT work have been thriving. Firms in the 1980s and 1990s faced a shortage of skilled workers and tradesmen, but vocational education has grown throughout the 21st century to meet this shortfall. In 1999, only 9.6 million students were in a trade school, but by 2014, this number increased to 16 million, according to the National Center for Education Statistics.

Forbes magazine interviewed “Dirty Jobs” host Mike Rowe in 2018 and noted that “over 80 percent of construction firms have reported they are having a hard time finding qualified workers to hire.”

Those high-paying jobs are left empty as high school graduates line up for a four-year degree. Rowe has since been an advocate or trade school, starting a scholarship program to fund students in a vocational program. The “Work Ethic Scholarship Program” recognizes those who understand the meaning of hard work and emphasizes its importance.

The Department of Education published a report that noted the projected growth in the jobs that don’t require a four-year degree:

Transportation industry employers are expected to hire and train roughly 4.6 million workers, an equivalent of 1.2 times the current workforce, to meet the needs of growth, retirement, and turnover in the next decade. Preliminary analysis indicates that projected annual job openings are 68 percent larger than annual completions of related educational programs across selected transportation occupational groups. This highlights a significant skills gap that must be addressed to meet expected industry demand.

Although a college education is still necessary for specific careers, The Atlantic states that some careers now “require specialized training in technology that bachelor’s programs are usually too broad to address.” One result has been that many vocational-education programs enroll students who already completed a bachelor’s degree so that students can learn coding and other tech skills. As the infrastructure, construction, and transportation fields are growing faster, four-year degrees are becoming less of a necessity, according to the Bureau of Labor Statistics. The bureau has projected that the “construction sector is to add 790,400 jobs from 2014 to 2024 to reach more than 6.9 million.” While that number does not make up for lost jobs since 2004, progress is certainly occurring.

If high schools introduce their students to the possibility of trade schools, young people can have more informed ideas about what to do after they earn their diplomas.

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The Myth of the Entrepreneurial University

Politicos and pundits praise American universities for their entrepreneurialism. Founders of tech companies get honorary degrees and give commencement speeches. Student orientations include sessions bragging about the startup resources students have on campus. Schools even create “entrepreneurship” majors and entrepreneurship centers within their business schools.

But how much of that startup acumen is rhetoric and how much is grounded in fact? University marketers and grant-writers rely on people not being able to question their claims here. So long as they can draw some connection between the university and student go-getting, the school will claim some kind of credit. Then, administrators justify new centers, apply for more federal grants, lobby for more public funding, and pour more resources into building their “prestige.”

But compare the entrepreneurial output of universities with the closest alternatives for brilliant young people, and the narrative crumbles.

The Thiel Foundation launched a fellowship program in 2010, backed by PayPal cofounder and venture capitalist Peter Thiel. The idea behind the program was simple: Thiel had bet big on brilliant young people like Mark Zuckerberg (founder of Facebook) and Patrick Collison (founder of Stripe, an online payments service). How could he find more people like that?

If one buys into the university administrator narrative, one would expect to trip over Zuckerbergs, Collisons, and smaller-scale successes at elite college. Those campuses, however, focus on attracting major corporations like Goldman Sachs, JP Morgan, Apple, and Google to recruit on campus. Students who would start innovative companies instead get caught up in competing for corporate jobs with their peers. Entrepreneurship takes a backseat to a job with prestige.

Student founders can be seen on those campuses, but they’re the exception, not the rule. The Thiel Fellowship acted as a honeypot for them—about 20 finalists join the program annually.

A decade after Thiel announced his Fellowship, the results have surpassed what most colleges could claim. Thiel fellows have founded several billion-dollar-plus companies, employ thousands of people, and are responsible for progress across industries like hiring software, design software, remote-work software, hospitality, robotics, self-driving cars, cryptocurrencies, anti-aging research, legal support access, and many other sectors.

Take any major research university in the United States and compare its recent graduates since 2010 with Thiel Fellows. Few come close, despite the colleges teaching thousands more students every year than the group of 20 in the Thiel Fellowship. Consider that those schools graduate thousands of students every year, yet a program that graduates fewer than two dozen people annually includes the likes of Vitalik Buterin (creator of Ethereum), Dylan Field (founder of Figma), Austin Russell (founder of Luminar), Eva Shang (founder of Legalist), and Laura Deming (founder of Longevity Fund), among others.

Universities don’t specialize in entrepreneurship, even if they create majors and centers devoted to it. In the best cases, they work as honeypots where entrepreneurship is a function of smart people being near other smart people. Universities specialize in credentialing, first and foremost. Students enroll primarily to get credentials, not to learn skills that make them entrepreneurs. That difference should be no surprise to anybody steeped in the economics of higher education—both Bryan Caplan in The Case Against Education and Richard Vedder in Restoring the Promise show that most of the gains from education come from signaling and that skills taught in school are rarely retained.

I’ve seen this firsthand with my own experience working with student entrepreneurs on campus and at entrepreneurship centers around the country.  Students who study practical majors like computer science or interesting majors like philosophy and the classics are more likely than entrepreneurship majors to have a business idea worth building. That is a selection effect, of course. The types of people attracted to history majors or philosophy majors in college are also likely to take on the big problems that venture capitalism funds in startups. The PayPal mafia was made up of philosophy majors and computer science geeks obsessed with sci-fi and reinventing money. If they had just been interested in payment processing, it’s unlikely the company would have gotten so big in an early stage of the internet. Steve Jobs was obsessed with making computer use beautiful and accessible to the average person.

Universities don’t specialize in entrepreneurship, even if they create majors and centers devoted to it.
Entrepreneurship centers can be a space on campus for students with entrepreneurial inclinations, but spinning up “entrepreneurship majors” just doesn’t bear the fruits of venture-funded technology startups in my experience. Venture-funded technology startups need to address big, multi-billion dollar problems. That takes big thinking about what problems the world faces.

Majoring in philosophy and liberal arts and computer science don’t magically make people think big about the world, though. The selection effect is at work here. Students with interesting ideas and a desire to build these ideas select into computer science, or music, or philosophy programs, not entrepreneurship programs. When something like the Thiel Fellowship gives them the chance to skip college and get to work, they thrive.

Similarly, competent young people with the drive and ability to build products and get customers select into elite universities—the universities don’t make them entrepreneurial. Elite schools are good at being honeypots for interesting, intelligent, and competent young people to meet. Those young people become cofounders and build technology, products, and services that later become companies. But only if they have the time and freedom to work on those projects which interest them.

Thiel and his team at the Foundation understood this. Mark Zuckerberg and Bill Gates both made huge progress on Facebook and Microsoft, respectively, during Harvard’s “reading days,” a period in which students did not have to attend class and could study before finals. The Thiel Fellowship works as a sort of extended reading days for Fellows. They don’t have to worry about keeping up with their fellow students or their GPAs and can instead focus on building technology and products that people want.

That analysis has been borne out in my experience on campuses. It is not elite campuses with busy students that have the most entrepreneurial activity; rather, colleges that give their students the freedom to work on what they want to bear entrepreneurial fruit. I’d rather spend an afternoon at Olin College than at MIT if I am looking for entrepreneurial students working on new technology not because of some class requirement, but because it interests them.

Universities can learn from the success of the Fellowship. Rather than forcing students to attend more undergraduate classes and making them compete with each other for the prize of a Goldman Sachs or Facebook internship, they can give students the freedom to experiment, to build, to fail, and, ultimately, to succeed. Bring back and extend reading days, open up opportunities for independent studies, encourage gap years, and promote co-ops during which students immerse themselves in the workforce.

Those kinds of reforms, not “entrepreneurship centers” and new majors, encourage students to start businesses and build products.

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GPA or SAT? Two Measures Are Better Than One

At a time when only 41 percent of college students graduate in four years—and only 56 percent in five years—colleges and universities across the country are phasing out the only truly objective measure of academic excellence and student success in the application process: standardized tests.

Next month, for example, the University of North Carolina Board of Governors (BOG) is set to vote on a policy that would significantly diminish the role of test scores in the admissions process.

To do so, however, would be a blow against academic standards for the 16 UNC schools.

Currently, in order to even be considered for admission at any UNC institution, applicants must have a minimum GPA of 2.5 and an SAT score of 880 or an ACT score of 17. (Meeting the minimum standards does not guarantee students admission to any of the sixteen UNC institutions.) Those standards, however, might be revised by a BOG vote.

The proposed revisions are subtle, but significant: instead of requiring GPA and test scores, the new policy would require a minimum GPA of 2.5 or an SAT score of 1010 (or ACT score of 19).

The proposed policy comes as a controversial pilot program nears its conclusion. In 2014, the board passed a resolution to establish a program to test whether students’ GPA was a better predictor of academic success than standardized test scores. Three UNC system schools participated in the pilot study: Elizabeth City State University (ECSU), Fayetteville State University (FSU), and North Carolina Central University (NCCU).

Students were admitted to the pilot program based on a sliding scale that weighted GPA more heavily than SAT scores, but the test scores couldn’t fall below 750. To be eligible, pilot students’ GPA had to increase by 0.1 with each 10-point SAT score decline. There are now 5 cohorts totaling almost 1,100 students. The last cohort will be admitted this fall.

The pilot was set to last three years from fall 2015 through fall 2017, but in 2018 the board voted to extend the pilot another three years (through fall 2020). However, several board members opposed the extension. During a full board meeting on May 24, 2018, board member Steve Long was concerned that the pilot program was a “whittling away of our minimum admission requirements.”

But system employees have assured board members that the program, and any resulting policy recommendations, are not intended to lower academic standards. Indeed, nearly two years later, in a January meeting of the Educational Planning, Policies, and Programs Committee, Kimberly van Noort, senior vice president for academic affairs and chief academic officer for the UNC System, emphasized that the new policy would not lower standards. The proposal, she says, is “simply a modification to allow more flexibility for the institutions.”

During the meeting, van Noort and her colleagues discussed the pilot’s findings—which were compiled in a report presented to the committee. According to the report, the academic outcomes of the pilot students were very similar to those of the non-pilot students. Both groups had similar GPAs of 3.2, had similar retention rates, and completed a similar number of credit hours.

On the face of it, the pilot’s findings seem to justify modifying the system’s minimum admissions requirements. Why require students to meet minimum standards for both GPA and test scores when the pilot students—who didn’t meet minimum testing requirements—did just as well as the rest of the student body?

Furthermore, the system is not (at the moment) proposing a “test-optional” policy. Every student who is eligible to apply based on his or her GPA must still submit his or her test scores. As committee chair Anna Nelson noted: “[The SAT or ACT] remains a tool in the admission officer’s tool belt” when making admissions decisions. The only difference is that students won’t have to meet a baseline test score to be eligible to apply. If there were any negative student outcomes in the future, administrators would be able to analyze whether there was any connection to low test scores.

Even so, several compelling reasons should stop the board from approving the policy recommendation.

Meeting a low bar doesn’t indicate success

The fact that the pilot students had similar academic outcomes to the rest of the student bodies at each of the universities does not necessarily mean success. That’s because the universities themselves are in large part failing to graduate their students. For example, each of the three universities that participated in the pilot has dismal graduation rates.

In fact, between 2014 and 2015, ECSU and FSU’s graduation rates decreased: ECSU went from 20.6 percent in 2014 to 19.4 percent in 2015 while FSU went from 22.7 percent in 2014 to 21.4 percent in 2015. The graph below compares the pilot students’ graduation rates with non-pilot students at each school (a comparison of graduation rates was not included in the report presented to the board in January):

The fact that the pilot students performed similarly to the regular student bodies shouldn’t be a cause for celebration. If system officials wanted to measure the predictive power of GPA over test scores, why didn’t they conduct the pilot at higher-ranked UNC schools where the majority of students do graduate? By running the pilot in schools where graduation rates are already very low, it virtually guarantees that pilot students will not perform worse than an already failing student body.

The academic performance of the three schools points to a need for stricter standards, not more “flexible” ones. Indeed, the poor graduation rates suggest that admissions officers at those universities have not exercised enough discretion in ensuring that the students they admit are academically prepared. If the schools struggle to graduate students under the current minimum standards, why give them even more latitude to exercise their misjudgment?

The reality is, there are a number of perverse incentives for schools to boost enrollment. For one, more enrollment means more funding from the state. Secondly, increasing rural and low-income enrollments make the schools appear more diverse—a label that schools will go to great lengths to attain.

The UNC system also puts a great deal of pressure on universities to meet lofty enrollment goals as part of its five-year strategic plan. For example, by 2021, FSU is expected to increase low-income enrollments by 11.2 percent. ECSU is expected to increase rural enrollments by 63.2 percent. Since low-income and minority students were heavily represented in the pilot group, a more flexible admissions policy would help the system meet its enrollment goals.

But the new policy—although it might make the schools look more diverse—would likely hurt the low-income and minority students they claim to serve. That’s because low-income and minority students often graduate at lower rates than the rest of a given student body. At ECSU, for example, lower-income Pell Grant students had a 2015 graduation rate of 17.2 percent, but non-Pell Grant students graduated at a rate of 28.3 percent. It is widely known that students who do not graduate from college struggle the most with student loan debt.

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