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Is too much education the problem with the economy?

Have we created unrealistic expectations by educating more people with college degrees than what there are jobs that require those degrees?
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I am tired of hearing that companies with $10 to $12 per hour entry level jobs can't get anyone to apply.  No one shows up at job fairs.  Yet unemployment is still too high, especially among younger workers!  What's the deal here?

A big part of the problem is extended unemployment benefits.  An acquaintance of mine just went back to work because his benefits were up.  He got a good job (meaning it matched his skill level), comparable to the one he lost, but he hadn't bothered to look for months because he didn't need to.  I'm all for a safety net, but we have created is not a safety net, it is an excuse to not work.  The system has blocked the normal bidding process whereby the most qualified fill the best jobs and others fill in below that until the least qualified or inexperienced get the $10 per hour jobs.

But, I believe, a bigger part of the problem is that, as a society, we have set an unattainable expectation that if you go to college, you deserve and will get a big salary.  Not true!  If there were an unlimited supply of jobs that required a college degree, then that might be true.  But there is not such a supply.  Only 26% of jobs require a college degree.   During the expansion since the Viet Nam war, we've essentially doubled the size of the labor pool (depressing wages) and we've built too much capacity for higher education.  To fill that capacity, we have lowered standards and made college not something that you earn through performance, but an entitlement.

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Now we have a whole generation (maybe a couple generations) of college graduates who want a new house right away with a BMW in the driveway  and are frustrated because they can't get the job they think they deserve by virtue of having graduated or attended college.  Someone needs to tell them that there aren't enough of those jobs to go around, and there won't be.  They are sitting on the sidelines waiting for something that isn't going to happen, while the same government institutions that are responsible for the oversupply, continue to pay people not to take jobs.

The automation industry is benefitting, because when employers can't fill entry level jobs like order pickers, they automate those jobs.  Once that happens, those jobs are gone forever - but more high skilled maintenance jobs are created.  Unfortunately, the typical college graduate isn't qualified for these $100,000 per year plus hands-on jobs.

The unemployed whom I respect are those who recognize the situation, take an available job, because it is the right thing to do, and start gaining the experience that will allow them to move up.  Others return to community college to gain skills that will land them high paying gold collar jobs as maintenance technicians,  machinists, plumbers, welders or other in-demand occupations.  That's not what they were told their future might be - but they were told wrong.  Success goes to those who can adapt.

To learn more about the ballance between jobs requiring college degrees and those that do not, download or purchase The Manufacturing Workforce Development Playbook




It is not a surprise that some people abuse the system, such as your friend! However, all of the 3.4 million Americans cannot be put in that same category. A requirement for even receiving benefits is to prove you are looking for work! Each state is supposed to monitor the unemployed so that no one is allowed to just sit back and collect benefits. There are hundreds of thousands of baby boomers who are classified as the long term unemployed. Many of which are degreed and had great jobs! They search daily for work but have not been successful in obtaining gainful employment. Many have attempted at taking a lessor qualified position, only to be turned down.

The author does a good job of presenting one point of view. It is an economic truth that those with marginal skills tend to make employment decisions based less on "best job option", and more based on what happens to be the "least worst" option. Like the author, I know a woman who collects unemploment, and food stamps, lives in a project, and sells jewelry on ebay. If her 2012 Subaru is anything to go by, she is skating nicely under the radar in a small upstate town. She works hard at her ebay business, clearing a living wage I think. Now, why isn't she looking for a job? She, as well as all the moochers the author talks about, are (potential) workers. However, that they are marginal workers-- that they have the lowest-value skills from the firms perspective-- is the main reason they make the decisions they do. As labor becomes arbitraged across countries, wage-rates and the value of skills declines in the first world, and improve in the third world. The flip side of labor-depreciation in the first world is inflation in the third world. Again, it is the lowest wage earners in the third world who suffer, and increasingly depend on government subsidies (for energy and food) to survive. It will be wrong to blame the marginal workers in the third world just as much. Globalization, which has many benefits for the rich, brings many challenges for the poor. Education is not what signals labor value within a country, it is what is needed to maintain labor value in a global economy. I agree with the author, we need curb this "degree bubble". Unlike the author, though, I don't think benefits or government programs are to blame for the malaise. The cause is the challenge of valuing labor. If you value labor merely as an input into the production process (the authors' view) you create more marginal workers, and the dole becomes more attractive. If you, on the contrary, see human capital, you allow curbs on globalization of capital and labor markets, so you can maintain the economic santuaries that are needed for marginal workers. By slowing the merger of capital and labor markets, you also give ermeging markets to catch you to the more mature markets through reforms and capacity building.

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