‘Degree inflation’ — like grade inflation — hurts workers as it does employers

An article in the Wall Street Journal says there’s growing demand for college degrees, even for manufacturing jobs.

It’s a trend that will have negative consequences for American workers and American businesses.

The Journal’s analysis of federal data found that “U.S. manufacturers have added more than a million jobs since the recession, with the growth going to men and women with degrees… Over the same time, manufacturers employed fewer people with at most a high-school diploma.”

The manufacturing sector is no doubt undergoing significant changes brought on by automation and the corresponding demand for workers to have skills in managing robotic systems — but we shouldn’t ignore the following vitally important factors.

First, one reason that manufacturing could be hiring more college graduates might be because there is a greater share of people in the labor market who have college degrees. While fewer students numerically are attending college, college graduates appear to be a greater proportion of the labor market. This rise in educational attainment in the U.S. labor force would then put pressure on companies that traditionally haven’t hired college grads to pursue a new “pool” of talent. A college degree may be preferred by employers because it can be seen as a convenient proxy screen for soft skills such as reliability, follow-through, and ability to give and receive feedback. 

Second, companies (but increasingly not high tech companies) will often state that a bachelor’s degree is “preferred” on their job postings. Yet it seems highly relevant to this discussion which degrees manufacturers are favorably inclined to consider and for which roles. If any degree will do, this could be an indication that employers are screening for the kind of employee who can successfully navigate the college environment, rather than have mastered specific knowledge and skills. And not all degrees bring the same value to employers.

Third, the phenomenon of “up-credentialing” is also of note. As high schools are at best stagnating in quality, as the most recent Nation’s Report Card results for 12th grade math and reading make clear, employers are likely to value this measure even less, and seek a 21st Century equivalent of the high school diploma: a college degree. Put simply, degree inflation — like grade inflation — means that a degree becomes less valuable when it is more common. Its value as a signal is diminished. Employers may be counting on colleges to do the work that high schools used to do.

Degree inflation not only hurts employers, it is damaging from the perspective of individual students. Data from the Federal Reserve Bank of New York shows that recent college graduates are actually more likely to be unemployed than the overall population of workers.

This cycle is a deeply unhealthy one. Taken to an absurd length, this could mean that in 20 years, Uber drivers (if they still exist) will have to have a master’s degree. 

The college-for-all narrative has always been a fragile one. Its flaws are only becoming more obvious.  Demographic changes mean that there will continue to be fewer college-age students — thus lower enrollment numbers in the coming years. Student loan debt has delayed the dreams of generations of young and not-so-young adults who were promised that college was a guaranteed ticket to the American dream. At the same time, business and industry leaders complain that conventional education at the secondary and post-secondary levels is not keeping up with the skills demanded in the workforce. 

Who, then, benefits from individual students having to spend more time and money on formal education? Who, on the other hand, suffers from an unnecessary delay in joining the workforce or starting a business and making an income? 

Those who are invested in conventional systems for delivering education are feeling the ground shifting beneath them. It’s becoming more and more clear we must create new institutions, models, and pathways to success for American workers.

Erin Davis Valdez is a policy analyst with the Texas Public Policy Foundation’s Right on Work initiative.