Friday Feature Film- College Inc.| FRONTLINE
Beware, the Education-Industrial Complex; an industry that masquerades as a free-market solution to the deficits of public universities.
The Theory of Two-Pronged Credential Debasement
The two-pronged theory of credential debasement seeks to explain why so many college graduates are underemployed. This is primarily due to two factors that make significantly reduce a bachelor’s degree on the job market. Not only there a quantitative debasement but also a qualitative debasement.
- Quantitative Debasement: The vast increase in the number of workers who hold 4-year degrees has made this form of credentialing more common. This variant of human capital documentation no longer helps a potential job candidate stand out to employers. Dispelling the myth that a college degree is a “golden ticket” for a decent salary. Policies to subsidize or provide “free college” mimic the feature of money creation. Whether it be printing more money directly or circuitous forms of money creation through asset purchases. The result is the same, the artificial introduction of more money into the economy. These policies compel more people who would not otherwise attend college to do so. Making college degrees less marketable.
- Qualitative Debasement: The basis for the argument of a qualitative debasement of college degrees is highly speculative. There does seem to be some connection between the duration of time spent studying and GPAs that present some notable patterns. It stands to reason if students are spending less time studying and are earning higher grades, that there must be a decline in the rigor of their course work. Paralleling the qualitative debasement of currency in ancient Rome. To stretch the coin supply the silver content of the coins was replaced with copper. Reducing the value of the coin by altering the intrinsic value of the coin by changing its physical constituents.
This two-layered assault on the value of college degrees provides some insight into why a sociology major is now working Wendy’s drive-thru window.
Credential Debasement
What is Inflation?
The concept of inflation (the depreciation of purchasing power of a specific currency) can be applied to other goods besides money. Inflation is directly connected to the Law of Supply and Demand. As the supply of a commodity increases the intrinsic value decreases, as the good becomes more scarce the value of the good increases. This same concept is also applicable to tangible items such as vintage baseball cards and rare art. These are incredibly scarce commodities that cannot be authentically replicated therefore they command a high value on the market. On the other hand, mass-produced rookie cards and replications of Monet’s work are plentiful. Yield little value on the market.
If inflation and the opposite principle of deflation applies to money and other physical goods, could it also be applied to intangible goods? When looking at the labor market this becomes quite evident. Jobs that require skills that are rare or exceptional tend to pay higher wages. There is a notable caveat to this observation, that is compensating differentials. Which is a higher rate of compensation for a job that is risky or otherwise unattractive. The higher wages are due to a paucity of workers willing to accept the job, rather than possessing skills that are in demand.
The Signaling Function of College Degrees.
Over the past couple of decades, credentialing of intangible employment value has become more prevalent. Credentials can range from college degrees to professional certification. One of the the most common form of credentialing has become a 4-year college degree. This category of human capital documentation has evolved to take on an alternate function. Outside of a few notable exceptions, bachelor’s degrees no longer operate as a form of job training, but rather serve a signaling function. George Mason economics professor, Bryan Caplan, argues that this function of a college degree is a signal to potential employers that a job applicant has desirable characteristics. Meaning that obtaining a college degree is more of a validation process than about skill-building. An individual may be intelligent, but if they lack other complementary attributes such as conformity odds are they will not complete college. Dr. Caplan’s signaling model for higher education seems to be substantiated by the fact that the vast majority of college graduates are not using their degrees. It was estimated in 2013, that only 27 % of graduates had a job related to their major.
Due to the signaling function of a bachelor’s degree over the year, there have substantial increases in the number of job seekers possessing a 4-year degree. Retention rates for 4-year institutions reached an all-time high of 81 percent in 2017. In 1900 only 27,410 students earned a bachelor’s degree. This number ballooned to 4.2 million by 1940. That number has increased to 99.5 million. Demonstrating the vast proliferation of Americans with college degrees over the past century. Today, just shy of 40 % of all Americans hold a 4-year degree. Considering the vast increase in college attendance and completion, it fair to question if a college degree retains its “purchasing power” on the job market? Much of the evidence seems to suggest that it has not.
What is Credential Inflation?
The signaling function of college degrees may have distorted by the phenomenon known as credential inflation. Credential inflation is nothing more than “… an increase in the education credentials required for a job..”. Many jobs that previously required no more than a high school diploma now are only accepting applicants with bachelor’s degrees. This shift in credential preferences among employers has now made the 4-year degree the unofficial minimum standard for educational requirements. This fact is embodied in gov the high rates of underemployment among college graduates. It is estimated that 41% of all recent graduates are working jobs that do not require any amount of time in a college classroom. It is quite shocking when you consider that 17 % of hotel clerks and 23.5 % of amusement park attendants hold 4-year degrees. None of these jobs have traditionally required a college degree nor is it a prerequisite currently. Due to a competitive job market where most applicants have degrees, many recent graduates have no means of distinguishing themselves from other potential employees. Leaving them with no other option than to accept lower-paying jobs.
The Two-Pronged Debasement.
The value of the college degree has been debased in ways. First, its value has depreciated due to the vast increase in workers possessing degrees. This form of devaluation mimics the effect of introducing more money into the economy has on the value of a currency. Following the Law of Supply and Demand, the greater the quantity of a good the lesser the value. The hordes of guidance counselors and parents urging kids to attend college certainly have helped this matter. However, public policy has served to amplify this issue. Through various forms of loan programs, government scholarships, and other programs all have incentivized more students to pursue college degrees. These policies that make college more accessible are precisely what is devaluing college degrees. The current proposal for “free college” would be more expansive than our current policies. Encouraging more people to attend college making degrees even more common and further depreciated.
The second form of credential debasement is a qualitative form of depreciation. Proving that the quality of a college education has decreased over the years is more difficult to definitively validate. Similar to how the Ancient Romans debased their currency by diluting the silver content of their coins, we have done the same to the college curriculum. College students are rarely studying, but are attaining higher GPAs than previous generations. The average full-time student spends less than 30 hours a week focusing on course work. Amounting to approximately 900 hours a year (average full-time worker devotes 1,800-2,000 annual to their job). Yet, the average GPA has climbed from 2.5 in 1940 to 3.1. A potential sign that college is not as academically rigorous as it once was.
Conclusion.
This is not to say that brilliant students with aspirations of a career in STEM fields should avoid college. For the average student, it may be a malinvestment in their future. Incurring large amounts of debt to work for minimum wage is not a wise decision. When faced with policies and social pressure that have made college the norm, the signaling function of a degree becomes distorted. If students focused more on obtaining skills than credentials, they might find a way to stand out in a job market flooded with degrees.
College: The Opportunity Cost Not Worth Subsidizing
Despite all of the arguments for attend college, earning a college degree is not without risks. Not every degree holds the same amount of salability on the job market. Clearly a degree in engineering will have more utility than a Bachelors in Gender Studies. The opportunity cost of the time spent in college needs to be considered. The student actively forgoes opportunity for hands-on job training when they elect to attend college. Mirroring the costs of an unpaid apprenticeship detailed by the near forgotten French Economist Richard Cantillon (1680-1734) in his seminal work An Essay on Economic Theory.
If his father has him taught a trade, he loses his assistance during the time of his apprenticeship and is obligated to clothe him and to pay the expenses of his apprenticeship for many years. The son is thus dependent on his father and his labor brings in no advantage for several years. The [working] life of man is estimated at only 10 or 12 years, and as several are lost in learning a trade, most of which in England require seven years of apprenticeship, a plowman would never be willing to have a trade taught to his son if the artisans did not earn more than the plowmen……. The professionals themselves do not make all their children learn their own trade: there would be too many of them for the needs of a city or a state and many would not find enough work. However, the work is naturally better paid than that of plowmen. (p.41-42).
While the dynamics are not identical to a student attending college in the 21st century, however, there are some striking parallels. Both practices are assumed to function as an investment in a young person’s human capital. A trade off forgoing income for the present, with the anticipation that this will yield higher potential wages in the future. However, based upon Cantillon’s depiction of 18th century of apprenticeships parents were more entuned to the practical results of their child’s job training. Due to the large costs of losing help on the farm parents were more likely to consider their child’s aptitudes and the present concentration of skilled labors on the job market. The current “college for all” initiatives have left out an important piece of information out the factual argument for promotion greater college attendance, not all college degrees are equal. On average graduates holding a degree relating to the medical or STEM fields stand to make more money than those who majored in the humanities. This fact is frequently omitted in the onslaught of appeals encouraging young people to attend college. Creating the false impression that an engineering degree is on equal footing with a degree in sociology.
The pragmatic concern of parents during the 18th century of an over saturated job market has disappeared. Witlessly parents are now pushing their kids to go college not for the sake of obtaining skills, but for acquiring credentials. Meaning that a college degree has turned into a signaling mechanism for employers. It’s an easy metric for qualifying potential candidates and effectively avoiding the the legal complexities of employment contingent intelligence testing (Griggs v. Duke Power Company). To a certain extent this signaling model for attaining college diplomas has backfired. As the number of people procuring 4-year degrees increases, invariably like another commodity its value depreciates on the market. Embodying the very essence of the most well know law in economics, the Law of supply and Demand. As the quantity of a good increase its market value (quantified in money) decreases. The current glut of college educated participants in the workforce is exemplified by the statistics that 41 percent of all recent graduates are underemployed. Recent graduates that are underemployed are five times more likely to remain underemployed five years after graduation. The overall employment rate of college graduates has decreased from 1989 to 2019. Retention rates for 4-year institutions reached an all-time high of 81 percent in 2017. In 1900 only 27,410 students earned a bachelor’s degree. This number ballooned 4.2 million by 1940. That number has increased to 99.5 million. Demonstrating the vast proliferation of Americans with college degrees since the turn if the 20th century. Considering nearly 40 percent of all Americans have a four-year degree does it still hold the same value on the job market? Clearly not. This is evident when observing the statistics relating to underemployment.
The decreasing value of a 4-year degree has distorted the signaling function of a bachelor’s degree. This precipitous decline in value is the result of credential debasement. The depreciation of college degrees has resulted from a two-pronged debasement of these ubiquitous form of credentialing. The first form of debasement that is afflicting college credentials is an increase in the quantity of degrees. Which is analogous to the introduction of more money into the economy through fiscal and semi-fiscal qualitative easing. Based upon the Law of Supply and Demand the greater the quantity of a commodity, the lesser the value. This debasement is exacerbated by federal subsidies for higher ed, government scholarships, and government loans. These policies eliminate the financial barriers for entering college, the result being more students obtaining degrees. On the surface, this sounds like a good thing. However, with an increase in the number of Americans holding degrees the “purchasing power” of a bachelor’s degree is greatly diminished. Leaving many graduates with no choice but to take jobs that do not require a degree. Even most positions in an office environment working in sales or customer service do not require any college (or shouldn’t). This phenomena is particular jarring when you consider that 29 % of flight attendants, 17 % of hotel clerks, and 23.5 % of amusement park attendants hold 4-year degrees.
While the first form of debasement is a quantitative debasement of college credentials, the second variety is a qualitative depreciation. Paralleling the currency debasement practices in ancient Rome. Gradually the silver content in Roman coins was replaced by higher concentrations of copper significantly reducing the real value of the coins, while nominal value remained the same. The qualitative debasement of academic standards is a metric that is difficult to empirical prove. However, many experts who believe that higher ed has been “dumbed down” utilize a lot of correlative measures to defend this assertion. Some theorists have cited a decline in SAT reading scores have being indicative of falling standards for college admissions. This talking point is far from the most damning piece of evidence supporting the claim of a dip in academic rigor. Students on average spending 400-900 hours a year on course work. In contrast, a fulltime work devotes 1,8000-2,000 hours annual to their job. Despite the paucity of time dedicate to their studies students are currently earning higher grades than their parents or grandparent ever did. Back in 1940 the average GPA of a college student was 2.5, now it hovers around 3.1. While it would be unwise to infer causation from correlation, it wouldn’t be foolish to at least notice pattern.
Beyond the hordes of misguided parents and High School guidance counselors urging students to go to College there is another force pushing them in this direction, public policy. In recent years, many politicians various forms of “free college” or “student loan forgiveness” as part of their policy platform. Even some Republicans have incorporated moderate compromises to the “free college” proposals. For example, Arizona governor Doug Ducey signed (AZ SB1453) a bill that allows community colleges to offer bachelor’s programs. This measure may seem minor, it helps further debase 4-year degrees. Allowing community colleges to provide bachelor’s degrees acts as a subsidy, by artificially lowering the cost of a 4-year degree. There is a substantial difference in the cost of tuition between junior and senior colleges. Such initiatives encourage more prospective students to attend college, pushing the 4-year degree closer to being the new defacto high school diploma.
Affirmative Action, Public Schools, and Tenure
Decades ago, Affirmative Action programs were implemented to combat discrimination in the workplace. Generally, imposing specific hiring quotas upon employers to provide career opportunities to historically disadvantaged groups. Like many initiatives designed to curtail injustices, there are blind spots in these anti-discrimination laws. For instance, how are quota systems impacted by layoffs? Does the employer have the legal obligation to maintain racial or gender quotas even when amidst downsizing? How do tenure and seniority play a role in this decision-making process? As any astute reader can infer attempting to balance out all these complex factors quickly degenerates into a muddled mess. Generating a large array of various legal conflicts, ranging from contractual obligations to employees to comply with workplace discrimination laws. The fallout of the downstream consequences that were never initially ironed out.
The intricacies of such conflicts are particularly salient in the sector of public education. Throughout the 1970s and 1980s, several cases tested whether mandated quotas superseded tenure. As could be reasonably anticipated these cases have resulted in some mixed rulings. For example, in the city of Boston, Massachusetts when budget cuts forced the school district to layoff faculty members the issue was complicated legally mandated racial hiring quotas. The school district opted to ignore the tenure of seasoned Caucasian faculty members in favor of maintaining their racial quotas. This decision by the administrators of Boston schools resulted in several lawsuits (P.311-312). Unfortunately for the teachers pursuing damages the District Court and Circuit Court of appeals ruled in favor of maintaining the quotas (P. 312). This ruling cited Milliken V. Bradley providing the rationale for desegregation plans taking primacy over seniority.
A similar case took place in Buffalo, New York. Resulting in the verdict of Arthur V. Nyquist which again ruled in favor of maintaining racial employment quotas mandated by Affirmative Action laws. The court stated that such quotas are valid and supersede tenure unless it is a “ …demonstrable necessity that their rights have been impaired..” (P.312). Examining this pattern in court decision it is easy to superficially interpret these rulings as displaying an institutional bias favoring Affirmative Action. The issue isn’t quite so linear once when you look at other cases examining the interaction of anti-discrimination laws and tenure in the public school system.
One prevalent example of the courts ruling in favor of faculty tenure over racial quotes was in the early 1980s. The Sixth Circuit Court of Appeals ruled that “contractual and statutory tenure rights” took primacy over quotas (P.312). Resulting in the case precedence established under Oliver V. Kalamazoo. The question becomes why did the court of appeals rule in favor of faculty tenure in this case? The court stated that over the past decade the school district had made a “good faith effort” to remedy any effects of past discrimination. Stating that tenure rights should only be subordinated when “reasonable” to do so (P.312). Judging by the context of the ruling in the Oliver case it would be easy to assume that the courts will giver deference to tenure rights if the school district has shown considerable progress in desegregation. While this may sound like a reasonable concession, it is profoundly problematic. How do you measure “progress” or a “good faith effort”? One can only assume these qualitative metrics are fulfilled if mandated quotas are consistently maintained. What if a school district is only maintaining the quota by a margin of one employee? What if this employee needs to move out-of-state to take care of a sick relative? The school district would no longer be compliant. This becomes particularly onerous if the school district is in a region of the United States that lacks ethnic diversity. If the nearest qualified African-American teacher is hypothetically hundreds of miles away the school district may be out of luck. So then, if another court case comes up and the school district has had issues meeting racial hiring quotas the contractual agreements of the teachers may be put on the backburner. This is concerning because if this country does not uphold property rights and contract enforcement it has fundamentally failed its citizens.
Then finally we come to Wygant V. Jackson which was decided in May of 1986. In this case, the school board included the plan to maintain racial quotas when layoffs occur in the collective bargaining contract for its faculty (P.312). However, the Supreme Court found this contract contingency to be unconstitutional. Citing the United Steel Workers V. Weber in their decision. Declaring that unless there was solid evidence of past discrimination contractually binding tenure rights take precedence over racial quotas (P. 313).
One of my favorite sayings is “ The path to hell is paved with good intentions”. Some of the downstream ramifications Affirmative Action laws embodied the wisdom in this old idiomatic statement. The unadulterated goal of Affirmative Action laws is laudable but is too broadly applied. While this conflict between tenure rights and racial quotas may have not been foreseeable, it exposes the Achilles’ Heel of top-down government solutions. It is impossible to plan for every conflict that can arise from a loophole or other notable blemish in the legislation. Being more Hayekian in my worldview I am more inclined to view these flaws as a result of asymmetries in information. Reminding us that most government initiatives fall flat in attempting to achieve their lofty goals.
The Legislation and Special Education Services
The the legislative roots of Individualized Education Plans (IEPs) date back to the education reforms of the 1970s. However, IEPs were not mandated until the 1990 IDEA Act. Acting an amendment to the EAHCA Act of the 1980s.
Interestingly enough, much of the legal justification for catering to special needs students was derived from the landmark case Brown V. Board of Education (1954) (P.347). This interpretation is somewhat of a novel application of the case. Citing how the case made a strong argument for equal access to education was not only important for civic and professional development but a right to all children (P.347). Per the literature, there are two categories of discrimination that children face in terms of receiving appropriate accommodations in education; exclusion and misclassification. An example of exclusion would be “grossly inappropriate placement” such as placing a non-English speaking student in an English speaking classroom without an English-Second Language paraprofessional (P.348) Misclassification is defined as incorrectly assessing, monitoring, or placement of a student with learning difficulties (P. 348).
While Brown may have been the philosophical roots for the special education movement in the United States, two cases operated as the primary impetus for this change in educational accommodations. There was the PARC v. Commonwealth of Pennsylvania (1972) ruling. Which found that denying children the right to education was unconstitutional under equal protection and due process clause (Page 348). The second defining a Constitutional precedent against discriminating disabled children from access to education was
Mills V. Board of Education (1972). The court ruled in favor of not shutting out children with intellectual disabilities out of the chance of being educated. Also that economic constrains shouldn’t stymy this process, in other words, the cost of additional accommodations shouldn’t be borne by the parents(p.348). Both laws provided the framework for federal legislation addressing the educational rights of children with learning difficulties or disabilities.
The first federal law implemented to address the educational needs of disabled children was Public Law No. 94-142. Passed by Congress back in 1975 was designed to make public education inclusive to disabled children. It was approximated at the time that as many as 1 million American children had been excluded from public education (P. 349). The law was intended to provide free and adequate accommodations to disabled children ranging from the ages of 3-21 years old. However, considering education is generally a responsibility of municipal and state governments the law cannot supersede the age ranges specified under state law (P. 349). One exception did arise in 1986 with the advent of Public Law No. 99-457, which operates as an amendment to the 1975 law. This amendment mandated extending the terms of Public Law No. 94-142 to infants and toddlers with developmental disabilities (P. 349).
From a legal standpoint what can be defined as an “appropriate” education for a child with learning difficulties? It is not sufficient to merely provide equal access to education under federal law. Failing to provide special provisions to a child with special needs would make the learning process impossible. In legal terminology it has been referred to has functional exclusion (P. 350). The 1975 case Fialkowski V. Shapp brought forth case precedent for defending plaintiffs against function exclusion through a school lacking appropriate provisions to accommodate the student. What accommodations and course of action are required for each child is determined under their IEP. This legally binding document that provides a tailored and consistent educational approach to help students learn despite their intellectual or physical deficits. These plans are calibrated and readjusted based upon “periodic” assessments of the student’s progress (P. 350.). Instead of a static approach that does not take into account potential changes in the educational needs of the student.
While Public Law No. 94-142 may have provided educational opportunities for those with learning difficulties or limited learning capacity; what about children that are deemed with no capacity for learning?
It is profoundly difficult to determine whether a child can learn or not, even with empirical measurements and assessments. A nonverbal child obviously cannot articulate their comprehension of classroom material, making thus determination much more complicated. A 1989 case, Timothy W. v. Rochester, New Hampshire School District (1989), grapples with this conundrum in the sphere of public education. Does the extension of access to equal and appropriate educational services include children that are arguably uneducable? The ruling was the byproduct of a nearly decade long legal battle between Timothy’s parents and the School district of Rochester, New Hampshire. Timothy suffered from cerebral palsy, cortical blindness, spastic quadriplegia, a multitude of intellectual and developmental disabilities. In 1980, the school board commenced a meeting to determine whether Timothy “qualified as “educationally handicapped” under the EAHCA and the corresponding state statutes”. The school board deemed that he did not qualify due to the severity of his disabilities. Then in 1984, the family’s attorney filed a suit against the school board for violations under the EAHCA and the Fourteenth Amendment’s equal protection and due process clauses. It was ruled on May 24th, 1989, by the U.S. First Circuit Court of Appeals that special accommodations are to be made for students with disabilities regardless of the extent of their disabilities. This ruling stems from an interpretation of the EAHCA that all children with disabilities irrespective of their learning capacity has a right to special provisions in public schools.
Editorial Note:
The purpose of this essay is a brief survey of the history of Special Education law in the United States. I am not presenting any arguments for or against legislation directed towards providing accommodations for students with special needs. I found the legal history of this development in public education to be fascinating. I apologize to my regular readers if this post was a bit boring. I happened to obtain a used education law textbook a few months back and have been enjoying this intellectual journey immensely. However, one point of speculation on the Timothy W. v. Rochester case. As a former New England resident, I can tell you New Hampshire has politically been something of an outlier in deep blue electorate of New England. Traditionally, New Hampshire has been a red state. In recent decades it has morphed into more of a swing state. The electoral history of the state is pertinent to this ruling because one can only surmise how it was perceived by residents and elected officials. There most likely was a pundit somewhere in the state that griped about the ruling being overreach on the part of the federal government. There is an argument for this point, as education has traditionally been a responsibility of state governments. Does the moral imperative of providing equal access to education for all trump the necessity of constraining federal intervention in state matters? That is a difficult question to answer with a simple yes or no response. However, dispensing with any strong ideological proclivities, I would have to say that the answer lies within striking a nearly unobtainable balance. The opportunity costs of either position needs to be carefully weighed before we hastily make any conclusive claims.
Inverted logic 