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The benefits of a college degree aren't what they used to be

Feb 26, 2015

If you want to make it in America, the standard advice is, go to college. People who get at least a bachelor's degree are more likely to be employed, they have higher wages on average, and they're more likely to make it out of poverty. 

But the benefit of a college degree may be reaching a plateau. 

Last week, The Hamilton Project (part of the Brookings Institution) held a conference on the future of work. The conference was meant to be about how technology may change employment opportunities in the years to come. But along the way, education came up again and again. 

MIT economist David Autor noted early in his comments that the so-called earnings "premium" of earning a college degree hasn't changed much in a decade. 

Later, former Treasury Secretary Larry Summers noted that the kind of college education you get matters more and more. That's becoming more of an issue as technology continues to displace workers. Summers said: 

"I think we can't think of education as just an undifferentiated blob of human capital where more is good.The idea used to be ... that part of what would be good about having more education is that people would be able to work in and office, rather than being plumbers. And that was part of what was good. That would upgrade people and give them new opportunity, and plumbers children could work in offices rather than being plumbers. It's kind of the essence of the technological changes that are being described that they are much more heavily bearing  on people who work in offices than they are plumbers."

This conference wasn't the first time these issues have been raised. Others have noted the diminishing returns of a college education. 

Last month, an economist at the Federal Reserve Bank of San Francisco published findings on the relative benefits of different levels of college attainment. It turns out, the earnings benefits of graduate degrees continues to rise. Bachelor's degrees, not so much. Here's a chart from the report:

Credit Federal Reserve Bank of San Francisco

Of course, none of this means that young people shouldn't go to college. People who hold a bachelor's degree still earn much more than those whose highest degree is a high school diploma. 

But, increasingly, even that bachelor's degree isn't enough to get a high-paying job.