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Friday, October 24, 2014

How the Supreme Court Created the Higher-Education Bubble

An article at The American Spectator. Basically, according to the article, after WWII, employers began using aptitude tests to select employees--including employees that would receive advanced training or education to work in white-collar positions--without much reference or reliance on education. However, in 1971, in Griggs v. Duke Power Company, the court held that the use of aptitude tests was racially discriminatory. The article relates:
The saga began in 1969 when Willie Griggs, a black man born in the segregated South, decided he was overdue  for a promotion. In order to get one, per Duke Power Electric Company rules, he had to pass two aptitude tests and possess a high school diploma. Griggs smelled racism. The tests surveyed employees on basic math and intelligence questions. None of Duke’s fourteen black workers passed. Griggs and twelve others sued the company for discrimination. A district court and federal appeals court accepted Duke’s claim that the tests were designed to ensure that the plant operated safely. Duke bolstered its case by pointing out that it offered to pay for employees to obtain high school diplomas and that white applicants who failed to meet the requirements were also denied promotions.  
The Supreme Court wasn’t buying it. This was North Carolina after all. The court compared the tests to Aesop’s fable of the Fox and the Stork, in which a fox offers a dish full of milk to a stork, whose beak prevents it from satisfying its thirst. The implication that black and white workers were of a different species did not strike any of the justices as racist, unlike the objective tests. Griggs found that if blacks failed to meet a standard at a higher rate than whites the standard itself was racist—a legal doctrine known as disparate impact.
Thus, employers shifted the responsibility on testing for aptitude from their own employment tests to colleges and universities by the simple expedient of requiring college degrees for an ever greater number of positions which previously had never required a degree. (And, I would note, by also increasing the requirements of those degrees--which is why accounting, for instance, shifted from a 2-year program to a 4+ year program).

This happily coincided with a crises in higher education. From the article:
By the late 1970s, universities were in crisis mode. The baby boom produced more students than they knew what to do with, but declining birth rates left them with a smaller pool of tuition-paying students. Their new role as the gateway to respectable careers and higher salaries solved that problem. They replaced comprehensive liberal arts education with career-oriented majors that displaced the apprentice, rise-from-the-bottom system that had previously defined the American labor market. Curriculum quality and homework rates plunged, but endowments swelled. 
“To keep their mammoth plants financially solvent, many institutions have begun to use hard-sell, Madison Avenue techniques to attract students. They sell college like soap, promoting features they think students want: innovative programs, an environment conducive to meaningful personal relationships, and a curriculum so free that it doesn’t sound like college at all,” academic Caroline Bird noted in her 1975 essay “College Is a Waste of Time and Money.” 
Colleges, aware of their newfound utility and the easy money pouring in from student loans and Pell grants, jacked up prices. Education costs, as George F. Will has noted, grew 440 percent in the post-Griggs era. That trend continues today. The Project on Student Debt found that total college loans increased 6 percent annually between 2008 and 2012. The average student today takes out nearly $30,000 in debt to buy a ticket to the good life. They’d be better off taking that money and buying a new Mercedes CLA and faking the good life.
 Now, there is a glut of bachelor's degrees, driving down the value of obtaining a college education:

The glut of bachelor’s degrees means even the undergraduate diploma is beginning to lose its value. About 17 million college graduates work in fields that don’t require a college diploma. There are 100,000 postal workers, 317,000 waitresses, and 18,000 parking lot attendants with undergraduate degrees. One out of every four bartenders has a diploma, and though they listen to moping for a living, few majored in psychology. Nearly 6,000 janitors have doctorate degrees, like something out of a Twilight Zone Good Will Hunting. College triumphalists brag about the 4.9 percent unemployment rate among graduates—lower than the national average. But, as Ohio University economics Professor Richard Vedder pointed out, that’s triple what it was during the malaise of the 1970s. Workers are acutely aware of the overcredentialing crisis. Nearly 60 percent, including 40 percent of college graduates, told Gallup in 2013 that they do not need a college degree to perform their job. 

The indebted former student is not the only one to suffer under the current arrangement. Research has shown that when graduates flood the unskilled job market they hurt the career prospects of their less-educated neighbors. The Ph.D, janitor waiting on the sale of his Great American Novel has displaced a worker without the résumé needed to get any other job.
And even if someone somehow works their way up from the bottom, they won't be compensated for it.
“There’s too much risk in paying a guy without a diploma more even if he is a better contributor,” she said. “God forbid the college graduate is a woman or a minority: They can sue you and claim that they were paid less because of discrimination, so we designed a system to pay people for their education, not their job.” Thus the credential becomes a force of downward mobility for the educated and uneducated alike.
 The end result is that promotions and salary are based less on merit and more on whether it keeps the company from being sued.

Related Posts: "Are Anti-Discrimination Laws Moral?"

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