Michael J. Hicks, Ball State University
I’ve been married now for a bit more than half of my life. One thing I’ve learned is that when my wife says I’m explaining something poorly, she’s probably right. Last week she suggested I do a better job of explaining what I mean about the rising demand for college-educated workers, and what it means for students, parents and state policymakers.
The U.S. started collecting monthly data on employment by education level in 1992. Since then, more than eight out of 10 new jobs have gone to college graduates. Two out of 10 of these new jobs went to people who had some college-level training. For everyone else, there are fewer jobs today than there were 30 years ago. But what does this really mean?
Well, it could mean that there has been a lot of ‘credential creep,’ or a growing share of new jobs that require a college graduate when they might not need one. One of my mentors, Professor Richard Vedder, made this argument many years ago. It is plausible, but that hypothesis also requires that the wage premium for college graduates must shrink. A credential alone doesn’t make anyone more productive or actually boost wages. However, the wage premium for college graduates is substantially higher today than in 1992.
The more plausible explanation is that jobs are increasingly complex, or at least more dynamic in the sense that the required skills changed more often. This is exactly the type of job that would require more formal education and offer fewer rewards for experience. My favorite example comes from my first career as a professional soldier.
The premier technical skill of an infantry officer of my generation was land navigation. This required use of paper maps and compasses. We learned to use an analog watch as a compass in the daytime, stars at night, and a sextant in the desert. Most of all, this took practice. On foot, through forest swamps and cities, on wheeled and tracked vehicles and in helicopters. I was so good at this that I navigated over 60 miles in one night, through a roadless desert, in combat, and arrived within a few hundred yards of my destination.
Today, young infantry officers still need to develop some of these skills, but most of their land navigation is done with GPS and Lorans, through several different technologies. Those items are faster, better, offer more redundancies and reduce the risk for everyone. To put this in temporal context, an infantry captain from General Washington’s army of 1776 would’ve mastered my maps and compass with only a few minutes of explanation.
In contrast, the past 30 years have seen more technological innovation in navigation than the previous 300 years, or maybe 3,000 years. The navigation of my youth valued practice and practical experience over almost everything else. Today, mastering the newest technology quickly and effectively is more essential. To do it well requires a good grasp of algebra and geometry, digital interfaces and the ability to adjust to changing software.
That sort of change has played itself out across every occupation from fast food cook and ranch hand to plumber and bricklayer, to nursing and physical therapy. This doesn’t mean experience is unimportant. Polanyi’s Paradox makes clear that in human knowledge, “we know more than we can tell.” That is, experience still matters. But today, formal education is much more important than at any time before. It will become increasingly important in the decades ahead.
In 2022, about half of jobs required post-secondary education, most of which require at least a four-year degree. The nation’s top researchers on these issues forecast that by 2030, 72 percent of jobs will require training past high school, with most of it clustered at the four-year degree level. This forecast is entirely consistent with the past half century of occupational and educational change. None of this is controversial among economists. Even strong critics of current higher education markets conclude that demand for education will grow.
This growth in demand for education does not require some rapid change in technology. Even a period of slower technological advancement—which seems unlikely—will do little to reduce the demand for better educated workers. So what does this mean for individuals and places?
For young people the answer is pretty clear. Today, you can get a job without post-secondary education training. It might pay reasonably well, and give you lots of experience. Just don’t expect that job to last as a career that will span five decades. Somewhere, in a business or laboratory, someone else is trying to find ways to eliminate labor costs in your industry.
Neither should you expect significant wage growth over your career. Real wages for non-college graduates peak in the early 30s, and decline thereafter. In contrast, college graduates tend to see real wage increases until retirement.
Fortunately, educational attainment is growing in most of the nation. At the current rate, the demand for educated workers nationwide will outpace supply. This will maintain, if not widen the college wage gap. It will also increase political pressure to increase the immigration of better-educated workers.
For young people, I think the evidence points heavily towards continuing education after high school. I recognize there are loud voices in the state saying “you don’t need to go to college.” I think these voices are terribly misinformed, or they have the interests of someone other than the student in mind. It is easy to find examples of happy, successful people without a college degree. Most of life doesn’t depend on career or financial success.
Still, for young people who want a path to middle class earnings, there are few pathways other than college. The good news is that the cheapest time to attend college, or any other type of post-high school education, is right after high school. That is also the time when that additional school has the largest lifetime benefit to both earnings and job security. This is the message kids need in elementary, middle and high school. Any other message is just not supported by the evidence.
Michael J. Hicks, PhD, is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University.