Paul Krugman on Graduate Jobs

In January I posted about UK university participation rates, contrasting the much larger numbers of young people going to universities now with the situation in the 1960s. I suggested that acquiring a university degree in 2010 was roughly comparable to passing the 11+ (and entering grammar school) then. On that basis, job prospects for many graduates today might be similar to those for people who used to leave grammar school without taking A levels.

It now looks as though this might have been an optimistic assessment. In particular, Paul Krugman, the Nobel laureate economist, has made some sobering points in the New York Times recently. On 5 March in his NYT blog, The Conscience of a Liberal, Krugman revisited an article he had written in 1996, which was intended to be a look-back from 2096:

I decided to write the piece around a conceit: that information technology would end up reducing, not increasing, the demand for highly educated workers, because a lot of what highly educated workers do could actually be replaced by sophisticated information processing — indeed, replaced more easily than a lot of manual labor. ... So here’s the question: is it starting to happen? Today’s [NYT] has an interesting and, if you think about it, fairly scary report about how software is replacing the teams of lawyers who used to do document research.

Developing the post's theme of The Falling Demand for Brains, he then introduced some evidence that higher education had been oversold: the ratio of earnings for full-time working men with college degrees versus those with high school:

Krugman concluded:

In my mind this raises several questions. One is whether emphasizing education — even aside from the fact that the big rise in inequality has taken place among the highly educated — is, in effect, fighting the last war. Another is how we have a decent society if and when even highly educated workers can’t command a middle-class income.

On 6 March in an op-ed article, Degrees and Dollars, Krugman pointed out that, as well as legal researchers, electronics designers were likely to be replaced by software, and, more generally, high-skill jobs performed by the highly-educated were vulnerable to “offshoring”, further hollowing out the US jobs market.

… the notion that putting more kids through college can restore the middle-class society we used to have is wishful thinking. It’s no longer true that having a college degree guarantees that you’ll get a good job, and it’s becoming less true with each passing decade.
So if we want a society of broadly shared prosperity, education isn’t the answer — we’ll have to go about building that society directly. We need to restore the bargaining power that labor has lost over the last 30 years, so that ordinary workers as well as superstars have the power to bargain for good wages. We need to guarantee the essentials, above all health care, to every citizen.
What we can’t do is get where we need to go just by giving workers college degrees, which may be no more than tickets to jobs that don’t exist or don’t pay middle-class wages.

Krugman’s views are certainly left-wing (‘liberal’) by US standards, and how the “society of broadly shared prosperity” could be achieved is far from clear. However, his reservations about the value of university degrees certainly seem realistic. Perhaps the current UK preoccupation with issues of fair access and tuition fees is missing the point (“fighting the last war”) that the majority of degree holders (who by definition cannot attend the most prestigious institutions) will never get above-average jobs. There then has to be some doubt as to whether the government will ever recover the money it will be borrowing to lend to students for fees.