Editorial: Rethinking the Connection Of Education and Earnings
By: John Morley
Issue date: 11/12/02 Section: Opinion
The notion that college education increases income is well established in the popular lore of the United States. In the last 50 years, public high schools in middle class suburbs all over the country have helped popularize the idea by counseling students that college-educated workers make a lot more money than their high school graduate counterparts.
Fortunately for students, this belief in the power of college is more than just a myth. Study after study has shown that college graduates earn more than people with less education. And the difference in earnings more than accounts for the costs of college. Even when the possibility of investing tuition and foregone earnings is accounted for, education is still a good idea.
So that's it, right? The government should dump cash into education by the bucketful and all students who know what's good for them should go to college.
Well, not necessarily. In actuality, education isn't the great key to public prosperity that everyone seems to believe it is. That's because even though it's clear that college graduates earn more than non-college graduates, no one is really sure why.
There are two basic theories that explain education-related earnings differences over time. The first says college graduates get paid more because education increases productivity. According to this theory, people who go to college learn skills that make them better workers, and they get paid more because they make more money for their employers.
The other theory holds that education merely serves as a screening device for companies trying to find people with minimum levels of trainability and intelligence. This line of thinking holds that education doesn't actually make workers better, it just filters out people who lack the motivation and intelligence to make it through college. And since people from wealthy families are more likely to go to college than their poorer counterparts, education also serves as a way for companies to find employees raised in society's upper echelons.
Fortunately for students, this belief in the power of college is more than just a myth. Study after study has shown that college graduates earn more than people with less education. And the difference in earnings more than accounts for the costs of college. Even when the possibility of investing tuition and foregone earnings is accounted for, education is still a good idea.
So that's it, right? The government should dump cash into education by the bucketful and all students who know what's good for them should go to college.
Well, not necessarily. In actuality, education isn't the great key to public prosperity that everyone seems to believe it is. That's because even though it's clear that college graduates earn more than non-college graduates, no one is really sure why.
There are two basic theories that explain education-related earnings differences over time. The first says college graduates get paid more because education increases productivity. According to this theory, people who go to college learn skills that make them better workers, and they get paid more because they make more money for their employers.
The other theory holds that education merely serves as a screening device for companies trying to find people with minimum levels of trainability and intelligence. This line of thinking holds that education doesn't actually make workers better, it just filters out people who lack the motivation and intelligence to make it through college. And since people from wealthy families are more likely to go to college than their poorer counterparts, education also serves as a way for companies to find employees raised in society's upper echelons.