Counterparties: The skills that pay fewer bills

June 11, 2013

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Nancy Folbre declared this week that the “golden age of human capital” behind us. As evidence, she points to the falling rate of return on a college degree, thanks to “declining state support, higher tuition and fees, increased inequality of access and the growing burden of debt.” Further, she says, technology is making many relatively well-paying jobs obsolete as complex tasks are increasingly done by computers. But maybe that’s okay, Folbre writes. Education has an intrinsic value: it’s good for society even if it isn’t making us richer.

Paul Krugman notes the “skill” involved in being a skilled worker — what we now think of as a job needing a college degree — has evolved with each epoch of technological innovation. Five centuries ago, monks were highly skilled workers who copied books line by line. (Then the printing press happened). “The role of higher education as a creator of human capital came along quite late. And maybe, as Nancy Folbre says, this role is already waning,” says Krugman.

But a lower return on investment doesn’t mean college is worthless. Adam Looney, a fellow at the Brookings Institution and the director of the Hamilton Project, came up with this graph last year showing the increasing difference in the employment rate and average incomes for those with and without college degrees:

The benefits of college even extend to those who don’t graduate. Dylan Matthews recaps Looney’s most recent study, which finds that, on average, college dropouts makes $8,000 more per year than high-school graduates who never started college. The change in the employment rate for those with some college is also flat since the start of the recession; for those with no college at all employment rates have fallen 9%, notes Josh Brown. As Felix wrote last year, “the fact is that while this economy is undoubtedly tough for recent graduates, especially those with liberal-arts degrees, it’s much, much tougher for people who don’t have any degree at all.” — Shane Ferro

On to today’s links:

Long Reads
Modern Warfare: The legal battle over the future of the billion-dollar Call of Duty franchise – Max Chafkin

EU Mess
Today he ECB’s day of reckoning in German court – Reuters
A brief is thistory of politicians and bankers declaring the worst of the euro zone crisis over – MacroScope

Servicey
Yelp for Wall Street brokers is about as accurate as Yelp – Dealbook

New Normal
Goldman will now let special clients borrow against the Bordeaux in their cellar – Bloomberg

Financial Arcana
How “financialization” can hurt the economy – Bruce Bartlett

Facebook
On Facebook: “When everything is a potential vessel for advertising, everyone is annoying” – Tom Scocca

Alpha
Anthony Scaramucci wants to build an alternative to bars that are “not fun” and have unattractive staff – Bloomberg

Wonks
We already tried libertarianism — it was called feudalism – Mike Konczal
The soaring number of $100 Bills – Timothy Taylor

Deals
Dole’s 90-year-old CEO makes unsolicited $1.5 billion offer for the company – Dealbook

Yikes
A German bank employee accidentally transferred millions while napping on his keyboard – AFP

And, of course, there are many more links at Counterparties.

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Comments
6 comments so far

a lot of those “without college degrees” barely had the smarts to make it through highschool…a college degree does not change inate characteristics..

Posted by rjs0 | Report as abusive

@rjs, native intelligence is rarely the limiting factor in academic performance.

Posted by TFF | Report as abusive

“Anthony Scaramucci wants to build an alternative to bars that are “not fun” and have unattractive staff” this has to be the most disgusting piece I’ve read in a long time for various reasons. I can think of nothing more horrid than to be in a restaurant that caters to white trash people (after all, who but them would think of such a thing?) who, now that they have some money, don’t want to sit with the possibly socio-economically less advantaged and, God forbid!, unattractive. Are we still in High School? If I found anyone belonging to this mess working for my company or any of my personal investments, I’d fire them immediately. If you want to know what’s wrong in the country, look no further than this article.

Posted by skyman123 | Report as abusive

“The benefits of college even extend to those who don’t graduate. Dylan Matthews recaps Looney’s most recent study, which finds that, on average, college dropouts makes $8,000 more per year than high-school graduates who never started college”

You have the correlation here exactly backwards. This isn’t a “benefit of college”, it is a benefit of being the type of person who at least tries college vs the type of person who does not.

All of the earning potential is pretty much baked in prior to college, and really prior to high school even.

Posted by QCIC | Report as abusive

TFF-

But native ability o listen to authority, delay gratification, and work hard are. None of which are really taught by college.

Posted by QCIC | Report as abusive

Absolutely, QCIC. This is why employers value college grads.

Posted by TFF | Report as abusive
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