Predicting the economic future is difficult, but lucrative.
Just ask hedge fund managers like John Paulson, whose 2007 bet on the housing market going bust netted his fund $15 billion. But you don’t have to be a Wall Street big-wig to benefit from foresight. The biggest bet most of us will make in our lives is on the career paths we choose, and if you’re working primarily to achieve financial security, choosing the right industry is essential.
Had you predicted the collapse of print media (or the rise of online advertising), you could have avoided the once-lucrative field of advertising (an industry that shed 65% of its jobs from 2002-2012), and learned some coding skills instead.
So, what will be the next industry to shed jobs with abandon? The following four signs point to higher education.
1. A four-year degree is an increasingly uncertain investment. It still pays big time to get a college degree. According to data from the Economic Policy Institute, the pay gap between those with a four-year degree and those with no college reached an all-time high last year, with degree holders earning more than 1.8 times as much as high-school graduates.
But the income gap between those with some college and a high-school education has remained flat for years. And as the cost of college is increasing faster than inflation, the return on getting just some college is dropping quickly. While we’d like to live in a world where every student has the desire to and is capable of obtaining a four-year degree, this trend will undoubtedly make students on the margin think twice about the expense of college, and will lead many to experiment with cheaper and less labor-intensive forms of training like online courses or vocational school.
2. The U.S. spends way too much per pupil on education, and doesn’t get great results. Proponents of healthcare reform convincingly argued that the U.S. spends more on healthcare as a percentage of GDP and still achieves worse outcomes than many other nations. Whatever your political philosophy, this simply didn’t make any sense. Both the government and the private sector stood to avoid wasting billions per year if we could have figured out a more efficient way to deliver healthcare.
Well, the same is true for the U.S. education system. As you can see from the graph below, we spend more per pupil on total education than any country other than Switzerland, while the economic benefits of all this education are dubious.
3. We’re abandoning the idea that “college is for everyone.” The statistics above deal with total education spending, not just higher ed. But in coming years, the U.S. will have to address the problem of inefficient spending on education in a holistic manner. And some states are already moving away from the idea that the purpose of primary and secondary education is to prepare students for college, rather than to prepare them to be productive members of the workforce. States from Florida to Washington are dropping requirements from high school learning with the hope of giving students who don’t wish to go to college a chance to succeed in school and prepare for a vocation.
4. The rise of self-directed learning. There are growing opportunities for self-motivated students to learn without spending big on traditional four-year schools or even cheaper, publicly funded institutions. Much has been made of the debut of massive, open, online courses (MOOCs) and individualized online education. Granted, the jury is still out on the effectiveness of such courses and the method is still in its infancy. At the same time, the education establishment has been slow to incorporate these courses. A recent survey from the Babson Survey Research Group shows “only 2.6 percent of higher education institutions currently have a MOOC,” while “another 9.4 percent report MOOCs are in the planning stages.”
The same survey shows that 69% of leaders at these institutions also believe that online education is “critical to their long-term strategy.” And it’s obvious why this is the case. Technology offers the promise of radically reducing the costs of education by making the process more efficient and potentially increasing the number of students a single teacher can reach. And colleges and universities have a cost problem. In a world where education is increasingly important, college enrollment is actually falling.
If one can afford a traditional, four-year university and succeed there, that investment has never made more sense. But disappointing college graduation rates show that this is not the case for a huge number of Americans, and those people are in desperate need of efficiently administered job training. And for that to happen, of course, we’ll need more education, and perhaps fewer administrators and educators.