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Awakening from the Dream

The Italian university graduate, visiting North America as a volunteer camp counsellor, laughed when asked if he had a job at home lined up for the fall. “I have an undergraduate degree,” he said. “No one in Italy gets a job with only an undergraduate degree.” Even with a degree in economics, one of the more marketable fields of study, he had been warned not to anticipate full-time work. So he applied for entry to graduate study in International Management at the Rotterdam School of Management, Erasmus University, and was waiting to learn if he had been accepted. “With a Master’s degree,” he said hopefully, “at least I have a shot at a decent career.” Given that more than half of Italian students drop out of university without a degree, you would think that the careers of those who persisted and earned an undergraduate degree would have a better outcome. Not so, it seems.

Not all Italians have such a dismal result after four years of academic study, of course. Some graduates get good jobs and solid careers, but this young man’s observations reflected the experience of many of his generation. Consider this surprising commentary, which shows that it’s actually more difficult for Italians to get a job with a university degree than without one:

Italy is the European country with the lowest number of “tertiary” graduates—meaning anyone with a university or university-like degree. Yet despite relatively low supply, one in three tertiary graduates between 20 and 24 (33.3%, up from 27.1% in 2011) remains out of work, according to Eurostat—even higher than their peers with just a high-school level degree, whose unemployment rate is 30.4%.

Italian companies actually seem to favor workers with lower levels of education: 37% of those employed in managerial positions hold only the minimum compulsory level of education, compared with 15% who hold a bachelor’s degree or above, according to AlmaLaurea, an Italian institution run by a consortium of universities and the Ministry of Education that gathers statistics on education.[1]

The problem, it seems, is that Italian undergraduates favour the Humanities and the law, areas that are disconnected from the contemporary European economy. But give some thought to the Italian realities. One-third of graduates were without work in 2013, only a small proportion move into management positions, and only slightly more than half of those who start out to get a degree actually complete their studies. If this is not an educational crisis, it’s hard to know what would be.

New Realities: Unemployment and Underemployment

The Italian situation is a good example of two new global realities: university graduate unemployment and the equally important pattern of sustained underemployment. Unemployment is easily understood. Students graduate and head into the job market, only to receive a cold reception. They cannot find work, struggle with living costs, and often move back home. The highly anticipated launch into adulthood has been postponed. Underemployment is equally devastating, but a little different. Many university graduates do find work, but not of the type and with the income that they had been led to expect. This produces underemployment, where university graduates find jobs but in positions that do not require the skills and expertise learned in their academic studies. A political science student driving a bus is employed, certainly, and perhaps even reasonably well paid, but in terms of the utilization of his or her skills is clearly underemployed. So it is with the hundreds of thousands of university graduates employed as retail clerks, taxi drivers, office support staff, hotel or airline representatives, or otherwise doing decent and useful work, but work that they could easily have done immediately after leaving high school.

According to The Economist, graduate unemployment and underemployment are significant around the world.[2] In country after country, graduate underemployment has become commonplace. In China, even before the financial slowdown hit in 2015, the chaotically expanding university systems—founded on a firm belief in the Learning = Earning mantra—had gotten well out of sync with the national labour force. New graduates struggled to find work. Graduates returning with foreign degrees found the market potency of the diploma greatly diminished. It turns out that China’s manufacturing-based economy did not demand an endless supply of university graduates, even in such previously high-demand fields as engineering.

The situation is not the same everywhere. In countries that limit university enrolment, as in Germany and Scandinavia, where the skilled trades enjoy considerable status and decent incomes, graduate unemployment rates are significantly lower. The American situation, however, is stunning. In 2013, according to Richard Vedder and his colleagues with the Center for College Affordability and Productivity, 48 percent of college graduates were underemployed, and 37 percent of college graduates held positions that did not require a high school degree to perform the job properly. Collectively, that added up to five million American college graduates holding jobs across the country that did not require even a high school diploma, let alone a college degree. As they reported, ominously, “Past and projected future growth in college enrolments and the number of graduates exceeds the actual or projected growth in high-skilled jobs, explaining the development of the underemployment problem and its probable worsening in future years.”[3] The situation eased in the United States as the economy rebounded in 2015, but became worse across Europe and in many parts of Asia, particularly in China. The National Post reported that “students have high expectations that their university degrees will amount to a job fairly soon after graduation … To the statement ‘obtaining a post-secondary degree ensures I will have a job in my field of study after graduation,’ the average response was 4.5 out of 10—meaning about half of the students strongly felt their degree would fairly easily score them work.”[4]

So, what went wrong? How did the dream of a university education become so substantially disconnected from the reality? It is important to realize that the focus on the experiences of college and university graduates actually understates the problem significantly. Imagine, if you will, that a hospital reported the success rates of open-heart surgeries basing its data entirely on the health outcomes of those who walked out of the medical centres on their own within a few weeks of the operation. This would be absurd, of course, for it would exclude those who died or became sicker in the hospital after their operations and those who were not helped by the procedures. The statistics, obviously, would be a success story, skewed in favour of the hospitals and their medical professionals.

But universities do this all the time. Statistical reports, particularly those issued by universities or academic associations, routinely focus on university graduates—the ones who enrol and then continue through to the end of their programs, graduating as planned. These are the patients who walked out of the hospital on their own, in other words. But what about those who fall by the wayside? In the United States, over half of those who start a college or university program do not complete their degrees within seven years. And the dropout statistics vary according to institution and race: the rate is much lower for Harvard and much higher for two- and four-year community colleges. “Traditionally Black colleges” in the USA have a six-year graduation rate of only 39 percent.[5] David Leonhardt, writing in the New York Times on September 9, 2009, reports that “only 33 percent of the freshmen who enter the University of Massachusetts, Boston, graduate within six years. Less than 41 percent graduate from the University of Montana, and 44 percent from the University of New Mexico. The economist Mark Schneider refers to colleges with such dropout rates as ‘failure factories’ and they are the norm.” If universities are going to take credit for the employment outcomes of their graduates, then surely they should also be morally responsible for students who are admitted into programs of study but drop out for academic, financial, or personal reasons.

Educational Outcomes

Educational outcomes vary widely across and within countries. Canadian universities do better than those in the United States, on average, although approximately 30 percent of Canadian first-year students do not graduate. At India’s highly regarded IITs, dropout rates are low, as they are in most elite universities. High-quality institutions, like Hong Kong Polytech, Cambridge, Stanford, and Swarthmore, have very low (as in less than 10 percent) dropout rates after admission. There is a simple lesson here. If you are juggling statistics to favour universities, you should select smart, highly motivated, and hard-working students at high-end institutions. Then graduation outcomes and employment outcomes will certainly tend to make the system look good.

At the other end of the spectrum lie America’s open-entry institutions, where graduation rates are routinely under half and occasionally lower than one-quarter of all entrants. In northern Europe (Germany and Scandinavia), doubly blessed with excellent high school systems and selective admissions to universities, dropout rates are under 10 percent. The United Kingdom, which raised its university fees dramatically in recent years, has a dropout rate under 9 per cent, much lower than France’s free and open university system, which loses about half of its students after first year. The message here? If an institution accepts poorly prepared and struggling students, even if it provides substantial assistance and support along the way (and some don’t), it will have trouble getting its students through to graduation. The top employers know these realities, and thus recruit heavily in the best colleges and universities, leaving graduates from the lower-tier and low-status institutions to fend for themselves in the workplace.

The global preoccupation with universities as a means to employment has introduced yet another worrisome element into the evaluation of the college and university system: declining standards. Recent studies of the American university system have produced disturbing insights into the limited learning that occurred among many students, and the low skill levels among both entering and graduating students. This is also seen anecdotally in, for instance, the notorious YouTube video in which undergraduates at Texas Technical University are asked the question “Who won the Civil War?” and a disheartening number don’t know.[6] The nature of the modern academy, where the expansion has been fuelled by an increasing commitment to accessibility, is such that the quality of the education provided has come under intense scrutiny. The picture that emerges is not pretty, for it describes (for American students and for many of their counterparts in other countries), serious problems with the students’ basic skills, limited curiosity, lack of commitment to studies, and disengagement from learning as a whole.

There is another set of issues related to the faculty members that includes an overemphasis on research and professional engagement; a surge of political correctness and sensitivity to issues of gender, ethnicity, class, and the like; the intellectual turmoil associated with post-modernism; and a publish-or-perish mindset that detracts from faculty commitment to the university experience. The struggle to reassert the primacy of college teaching is shaping up as one of the epic professional battles of the twenty-first century.

But governments, to say nothing of parents and students, want results. And just as the commitment to universal high school education has led to a gradual reduction in the quality and academic standards of the secondary system, so are pressures to retain and graduate students from universities resulting in noticeably lower standards for course work and eventual graduation. The one place where this really attracts attention in the United States relates to college athletics, particularly basketball and football, with a regular cycle of scandals relating to “bird” courses, assistance in writing papers and examinations, special concessions from faculty members, and other measures designed to keep the student athletes in school and eligible for competition (and, less urgently, on track to graduating from college). The worst current example is the appalling scandal at the University of North Carolina at Chapel Hill, where football students for years took fake courses to retain their eligibility to play.[7]

At many institutions, faculty members are under various forms of pressure, subtle and otherwise, to allow students to progress so they stay eligible to play, with many non-elite colleges and universities mirroring the behaviour of public schools in their desire to reach performance targets. That keeping students in programs adds to the institutions’ financial bottom line and therefore pays for faculty and staff salaries is an additional incentive to let academic standards sag.

Overall, the picture from the perspective of student success is not a happy one. Certainly it is far removed from the cheerful pictures in the recruiting brochures and the promises to students and their parents about supportive academic environments. Some American institutions—places like Reed College, Colorado College, St. John’s College, and the members of the Colleges of Distinction consortium—uphold the spirit of the learning-centred academy (as opposed to that of places focusing on preparation for careers; for instance, a teachers’ college or a law school), but they are clearly the exception rather than the norm in the modern university system. What this means, to be blunt, is that many students—the number unknown and likely unknowable—have mediocre college and university experiences, do not see their skills improve significantly, and are not well positioned for the transition to the workplace. Some universities do much better than others. Elite technical institutions, such as MIT, CalTech, and Waterloo, for example, and specialized universities like Juilliard (fine and performing arts), Rensselaer (technology), and the Colorado School of Mines, attract focused, eager, and career-oriented students and, not surprisingly, produce graduates whom companies, government agencies, and organizations find very attractive.

But too few people have noticed the unfolding of a basic economics lesson: the production of millions of university graduates, in numbers beyond the capacity of the labour force to absorb them, has lowered their value overall and individually, especially at the bottom end. Richard B. Freeman, a Harvard-based labour economist, fears that American college graduates may suffer further from international competition. As he noted, “The college graduate situation has a global dimension—6 million bachelor’s graduates in China that affect the U.S. market as well—which is very different than in the past.”[8] Freeman is right. But add in millions more from Turkey, India, Spain, Portugal, Brazil, and many other countries. In the 1960s, as we showed earlier, North American and northern European countries had the global lead on post-secondary education. Now, North American graduates are swimming in what looks like an ocean full of fish with mortarboards on their heads. Companies looking to build high-tech operations near a pool of skilled labour can choose among a few key sites in North America, but they can also go to Hong Kong, Melbourne, Oulu, Stockholm, or Copenhagen; to several cities in Germany or Istanbul; or to leading high-tech and higher-education urban areas in India. And the choices don’t end there.

In technology, North America set the gold standard immediately after World War II and held pride of place into the 1970s. But its leadership has steadily eroded—despite the continued success of Stanford, University of Texas at Austin, University of San Diego, Waterloo, MIT, Harvard, Duke, University of North Carolina–Chapel Hill, and several other major centres. Imagine, if you will, a global firm (say a former American-centric multinational like Sun Computer Systems that now has much of its research capacity in Asia) trying to decide on the best location for a new digital research centre. Their eyes—if they are smart—will scan a few American hotspots, contemplate Bangalore, consider London or a European centre, and then take a good hard look at China. A quick check of Beijing would reveal dozens of excellent universities, topped by Tsinghua University, one of China’s best and a world leader in engineering, math, computer science, and other scientific fields. A check of the student population and workforce will reveal thousands of creative, eager, highly skilled workers who are willing to work for wages that are lower than those in the West. North American schools produce many graduates of comparable quality—Tsinghua is on par with Stanford, Princeton, Waterloo, and Toronto in this area—with the important caveat that many of the undergraduate and graduate students in these institutions were born in Asia, too.

The Employment Crisis

The employment crisis has hit unevenly. For graduates with specialized degrees—from Accounting and Electrical Engineering to Medicine and Digital Communications—the evolving scientific and technological economy still provides excellent opportunities. High incomes, multiple job offerings, and rapid advancement exist in the world of Google, Apple, Microsoft, and Cisco. But many of the jobs in the evolving “new economy” belong to the service sector. While some young adults—most notably in the deservedly derided finance sector—discovered world-class opportunities for wealth and advancement, the majority left university to find that most jobs offered low incomes, short-term contracts, and insecurity. Having gone into debt to pay for their degrees, the graduates find themselves in low-paying, undependable jobs with few prospects for advancement. Not many parents and young people expected that four to six years of academic study would lead to work as a cashier, though in 2008 more than 356,000 cashiers had college degrees, up from 132,000 in 1992.[9] Of course, as Matt Gurney points out in the National Post, there’s a fairly easy fix for the student indebtedness problem—get a job straight out of high school, save like crazy, and go to university later.[10]

In country after country, the rapid expansion of university systems and the number of degree holders have clashed with the needs of a stagnant and uncertain workforce. Much of this had little to do with universities, save for the expectations built up through personal and family investments in the education of young people. The serious economic problems in North Africa in recent years did not start with the universities. The same was true in Spain, Portugal, Greece, Italy, and other European countries, where broader economic forces wreaked havoc with national and regional economies.

In some nations, the dashed expectations sparked activist youth movements. Such was the case with the Arab Spring movement that swept across North Africa and the Middle East after 2010, the Occupy movement in the USA and Canada that attacked increasing inequality, and regional social and cultural protests against inequality and social injustice elsewhere in the world. Young adults in Greece, including those with and without university degrees, struggle with crushing rates of youth unemployment (around 50 percent officially) and declining wages. Not surprisingly, having been raised to expect better outcomes, many Greek youth joined the mass protests that spread across the country in the wake of Greece’s cataclysmic debt crisis in 2015.

Most unemployed and underemployed young adults did not become revolutionaries, or even protestors. They struggled with their realities, continued to search for work and—following closely on the ideological foundations of the modern university, which linked outcome to individual effort and ability—largely blamed themselves for their inability to find work. In some instances, they were right. Decent jobs could be found in non-urban places—remote Indigenous reservations (“reserves” in Canada), the pre-2015 oil fields in North Dakota and Wyoming, and certainly for trained professionals in the poorer districts of the major cities —but these were not always attractive to college graduates raised to expect a more comfortable middle-class life.

Suffice it to say that many college and university graduates struggled—and so did those who started along the degree path and opted out. Those with large student loans carried a major burden into an adult life of low wages and uncertain employment prospects. As if it were not already difficult enough to find work, many of the new jobs were part-time and often with few or no benefits.

The harsh truth is that colleges and universities have been grossly oversold—most notably by the institutions themselves. The result has been that for some time now the dream has been in danger of dying, although governments have largely ignored the mounting evidence and the public seems blissfully unaware of it. Colleges and universities continue to promote the supposed advantages of a post-secondary education, arguing that they are not job factories, but institutes of higher learning, and that intellectual improvement should not be connected to crass questions of employment. Meanwhile the system undergoes a massive reorientation of its programming toward professional and technical fields of study.

Opening universities and colleges to women, minorities, Indigenous peoples, children from working-class families, and the disabled brought many thousands of talented and capable people into the advanced educational system. The world has been surely blessed by the perspectives, abilities, and contributions of young adults who, in earlier times, would have been locked out of career advancement through college educations. The same holds in the developing world, where university degrees had, for generations, been the exclusive preserve of the wealthy, the well-connected, and the highly gifted. To a point—imprecise and never examined—the opening of the university floodgates served a valuable personal, national, and global purpose.

But at some stage a tipping point was reached. Universities let in too many students for the employment market to absorb. The overemphasis on personal choice allowed young adults to select their own fields of study, skewing the skills of those graduating in favour of the educational interests of seventeen- to twenty-one-year-olds. A world desperate for highly skilled engineers got more psychology graduates. An economy eager for people with advanced technical skills got thousands of wildlife biologists. A national workforce that had space for a few hundred fine arts graduates a year could not absorb thousands of them. University education still worked for many, but not all, and increasingly not even most, of the first-year students who ventured, bright-eyed and more or less eager, onto the world’s campuses each year.

Governments kept the floodgates open, and even expanded opportunities. American president Barack Obama urged more and more young people to go to college, apparently oblivious to the fact that sending more students into the system, not to mention weaker ones, watered down the quality of the country’s skilled workforce. There was method in this seeming madness. With the global economy in dramatic flux, with financial crises building on massive technological change, there were not enough unfilled jobs in the economy to absorb the large number of young people graduating from high school. Governments faced a seemingly obvious choice: let the students enrol in a partially subsidized university system for four or more years, keeping them out of the labour market while they developed some saleable skills. Or, on the other hand, let them join the ranks of the idle and unemployed. Colleges and universities, if they did nothing else, served as a holding pen for a large reserve labour force that, if economic growth occurred as hoped, could capitalize on future job opportunities.

The college degree did not stop working as a route to prosperity and career progress, which should, in any case, be measured more in terms of job and life satisfaction than annual income. But it worked for fewer and fewer students all the time. With national dropout rates ranging from under 10 percent in nations like Germany to over 50 percent in the United States, millions of university students left the system each year without attaining the desired credential. Many of these, of course, found their feet through entrepreneurship, personal effort, family connections, or specialized training. But large numbers bore the mark of failure, of falling off the twenty-first-century career train, left to fend for themselves, degreeless, in a world awash in equally unqualified young people.

Always remember, though, that for a lucky and skilled minority, the college or university degree worked brilliantly. Without the opportunity for advanced study, these students might not have been able to secure the stable, high-paying jobs that launched them on a comfortable and productive life. Note in passing that the evidence is strong that students from wealthy backgrounds are far more likely to end up wealthy themselves. Perhaps the most assured route to a high income is having high-income parents and a stable family background. “Power couples” conceive bright children and bring them up in stable homes—only 9 percent of college-educated mothers who give birth each year are unmarried, compared with 61 percent of high school dropouts. They stimulate their children relentlessly: children of professionals hear thirty-two million more words by the age of four than those of parents on welfare.[11] Recognize, too, that many who did not go to college or graduate from university can also do well economically, largely because of hard work, personal qualities, technical skills and training, risk-taking, family support, pure luck, or specialized talent—think Bill Gates, LeBron James, and Taylor Swift. There are plumbers, pipefitters, real estate entrepreneurs, dealers at top casinos and hotels, franchise operators, building contractors, high-quality hairdressers, long-haul truckers, and many other working-class and technical personnel who earn upwards of $75,000 a year—or more than teachers in most states. In other words, not going to university can also be quite remunerative and personally satisfying, something that too many educators and politicians forget or ignore.

But here is the kicker. Americans spend billions each year on the world’s largest and most impressive college and university system, with over several thousand degree-granting institutions. It’s hard to say exactly how many billions of dollars are involved, but an article in The Atlantic estimated that the US federal government spent $69 billion in 2013 just on various grant programs to universities and colleges, not including loans.[12] Total outstanding student loans have now passed $1 trillion. Families spend billions each year, incurring sizable debts to capitalize on the perceived opportunities for their children. Young people devote at least four years and as much as a quarter of a million dollars in the hope that they will be able to convert their studies into a decent career. This is a staggering investment, one now being replicated around the world, based on uncertain and unspecified returns. This is gambling of the highest order.

Weighing Personal Qualities Against Credentials

There is a grand statistical debate taking place about the actual earnings of college and university graduates. On average, college graduates earn significantly more than non-college graduates. Is the college degree responsible for those increased earnings? Clearly “yes,” in the case of accredited fields like Medicine and Accounting. No degree, no high-paying job. But consider these other elements. Smarter young people are more likely to go to college than people who are less intellectually gifted. Is it intelligence that produces the higher income or the credential? Hard-working, motivated, and conscientious young adults are more likely to succeed at university—and in the workforce. Should we credit the personal qualities or the college degree for their success as adults? People from wealthy families are much more likely to go to college and even more likely to graduate. Is income really the important dependent variable, rather than intelligence or education? After all, the non-college-educated children of wealthier parents tend to have higher incomes than the college-educated children of poorer parents.

So, how does one make sense of this statistical jumble? First, it is obvious that, on average, a college education carries real financial benefits. On average, college and university graduates do significantly better than nongraduates. Second, it is equally obvious that the field of study matters. The average income and career earnings of medical doctors greatly exceed those of film studies graduates, and electrical engineers make more money than wildlife biologists. Third, many of the career achievements are associated with the personal characteristics of the graduates. Before a single day at college, university students have set themselves apart from their high school classmates by being, on average, smarter, harder-working, more dependable, adaptable, and determined, as well as being significantly wealthier (in terms of family income). But heavy-duty mechanics and oil drillers can make more money than film studies graduates too.

What hangs over all of the averages and statistics is that they do not predict the outcomes for individual students. A mediocre high school graduate, attending a fourth-tier college, can soar to the top and become fabulously successful. A class valedictorian, accepted at all the top-five universities she applied to, can run into an intellectual brick wall during her first year at Harvard and skulk home in abject failure. An engineering graduate, entering the job market in the economic doldrums, can end up waiting on tables, just as a psychology student could turn into a world-class journalist and succeed magnificently. Students and parents plan for post-secondary education based on averages and stories of great successes, believing that each young woman or man can or will be the one who will achieve phenomenal results. Such is the naïveté of our age that people equate averages with individual outcomes, a risky venture at the best of times—and these are not the best of times.

Anecdotes do not pay the bills. College websites often have examples of Arts and Science graduates who went on to do great things. (See Yale’s, for example.[13] ) These stories—and some are truly inspirational—do not tell you what happens to an incoming high school graduate. The incoming student may be the next Steve Jobs, drop out quickly, and become a world-changing billionaire. He may be the next Malcolm Gladwell and become a truly impressive writer. She may follow in the footsteps of Oprah Winfrey (who did not quite finish her degree at Tennessee State University). But these are real longshots, offered up as part of the “You can be anything you want to be” mantra that dominates modern parenting in North America. While the individual stories are impressive—Kim Coates of raunchy Sons of Anarchy fame did graduate in drama from the University of Saskatchewan—but that in no way means that all USask drama graduates will follow his path from the Canadian prairie to Hollywood.

Nor, at the same time, do average incomes of university graduates tell incoming students what their employment and career outcomes will be, in large measure because all the statistics are backward-looking. Basing plans for an eighteen-year-old’s future today on the basis of the career experiences of university graduates in the 1980s or even the 1990s is suspect at best. After all, the fundamental economic uncertainties attached to globalization and technological change have made predicting the future a mug’s game.

The Dream Factories live on. There are thousands of stories each year of young people, including many from disadvantaged backgrounds, who make their way through university and launch themselves into wonderful jobs and enviable lifestyles. Modern society is populated by doctors, nurses, economists, university professors, accountants, financial officers, engineers, computer scientists, microbiologists, and many others who could not do their jobs without a high-quality advanced education, often requiring two or more degrees after high school. For many more, particularly those from poorer or marginalized populations, colleges and universities convert dreams into reality. These are the system’s success stories and they deserve to be heard.

But colleges and universities also produce poor results, the numbers varying, based on the quality of the input (admission standards), the rigour of the programs (academic standards), and the nature of the field of study (professional standards). How often do these institutions publish accounts of the devastation of student and family dreams when young people are forced to withdraw because they lack the intellectual ability to complete an undergraduate degree? Do we hear about the international students with limited English-language ability, whose families saved for years and struggled to get them into a third-tier American or Canadian university only to have them fail to graduate and head home in despair, having used up the family’s money? And is there much coverage, beyond the occasional obligatory story about English-literature graduates serving coffee at Starbucks, about the system-wide experiences with unemployment and underemployment? For many university students—no one knows the percentage, but it’s much too high—the Dream Factories produce unhappiness. For a growing number, these factories produce outright nightmares.

There is a silver lining in this story. Many employers do favour college graduates, even if it is for work that does not require an advanced education, such a hotel clerk, rental-car sales associate, retail clerk, or the like. Fairly or not, many employers use the completion of an undergraduate degree as a sign of commitment to task, work ethic, and basic ability, and not any longer as a sign of excellence in such previously fundamental areas as writing and mathematical ability, basic understanding of political and legal systems, and general education. In other words, if you are hiring car-rental desk clerks, and of two hundred applicants, half have college degrees, there’s no reason not to give them preference. So, in an economy with too few jobs of any variety, college and university graduates can usually find some sort of employment.

Using twenty-first century survival skills—marked by moving back in with their parents, getting regular contributions from Mum and Dad, sharing living accommodations with friends, holding down two or more jobs, postponing major life choices (marriage, children, buying a home), and getting by with less—young college graduates are generally making do. They may not enjoy the lives of the leisured and well-financed middle class that they and their parents anticipated, but neither are they on the streets. While aspiring to the upper middle class and beyond, many thousands of college graduates are settling into lives in the lower middle class, often enjoying lower standards of living than their parents and coping with ongoing uncertainty about the future. This, for the vast majority of young people in North America, was not the dream that they had been sold.

Upgrading Skills and Credentials

So, what are young people and their families doing about the growing crisis in the employment of university graduates? They are doing just what the Dream Factories and their government supporters want them to do: they are doubling down on their investments and continuing their studies in order to obtain a second or third degree. If graduates with a BA cannot find a job, continuing on to graduate school to obtain a MA should surely give them an advantage over the competition. To top it off, the best schools offer graduate stipends, research assistantships, and other support to help defray the cost of attending. There is not a great deal of evidence, however, that these educational gambles pay off in a major way. Less than a quarter of PhD holders end up with full-time faculty teaching positions. Instead, many wind up on short-term contracts. We won’t get into the horrors of teaching at universities as an adjunct or sessional professor, but it’s tough to argue that it’s worth the cost in money and years that it takes to get a PhD. And, as in other fields, the production of MAs in Political Science, MScs in Biology, PhDs in English Literature, or Doctorates in Education is in no systematic way tied to evident market demand.

Crisis in the Law Schools

The USA is experiencing a decline in law school applicants, with 20% fewer applications this fall [2013], due to the slowly-recovering economy, staffing cuts at law firms, and the rising cost of a law degree. There are roughly 30,000 fewer applicants than there were just 3 years ago, says Wendy Margolis, an official from the Law School Admission Council, which tracks enrolment. Ohio State University’s dean of the Moritz College of Law, Alan Michaels, explains that the recession caused a decreased demand for lawyer services. At the same time, he says, tuition at law school has risen; Ohio State’s law tuition is currently $28,000 per year.[14]

The steady and even growing enrolments belie the notion that there is a crisis in graduate school attendance. After all, if the number of people pursuing law degrees holds steady or dips only slightly, then surely that is an indication that the market has not yet discounted these degrees in any substantial way. But law is a good example. Changing technologies and the shift toward paralegals and outsourced research has reduced the demand for new lawyers. In many jurisdictions, finding a career-launching articling position has become a formidable challenge. Imagine completing a four-year undergraduate degree, fighting to get into a good law school, finishing a two- or three-year program, and then running into a brick wall when searching for the crucial first job.

Here, however, the signs of market awareness are becoming evident. The number of law school applications has indeed started to fall, particularly in the United States, where several small law schools have closed. But the law schools that remain need students to fill the classes and pay the bills. Faced with fewer applications for a fixed number of positions, the law schools simply go down the scale a little further—effectively lowering their standards of admission—in order to complete the incoming class. Lower-quality students likely mean higher failure rates, poorer performance at the bar examinations, and less-effective lawyers in the profession. This is hardly the outcome any country would want.

Even here there are some oddities. The rush to graduate schools does not hold, incidentally, in the highest-demand areas, like engineering, the sciences, and accounting, where undergraduate-degree holders can usually still find good jobs. In these cases, international students make up the lion’s share of the graduate enrolments, perhaps because of the lower math and science skills of domestic students. Some of these degrees are of value mostly to the incomes of those who hold them. The best example is the growth in Master of Education and PhD/Doctorate in Education programs. Most of these graduate students are practising teachers; the main attraction of the graduate programs is contractually fixed salary increases tied to the completion of an additional degree, even if the degree is not connected to their teaching duties. For the United States, the salary bill for these extra—and often irrelevant—degrees adds more than $5 billion a year to the education system’s budget.

Paying the Bills

In order to manage student debt, some undergraduates have gone so far as to pay for their education by selling companionship and sex to older men. The usual income for “sugaring,” as it’s called, is between $3,000 and $5,000 a month, according to a Miami firm called “Sugardaddie.” Allison, a twenty-three-old “sugar baby” in New York state, whose online name is Barbiewithabrain, has earned that much and more over the past five years from three successive sugar daddies.[15]

The situation in graduate schools raises the question about what else young adults can do in this job market to advance their interests and meet their aspirations. In the 1960s and 1970s, a high school diploma was sufficient to get the attention of most ordinary employers. By the 1980s and 1990s, an undergraduate degree was the key. By the 2000s and 2010s, the undergraduate degree, outside of specialized and technical programs, had started to run its course, providing access to entry-level jobs but rarely to desired careers. Now, graduate and professional degrees are deemed the key to entry into a successful economic future, although even here the shine has started to come off the advanced degrees. What a change this is from a generation or two earlier, when a college diploma was a sure ticket to the middle class.

The greater problem is that the doors are open so wide that the system is overwhelmed by students of minimal academic ability, motivation, and innate curiosity. Colleges and universities were not intended for the disengaged. Nor were they designed to be credential- and income-conferring organizations focused on students’ short-term career needs. But this is what governments want them to be, what parents demand that they be, and what a growing percentage of the students expect them to be.

Universities were once bastions of achievement and meritocracy, although nowhere near what faded memories suggest. That still holds for the elite institutions, but many more now wallow in mediocrity. Here is a statement, alarming but true, that you won’t hear from any government or university bureaucrat:

For many of the world’s university students, their attempts to get a degree will result in academic failure. Graduates may experience minimal career benefits, be burdened with debt, will not have the expected job opportunities and income and may find they are not prepared for a successful career. For a minority—ironically largely in academic fields where the programs are regulated by outside professional agencies, like nursing, medicine, and engineering—university degrees produce superb career opportunities, high incomes, and a good chance at professional satisfaction. For many (but not all) of the rest, disappointment awaits.

Colleges and universities have never been perfect. Student thirst for learning was never as intense as nostalgia would have it, although we suggest (and experience reinforces) that it was demonstrably better than at present. The career outcomes for graduates were never perfect, but again better than at present. In over two generations, colleges have gone from being places to learn, as well as to mature and socialize, to places to prepare for a career. The tragedy of the Dream Factories is that, for a significant majority of the students in North America, they are also failing in this new role. What’s more, with the surge of attempts to regulate sexual behaviour and freedom of speech, struggles over on-campus drinking, criticisms of college athletics, high levels of student debt, and many other expanding challenges, the colleges and universities in North America are slowly losing their special status as places to socialize, have fun, and discover one’s future.

What conclusions can we draw from the many transformations of the past fifty or so years? First, there are career benefits, particularly for those who graduate. While much of this is accounted for by non-institutional elements, college graduates generally do reasonably well in the contemporary workforce. Second, there is still a college premium evident in the workforce,[16] and in most countries university graduates have considerably lower unemployment rates than those who do not have a degree. Our point, from the outset, is not to argue that there are no employment benefits from a college degree. Rather, we have emphasized the growing reality that colleges, which lose many of their admitted students enroute to graduation, produce uneven results that are not consistent with the promotional rhetoric and realities of the contemporary workforce.

While it is reassuring to note that college graduates usually do find work, it is depressing for many of them to discover that the work is insecure, low paid, and not connected to their expectations and what they feel are the promises of governments, institutions, and parents. Moreover, the college and university sector does not hold back in celebrating the accomplishments of their top graduates, using recruiting and promotional tactics that are more akin to late-night television weight-loss and hair-replacement advertisements than a realistic assessment of how college might change a young person’s life.

But broader societal forces are at play as well, a fact that helps explain parental paranoia and youth anxiety about the future. Robert Putnam, an eminent American sociologist, documented the surge in inequality in the USA and described the rapid collapse of the American Dream. He put it bluntly:

The causes of this increase in inequality during the past three to four decades are much debated—globalization, technological change and the consequent increase in “returns to education,” deunionization, superstar compensation, changing social norms, and post-Reagan public policy—though the basic shift toward inequality occurred under both Republican and Democratic administrations. No serious observer doubts that the past 40 years have witnessed an almost unprecedented growth in inequality in America. Ordinary Americans, too, have gradually become aware of rising inequality, though they underestimate the extent of the shift.[17]

Putnam argued that unequal access to high-quality education is a significant contributor to the rise in inequality. But if advanced education were actually the panacea it is made out to be, economic inequality in the late twentieth- and early twenty-first century should have diminished because of the surge in enrolment. Instead it has grown.

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