Malinvestment and the Higher-Ed Bubble

Workers with specialized skills like electricians, carpenters and welders are in critically short supply in many large economies, a shortfall that marks another obstacle to the global economic recovery, according to a research paper by Manpower Inc. The study mentions an Ohio shipbuilder that had to bring in experienced workers from Mexico and Croatia and a French metal-parts maker that hired Manpower to find welders in Poland.

The paper blames the shortage in part on the “social stigma” assigned to skilled blue-collar work, and cites a poll finding that only one in 10 American teenagers see themselves in a blue-collar job as adults. (The proportion was even lower in Japan.)

Just yesterday, I was going through a stack of Wall Street Journals, and came across an article on “Our Blue-Collar Depression,” by Janice Nittoli. The implication of her article is that those hardest-hit by the recession/depression are those lacking college degrees. Viewed in the context of the Manpower study, it would seem that the real problem is not so much college-educated vs non-college educated, or blue-collar vs white-collar, but rather high-skilled vs unskilled. (Not discounting the fact that the mismanagement of the economy has hit many high-skilled workers very hard also..but in general the high-skilled are still much better off than the low-skilled)

For at least the two decades, there has been an almost religious degree of reverence paid to college degrees. The message has not been “go to college because knowledge is valuable in its own right,” or even “go to college to learn skills you will need for your career,” but rather “get a degree so you can get a good job.” The emphasis has been all on the piece of paper. And when a piece of paper is valued for the circular reason is valued, then you are in a bubble, whether the pieces of paper in question are shares of stock or college degrees.

And as Glenn points, out, bubbles produce malinvestment.

See my previous post the higher-ed bubble, continued, in which I observe that:

Meanwhile, Obama and his education secretary have called for increasing the number of college grads, with Secretary Duncan referring to leading the world in college graduates as “the North Star for all of our educational initiatives.”

9 thoughts on “Malinvestment and the Higher-Ed Bubble”

  1. I remember having a conversation with a former coworker about his son. My coworker was talking about how his son had to bring his grades up if he wanted to go to college to which I asked “what if he doesn’t want to go to college, and what if college isn’t right for him”? He quite bluntly told me that his son “had not future” unless he went to college right out of high school. I asked him if he felt the same way about me, since I worked as a millwright and machinist for three years out of high school before going to college to get my engineering degree, and continued to work all the way through school. I told him that just because someone doesn’t go to a formal university doesn’t mean they couldn’t make a good living. Our company hired hundreds of tradesmen a year for various projects and some of them made as much, if not more, than we did. He dismissed it by saying that no son of his was going to work with their hands. I asked many of my friends who went to college right after high school and dropped out after a semester or two if they wanted to leave their jobs at the Gap and Electronic Boutique to come work with me at the mill. They all said the same thing “I don’t want to work a job like that” despite the fact that it paid three times what they were making.

    This degradation of blue collar work seems to be encouraged by our society and education system.

  2. There’s a peculiarity of American English that I’ve noticed recently that may be instructive. You guys, or many of you, seem to refer to skilled manual workers as “laborers”. In Britain we’d call them “tradesmen” or “craftsmen”; the bricklayer, plumber or the like is distinguished from the unskilled “labourer”.

    Or is this American usage a generational thing?

  3. Dearieme,

    It’s probably hubris and clueless classism. If you aren’t college educated, you are just a stupid prole.

    Forget the fact that most college grads today know nothing about anything, and unlike the tradesman or unskilled laborer, wouldn’t know how to change a tire or unclog a sink.


    Great post. In the “great de-leveraging” that needs to take place, it would be a good start to just start shutting down universities, sending the lefty professors to the McDonald’s counter, and re-allocate the funds to spending cuts and community colleges and trade schools.

  4. Good post. I would add that with an ever increasing number of adults living with mom and dad, what’s the point of developing a trade and having an independent life?
    Think of the current benefits: HDTV, HD cable, game console, own room, a honey on the side, car, car insurance, health insurance, a part time job, smart phone at a discount, no external pressure to compliment that internal discomfort of having to get a life, and the always reliable and easy excuse of “going back to college” in the distant future. That type of comfort is as addicting as getting a government welfare check.

  5. He dismissed it by saying that no son of his was going to work with their hands.

    This is an interesting statement and was also made by Karl Rove in a recent quote. As a retired surgeon, this has particular interest for me. When I applied for a surgical residency in 1967, only one professor asked me any questions about manual dexterity or working with tools. A number of orthopedic surgeons I have known well were college athletes but it doesn’t seem to apply as much to general surgeons. Denton Cooley, a great cardiac surgeon, was an All American college basketball player.

    The reason I raise this issue is the number of inept surgeons I have had the misfortune to observe. I’m sorry to say that many of the women surgeons I was called upon to observe were some of the worst although you would think fine motor skills would be a female attribute. I suspect it has to do with the absence of any contact with tools. Frankly, if I were to have one question to ask a surgeon who was being considered for my own care, it would be about tools and musical instruments, the questions I was asked in 1967. Sports would be another possible topic. The surgeon who did most of my 14 hour back fusion plays golf with a handicap of 2. I didn’t have the opportunity to question his residents who probably did 50% (or more) of the procedure, about their interests but I hope he did.

  6. I have an engineering degree and have been working in the Evil Private Sector since I was still an undergrad. Ironically, it has given me more respect for tradesmen than I had before. Even with my degree, there is only so much that can be looked up in manuals. If there is something I don’t know, the best way to learn way more than you ever wanted to know about it is to call an installer or supplier or fabricator or whatever. They often have more detailed literature than any of my books, not to mention years of field experience. I have done this on everything from sports fields to wells to irrigation systems to giant seawalls to traffic paint.

    There is actually a lot you don’t learn in college…

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