Does education pay? The doubtless answer from decades of research says yes. Holding a high school degree leads to higher earnings, and a college degree even more so. Even with the oscillating trends of unemployment among the college-educated, the education premium is unmistakably real. The more puzzling question is why: Is it because education leads to people doing their jobs better (skill-building) or because education tells an employer that this person will fit (signaling)?
In a recent piece for the LA Times, Bryan Caplan argues that it is signaling that drives the educational arms race. How else can we explain the demand for bachelor’s degrees in jobs where they were not needed before? Or that someone who drops out after junior year of college will earn disproportionately less than a graduate? As Caplan says, these are explained because grades, classes and degrees do not actually skill-build for the labor market, they signal employability. This of course puts people who cannot afford college, or further degrees, at a huge disadvantage even though they might have better job performance. They are simply missing the essential signal that makes the hiring process much simpler for employers.
The rapid degree arms race and its negative effects for low-income people in a country where college is often prohibitively expensive are important. Though the entire premise that Caplan bases his argument on is missing one essential component: His piece, and many others on similar issues, operate under the assumption that education is for employment. All education is job training and if education is not skill-building for the labor market, it is not a good investment of taxpayer money.
This underlying assumption is saddening. Education can be much more than preparation for checking emails at an office. It is not important that many aspects of education do not build skills for jobs as long as education achieves other social goods. Perhaps the most important of these is the value of an intellectually curious society that understands its history, grasps the basics of science, appreciates literature and practices critical thinking. That last point especially is mission critical for a democracy, or at least it should be. And these skills cannot be taught only in college, to the tiny slice of the country that can afford that path. Everyone needs a well-rounded education that makes them an active thinker with a general understanding of human knowledge in different fields. This is not to make people better workers for jobs that most people would quit if they did not need the money. It is so people can lead fuller lives and be better equipped to critique the world in which they live.
The value of education extends far beyond the labor market, but it is hard to quantify, hence why economists focus on earnings. Mr. Caplan is an economics professor, but that might have already been obvious to anyone who has read some of the economics literature on education. Many economists, though very educated, seem to underestimate or ignore the importance of education as a social benefit. This benefit should be taken more seriously.