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Federal Reserve Warns That "College May Not Pay Off for Everyone"
Back in May, the one regional Fed that has come to symbolize everything that is wrong with being a "master of the obvious", and conducting pre-K level research at the expense of millions in dollars in taxpayer funds, and also the Fed where the current Fed charimanwoman emerges from, that of San Francisco of course, conducted one of its trademark frontal lobe-combusting "studies." Specifically, that purveyos of intellectual titanism asked (and answered) "Is It Still Worth Going to College?" The SF Fed's answer, in a nutshell, was a resounding "yes" as one would expect of course: because in a world in which marginal revolving debt demand is virtually zero, the only source of consumer credit - that opiate for the Keynesian masses and certainly for their shamans - for the past five years, is simple: car loans and, to a far greater degree, student loans.
Which is why we were shocked to find today that the "other" Fed, the one housing the most powerful trading desk in the known world, that located at Liberty 33, today issued a research piece with a very different conclusion, namely that "College may not pay off for everyone." But... that does not jive with the west coast Fed's kindergarten level, blanket summary. How is this east-vs-west coast Fed rivalry possible?
For the answer, we go to the NY Fed's paper, presented below.
College May Not Pay Off for Everyone
Jaison R. Abel and Richard Deitz
In our recent Current Issues article and blog post on the value of a college degree, we showed that the economic benefits of a bachelor’s degree still far outweigh the costs. However, this does not mean that college is a good investment for everyone. Our work, like the work of many others who come to a similar conclusion, is based in large part on the empirical observation that the average wages of college graduates are significantly higher than the average wages of those with only a high school diploma. However, not all college students come from Lake Wobegon, where “all of the children are above average.” In this post, we show that a good number of college graduates earn wages that are not materially different from those of the typical worker with just a high school diploma. This suggests that, at least from an economic perspective, college may not pay off for a significant number of people.
The chart below plots the median annual wage for full-time employed workers with a bachelor’s degree between 1970 and 2013, together with the median annual wage for those with only a high school diploma. We also plot the annual wage for the 25th percentile of college graduates. All figures are expressed in constant 2013 dollars.
The much discussed college wage premium is quite clear, as the median worker with a bachelor’s degree earns well above the median worker with only a high school diploma, a trend that has held throughout the past four decades. Measured at the medians, the wage premium for a bachelor’s degree has generally hovered between 60 and 70 percent since the 1990s. As we have cautioned before, this earnings gap may arise at least in part from differences in the skills and abilities of those who earn a college degree compared with those who don’t, rather than from the knowledge and skills acquired while in college.
However, when we look at wages for the 25th percentile of college graduates, the picture is not quite so rosy. In fact, there is almost no difference in the wages for this percentile ranking of college graduates and the median wage for high school graduates throughout the entire period. This means that the wages for a sizable share of college graduates below the 25th percentile are actually less than the wages earned by a typical worker with a high school diploma. While we can’t be sure that the wages of this group wouldn’t have been lower if they had never gone to college, this pattern strongly suggests that the economic benefit of a college education is relatively small for at least a quarter of those graduating with a bachelor’s degree.
When we look at men and women separately, the same basic wage pattern holds, although a wider gap opens up among men. The 25th percentile for male college graduates has been about $4,000 to $5,000 more than the median male high school graduate in recent years, whereas among women, the gap has recently been around $2,000. This difference between genders suggests that some people may be choosing lower paying jobs because of occupational preferences or family considerations.
Overall, these figures suggest that perhaps a quarter of those who earn a bachelor’s degree pay the costs to attend school but reap little, if any, economic benefit. In fact, once the costs of attending college are considered, it is likely that earning a bachelor’s degree would not have been a good investment for many in the lowest 25 percent of college graduate wage earners. So while a college degree appears to be a good investment on average, it may not pay off for everyone.
* * *
So what is the solution? Well, 25% of all students should simply not go to college then, right? Well, no. Because then the 25% of the 75% that are left will once again underperform all "other" college students when it comes to wages. So say another 25% of the 75% decided to get out of college instead of drowning in debt which can never be repaid. Well, great, until the 25% of the leftover college students once again is left holding the short stick. And so on, and so on, until by the induction of Xeno's paradox there is just one college student left. And what happens then: how will all those millions of Keynesian professors maintain their tenure and their shaman status paying well into the 6 figures?
In fact, let's just forget the NY Fed said anything, and continue enslaving future generations with debt that will never be repaid. Because after all, the Krugmanites of the world gotta get paid.
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I've had that conversation with people before. I think it's very appealing compared to all the debt and wasted time in college to NOT be trained for what you want to do for work.
The FEDs have ruined the way of life for the world, some people just don't see it yet, but they will. They will.
"the way of life for the world"
The "way of the world" was never sustainable. The Fed did not cause these results, it has only altered the time frame. Again, the System has been predicated on the notion of perpetual growth (on a finite planet) LONG before the Fed was even a glint in the evil banksters eyes...
We can either feel cheated (which requires a basis in an entitled attitude) or we can get on with making the future what we want it to be: and best to set the proper expectations/foundations with the REAL understanding that basing it on growth will condemn it to the same fate.
Again, a down-voting punk who is incapable of supporting his/her position. Go ahead, fight POWER, give it the reason to clamp down even further (as you dream of resurrecting the unsustainable). Good fucking god, idiots are everywhere...
Abel & Dietz better get their resumes in order. Honesty will be their undoing.
Can I? Can I" I've always want to post this:
"Find out how you can earn $20,000 a month from home by... [sending me what little money you have]"
College is definitely paying off for the cabal of $300k/year university "administrators".
And I'll bet that it's more lucrative for all those corporations that are creating the curriculum materials: my brother once worked for a publishing company, he gave me an insight into what a captured market the education sector was; and, as once a college student I can attest to the costs of books.
why is the federal reserve making a comment about college education? and why should we fucking listen!
Because they're warning of us the bubbles, bubbles which they never seem to see forming... Yeah, no idea...
totally unexpected, blindsided, no one could've seen it coming...
OK. Along a more serious line, I think that it's a start of a campaign to cut education assistance. With bankers fees in decline they need to do what they can to make up for that loss... Better to shift the money from "education," and what better way than to make the future even bleaker such that the young people turn to drugs, and the drug industry is WAY better source of money: unlike education, where folks are likely to not end up with jobs, thereby not being able to repay (or feel motivated enough to repay their loans), drugs will motivate people to such an extent that they'll actually kill others! yeah, willing to kill in order to pay the cartel, now that's a good credit risk!
...and don't forget the incarceration racket...
In most cases knowledge and experience are worth the effort.
However, a degree or two, or three, etc... does not guarantee knowledge or the ability to apply it – it does mean that the recipient knew how to “play the game and not make waves” aka “cooperate and graduate”.
Today we need men and women who make waves, do not cooperate with stupidity, and get the job done without requiring adult supervision or continuous accolades.
still glad I dropped out of college when some punks tried to jump bad on me for flunking them out of calculus...made me realize any flunkee can go to college and get C's...now I'm a millionaire, but that's no big deal these days...
Another thought on college degrees:
Go out into the world and make money,
(or alternatively-steal it; or have rich parents)
then if you donate a reasonably significant
amount to a college or university, it is
entirely possible that they will just
simply hand you a degree.....
(nothing like "quid pro quo", or
anything as seamy as that, of course.)
Silly wabbit, if you really want to "get there" you go after a Nobel Peace Prize!
Suddenly it occurs to me the best symbol of the Federal Reserve is "Captain Obvious"
News from Federal Reserve: Fiat money does not pay off for anyone... except us banksters. Which is why we support, defend and promote fiat money, of course!
There, that's even more obvious!
What this means is that India has been sustaining the US economy not since just a few years as Brookings report showed but since even before the 90s. Same as India financed and created Modern Britain through the Industrial Revolution when the East India Company had gone bankrupt. Many of the great American and European fortunes were built on the Opium grown on Indian soil destroying agriculture and leading to 400 years of Indian Holocaust that was used to drug entire Chinese generations into subjugation. It were these Opium smuggler families that laid the foundations of Western Education System. And now when the American Empire is waiting for it’s death nail, novel bollywood style concepts are introduced into India in the form of Skill India, Jan Dhan Yojna etc through Foreign Direct Investment in India. What nobody seems to question is how when the West is resorting to colonial tactics invading Syria, Ukraine, Iraq to salvage what is left of it’s bankrupt economies, how on earth could the same bankrupt US EU countries would reform and Shine India through FDI ?
Indians Still Dreaming The American Dream ?.....kinda figured this shit out over twenty five years ago when I saw jobs shipped overseas.
But hey, nice of you (FED) to follow up in the rear.
Brilliant. These are the best E-CON- omists our cuntry has to offer.
Absolute brilliance. How forward thinking!
SMC:In most cases knowledge and experience are worth the effort.
However, a degree or two, or three, etc... does not guarantee knowledge or the ability to apply it – it does mean that the recipient knew how to “play the game and not make waves” aka “cooperate and graduate”.
Today we need men and women who make waves, do not cooperate with stupidity, and get the job done without requiring adult supervision or continuous accolades.
Yup, I know of several local businessmen (last hold-outs in this craptastical State, soon to move to greener pastures) who have no degree or college education who are millionaires. Judging from the human swarf that slides through my place looking for yobs....I'd say the average recent college grad is dumber than a bag of fetid dicks and borderline unemployable.
Why go to school? they don't want to hire you anyway. They will just keep importing people they need to work with H1-b visa or let the foreign students stay that keep coming in droves and don't leave once they get here. They haven't needed us in decades.
I work at an University, they just layed off 32+ staff. They don't have the money, are not getting donations, and are losing.
Why pay for a course at a University when you can take it online for free?
let's take it nationwide, and remove the classic incentives...PERS pensions, gold plated health care, and employment for their cronies...
The small liberal arts colleges (SLAC) are hurting big time. They sold an exclusive aura but their recent graduates are living in their parents' basement. The younger brothers and sisters of the cellar-dwellers are not buying the college hype all and re going to State U, if anywhere. No bodies to fill the classrooms at the SLACs - no tuition coming In equals layoffs, mergers, and closings.
yes, yes, yes...not all of us can be as smart a we at the fed...
Then why do we have to show you pictures?
Federal level reverse college is great services and good opportunity and here SmartCustomWriting.com for students and our special concerns for students.