Education has long been considered the great equalizer, enshrined in the minds of well-meaning researchers and policymakers as the mechanism by which Americans from any background can step onto the ladder of economic success and ultimately achieve the American Dream. Decades of public policy subsidized the growth of traditional American higher education and cultural mores and pushed an increasingly large segment of the public into lecture halls and dormitories. But rather than lifting economic opportunities for everyone, we find ourselves stuck in an era of underemployed and indebted graduates and on the verge of a two-tiered economy in which the best opportunities are available only to a credentialed few.
C.S. Lewis once noted, “We all want progress, but if you’re on the wrong road, progress means doing an about-turn and walking back to the right road;” he continues, “in that case, the man who turns back soonest is the most progressive.” With each passing year, it becomes clearer that the path we’ve taken with regard to higher education has led us down the wrong road. Perhaps none have done more in recent years to highlight the severity of the stark educational divide in America than former investment banker, author, and photographer Chris Arnade. Through writing, interviews, and first-person storytelling, Arnade illustrates the stories of those he terms the “back row,” who declined or failed to secure a spot on the only ladder now capable of unlocking broad economic opportunity—the ladder of formal education and credentials.
In a 2020 book review, Arnade describes the narrow view of success presented, “Despite this hard work and genuine empathy, the authors can’t break out of their worldview. They can’t get beyond wanting to get people on the good ladder, and not dismantle the system of two ladders. … Their top two policy suggestions are about getting people started on that ladder early.” To their credit, this was the path that led to their own success, and the authors seem genuinely concerned about helping others fulfill their potential. “But potential here is so narrowly defined. It is about the résumé arms race, about getting gold stars in elementary school, valedictorian status in high school, then leaving your town behind for a good college and maybe even The New York Times,” he writes. The view Arnade criticizes here and elsewhere may not be universal, but it is common, particularly among the more credentialed Americans working on education and public policy.
Remedying this situation will require a reevaluation of how we think about the role of higher education, the best mechanisms for acquiring and signaling human capital, and what the prerequisites should be for economic success. Fortunately, cracks in the walls of the universal college ideal have created some space for alternatives to appear and fill the gaps. Embracing alternatives to the college-for-all mindset won’t be accomplished quickly or easily but doing so provides an opportunity to get closer to a reality in which Americans from any background, and any region of the country, can secure their American Dream. But before exploring what kinds of alternatives might constitute an improvement to the status quo, it’s worth taking a closer look at what has gone wrong within traditional higher education.
An Ailing System
The most common complaint we tend to hear about traditional higher education is its ballooning cost. A recent report on American higher education points out that public support now exceeds $200 billion annually. By subsidizing demand through government spending and preferential government-supported loans, colleges were able to raise prices with little regard for graduate outcomes or the need to compete on price with their peer institutions. Student loan debt has been rising, along with college costs, for several decades. As of this writing, the total amount of U.S. student loan debt has broken previous records to reach a total of $1.73 trillion. In just the past decade alone, student debt has increased by more than 91 percent. The costs and debt associated with going to college are so high that there is now even a political constituency focused on using government power to relieve the loanees from having to repay the loans to which they agreed.
Despite this dramatic increase in cost, there is little evidence that today’s students are better educated or equipped to join a skilled workforce than college graduates of decades past. On the contrary, as the proportion of Americans with at least a bachelor’s degree increased from 4.6 percent in 1940 to 37.5 percent today, and students began to be seen as consumers more than pupils, the quality and rigor of higher education seems to have declined. Economists Philip Babcock and Mindy Marks find that, compared to today’s students, “students in the middle of the 20th century spent nearly 50% more time—around 40 hours weekly—studying.” The most common grade now given is an A, representing 45 percent of all grades nationwide (this is up from being just 15 percent of all grades given during the early 1960s). Moreover, recent campus political activism has chilled robust class discussions, further limiting the potential to truly learn.
So, if college has become so expensive and its quality has declined so much, it is more than reasonable to ask why anyone, let alone the nearly 13.7 million undergraduate and graduate students enrolled in the fall of 2021, would choose to attend. One reason is, for most students, despite these alarming trends, getting a college degree still makes economic sense. Employers, looking to acquire the best talent, now have a much larger pool of college graduates to choose from than they did in previous decades. In response to this abundance of newly credential potential workers, employers have steadily increased the breadth and number of positions requiring at least a four-year degree. This “degree inflation” means that many more jobs now require applicants to have at least a bachelor’s degree than was the case in years past, even when it’s clear that such occupations do not require one. For example, in 2015 only 16 percent of currently employed workers in the Supervisor of Production occupation had a college degree, but 67 percent of postings for the job requested that applicants have such a degree. That same pattern is represented in occupations across the board, from sales representatives to childcare workers.
For a rapidly increasing range of professions, particularly those in the so-called “knowledge economy,” having a college degree is simply the price of admission. This is reflected in a “wage premium” that college graduates can expect over non-college graduates. However, it is important to note that such a premium depends greatly on which institution a student attends, what major they choose, and most importantly, whether they actually graduate. One recent study even found that more than a quarter of programs could even have a negative return on investment (ROI).
Despite these caveats and risks, most high school graduates continue to enroll in traditional four-year colleges and universities after graduation. And as a higher proportion of the population floods into and out of four-year colleges, and entry-level opportunities for those without such credentials dwindle, so much so it now seems more appropriate to track the non-college “wage penalty.” How then can we expect to remedy this situation? Government support for higher education seems unlikely to decline anytime soon, especially as political movements for student loan “forgiveness” are gaining attention.
Emerging Alternatives
Like any paradigm shift, the current model is unlikely to fade until a more attractive alternative is ready to take its place. Employers won’t (and shouldn’t) stop searching for ways to get at least an approximation of what skills or competencies potential employees can bring to the table. For now, that signal is a college degree, but it doesn’t have to be. In fact, some top-tier companies are already changing things up.
Apple, Tesla, and Netflix have announced that they do not require a college degree to work at their companies. Google has even set up its own certification program that it says it will substitute for a traditional college degree. While these actions are a step in the right direction, these companies remain outliers in the larger employment picture.
One promising alternative model is the one pioneered by the Bloom Institute of Technology (formerly Lambda School). Rather than pay tuition up front, students train to become a software engineer or data scientist and only begin payments after they’ve secured employment earning $50,000 or more per year. Such a model means student and institutional incentives are better aligned and the advantages of remote instruction and focused real-world skill development have proven to be popular. Praxis is another college alternative that works on a similar model. Enrollees join a one-year program that begins with an intensive skills-based bootcamp, followed by a paid apprenticeship within a company, ensuring that learned skills match the expectations of existing businesses.
The key distinction that these institutions and others like them offer is an emphasis on skills rather than on credentials. Of course, completing a course or program of some kind is still a credential, but rather than signaling something broader and more abstract like a traditional college degree, these comparatively short and vocationally focused alternatives are designed to meet the need for specific skill sets. As more employers and industries find graduates of traditional institutions of higher education lacking these necessary specific skills, such institutions that train people for so-called “new-collar” jobs are only likely to grow and expand into a wider range of industries. Adapting to this new model could also benefit local community colleges and vocational training centers at a time when their enrollment continues to fall relative to four-year institutions.
Moreover, boosting opportunities for vocational training, or career and technical education (CTE), as an alternative to four-year colleges more broadly is a worthwhile endeavor in itself. The United States is unique among peer nations in the Organisation for Economic Cooperation and Development (OECD) for its glaring lack of a clear vocational pathway after high school. The extreme focus on traditional four-year college as the only pathway to economic success has warped perceptions of what the labor market actually looks like. Skilled trades offer opportunities for high school graduates to earn at or above the median income in half the time and for a fraction of the cost of a four-year degree.
Organizations like the Mike Rowe Works Foundation are working to call attention to these possibilities and working to reverse the PR problem that many vocational trades face when compared to traditional higher education. Reintroducing opportunities to learn about trades or even take vocational classes in high school would go a long way toward making sure students understand that a four-year degree from a traditional college or university is just one viable option among several for achieving economic success.
Going Further Outside the Box
While these promising alternatives should not be understated, neither should more dramatic departures from the credential-based model of economic opportunity be given short shrift. Rather than constructing another two or three alternative ladders to economic opportunity, our ambition should be to equip every American with the tools to build one for themselves. In practice, this means strengthening entrepreneurship. While entire volumes have been written offering ideas to boost entrepreneurship, I’d be happy to see some real progress in just three key areas.
First, students should begin learning about entrepreneurship in high school. In addition to the core subjects students study in high school, many of us were required to take at least one class offering more practical skills—like a class in computer literacy or basic household finance. Classes on entrepreneurship should at least be offered for students curious about what it means to start and run a business. Whether that means offering classes as an elective during normal school hours or working with independent partner organizations like Junior Achievement, schools should actively seek ways to add entrepreneurship into the curriculum.
A second area of focus should be on reducing the barriers that prevent would-be entrepreneurs from getting off the ground. A natural place to start is by reigning in occupational licensing restrictions that force potential entrepreneurs or workers to obtain a government license before they can begin working. Since the 1950s, occupational licensing requirements have grown from affecting about 5 percent of occupations to nearly 25 percent of occupations today—everything from interior designers to tour guides (depending on the state). Ideally, states would examine their occupational licensing requirements and eliminate those that aren’t licensed in other states or are not necessary to ensure public safety. At the very least, states could follow the example of Arizona and adopt a universal recognition law, in which licenses from other states are recognized as legitimate—saving workers and entrepreneurs from having to obtain a new license just because they moved from one state to another.
In addition to curtailing occupational licensing requirements, states should also legalize home-based businesses. In many states, zoning laws that restrict commercial activity in residential areas are outdated and unwelcome holdovers from a time when commercial activity meant something quite different than it does now. Today, about half of America’s 30 million businesses are home based, ranging from tax preparation to video editing. As advances in technology allow small businesses to reach a wider range of customers online and enable entrepreneurs to perform more sophisticated services from home, zoning laws about commercial activity must keep pace. Home-based businesses are a great way to work flexibly, try out an idea, or just earn a bit of extra income as a side business. So far, eighteen states have already passed laws preventing localities from instituting zoning restrictions that would prevent entrepreneurial activity. More should follow suit.
Another example of states clearing the way for entrepreneurship is by adopting “cottage food laws,” which exempt small-scale food makers from burdensome regulations that apply to larger commercial kitchens or restaurants. Additionally, Kansas even allows food vendors to sell at fairs or markets up to six times per year without requiring an official license. Utah exempts home-based businesses from license fees and pioneered the “regulatory sandbox,” which allows entrepreneurs offering a new type of product or service to sidestep outdated regulatory frameworks and operate for a period of time while being monitored but not restricted by state regulators. All of these reforms make starting and running a business easier and cheaper for the individual who may not have a team of lawyers or accountants at the ready to ensure compliance.
Finally, states should strengthen protections for the gig economy. More than ever before, there are now flexible work arrangements available to a wide range of people to pick up the kind of work they want, when they want, and without the hassle of becoming a formal employee. Driving for Uber, delivering for DoorDash, running errands on Task Rabbit, writing as a freelancer, or taking advantage of some other platform to do work on your schedule is an important way to maximize flexibility and broaden the range of options available to those who want them. Sure, it’s not for everyone, but it’s an option that should exist for the people who want it. Just because one person might not be interested, doesn’t mean it should be illegal.
Unfortunately, that’s just what lawmakers in California did. In a misguided attempt to boost wages and require platforms to offer benefits to those who used them to find gigs, California’s AB 5 enshrined into law a new three-part test to determine whether someone must be classified as a contractor or an employee. Although rife with exemptions for workers who wish to continue the voluntary work arrangements they’ve agreed to, the law severely limits the gig economy by making the definition of employee extremely broad. Now, similar legislation is being considered at the federal level in the form of the PRO Act.
Protecting opportunities for flexible work arrangements that people can choose to participate in is a key part of broadening options for how people may work and live. Platforms like Patreon allow content creators a way to earn income for their work by providing a mechanism for subscriptions and distribution. Other platforms like Etsy, which provides an online marketplace for the creators of unique and small-scale goods, similarly blends the categories of entrepreneurship and the gig economy. We don’t know how these platforms might change in the future or what others may come along, but policies that attempt to force people into specific predetermined work arrangements will only restrict their range of choices and hold back some creative—if non-traditional—pathways to success.
If policymakers can succeed in making progress on these key areas, entrepreneurship of one kind or another could become a viable path to economic success for many more Americans dissatisfied with the models currently on offer.
A Note about the Good Life
One objection to moving away from the traditional higher education-based model I have yet to discuss is that it might prevent students from being exposed to the kind of liberal arts education that focuses on what the classics refer to as seeking the good life. I suspect that most readers of an article such as this are probably college graduates themselves and may even be more concerned about this aspect of education than most Americans. All I can say to this point is that while four-year colleges and universities may have started the twentieth century concerned with this aspect of education, most of them certainly did not end it that way.
There is indeed great value and truth to be found in that kind of study and, rest assured, I strongly suspect that those colleges which take this task seriously will be able to continue their work despite the changing models for credentials, employment, and job training. But most people going to college now are doing so for the opportunity to get a better job. That’s not a bad motivation either, however, our current system has become ill suited and even counterproductive in opening up those kinds of opportunities for those who may want or need an alternative route.
For those still interested in studying the classics or thinking about the examined life, technology has already opened up more opportunities than previous generations could dream of. I strongly recommend taking a look at the work of Zena Hitz and The Catherine Project (also featured in this issue) for a closer look at what a non-college-based model of reading and learning could be. My hope is that other institutions and social entrepreneurs will be there to work with those truly interested in these topics and eager to learn, and there is no reason to think they won’t be. But whether I like it or not, most modern American colleges have already left this behind.
Conclusion
As the economic recovery from the COVID pandemic continues—and researchers and pundits comment on the unequal opportunities available to those with and without the credentials to successfully compete in our modern economy—we must resist the urge to get everyone on that one familiar ladder to economic success. Instead, we as citizens should be on the lookout for ways to empower every American to construct their own ladder of success on their own terms. Encouraging employers to seek and accept alternative credentials, highlighting skill-based models with better-aligned incentives, and rewarding policymakers willing to break down barriers to entrepreneurship of all kinds will be valuable improvements.
Ultimately though, little can substitute for changing the status quo where we can in the positions in which we find ourselves. Do we really need a graduate of a four-year college to fill this position? Is there an alternative place we can look to gauge the aptitude of applicants? Just asking these questions more often will take us further than we might expect. As with most improvements, it starts with us.
