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Why Are So Many College Graduates Driving Taxis? (bloomberg.com)
60 points by lmg643 1431 days ago | hide | past | web | 46 comments | favorite

Because our lower education system pounds the idea of "you're nothing if you don't go to college" into everyone's heads for twelve years. We've all been told that if we go through college and get the degree, we'll be all set in life. I think the millennials have it worst of all so far but it's not just them.

Somewhere along the lines, college changed from being a stepping stone to the goal in and of itself.. and no one considered what comes after.

Agreed 100%. I know many will tear me apart for this, but not everyone is cut out for higher education, and lowering standards does not make that any less true.

There is nothing wrong with skilled labor. We need it and it is vital for any economy. The problem is that many of us teach our kids to look down upon such career paths.

"You're nothing if you don't go to college" seems to be a common sentiment instilled in our children as they grow up. Well, often times you're nothing if you do go to college because a million other 22 year olds with the same middle of the road academic resume graduated right alongside with you. Have fun delivering pizzas.

I have a electrician cousin and uncles in carpentry and EMT.. sure, they don't earn as much as most software developers annually, but they started before and with less debt than almost anyone who went to college.

Throw in the fact that working more than 40 hours is called "overtime" in many cases, it seems like reasonable trade offs.

(Then again, maybe it's a "grass is greener" view.)

Funnily enough, I also have a cousin who is an electrician. We have been very close all of our lives (my parents adopted him at 14) and he went the college route at first. He wanted to write software.

Now, Josh (my cousin) is not a stupid person by any means, but he's also not academically inclined. He's not very technical and, for example, doesn't enjoy reading the Principia in his spare time.

What he does enjoy is having a steady job that pays him well enough to support his family. He has that as an electrician and he has a good amount of job security. He is not an unskilled worker and he cannot be replaced by any Joe Shmoe off the street.

That's more than can be said of many of the people I went to high school with (graduated in '01) who have college degrees (lots of marketing and psychology majors here).

If I may expand upon what you've said... A lot of this is anecdotal so take it for what it is.

Let's rewind a generation or so and pretend to be our parents. At a very basic level, looking around, I see a pattern of "X went to college, and X has a better standard of living than I do". Easy answer: college makes life better. I want my kids to do that well, so I better get little Sally to go to college.

I don't know whether that's entirely true or not, but I think that college has been the "easy answer" for a generation. Somehow things like work-ethic, realistic career goals, etc. got lost along the way.

I hate the idea that "if we go through college and get the degree, we'll be all set in life." Who has been saying that? Anyone saying that is either lazy or worse. All degrees were not created equal, and it seems that a surprising number of people either honestly thought all degrees were equally valuable or people simply didn't put any thought into their career or life before signing up for tens of thousands of dollars in loans.

If we use the same analogy I had above, I think the "if you go to college, you'll be set" is completely wrong. 20 years ago, the people who went to college were, in general, the more motivated set of people who actively sought to go to college. They weren't just following the prescribed plan, they actually were thinking about what they wanted to do with their lives, what they loved, how to achieve their goals. Now that college is the "default", everyone goes to college, it's just expected.

Anyways, this whole thing wasn't a bash on people who do and don't go to college. Of course there are going to be more taxi drivers with college degrees now: a much higher percentage of people have college degrees now. Everyone is expected and encouraged to go to college. There are still going to be taxi drivers, bartenders and other such positions.

The term I like is "cargo cult social science".

Going to college was highly correlated with a strong work ethic, motivation, future-planning, etc. General success. Therefore certain people came to the conclusion: make it easier for everyone to go to college, and everyone will receive the same benefits. So everyone goes to college, but that obviously doesn't actually increase the prevalence of work ethic or motivation in the general population, it just means that those who don't have it end up with a useless degree and some non-dischargable debt.

The same thing played out with homeownership too. Owning a home was correlated with some types of success -- often the same ones for higher education -- so much effort is expended making it easier to own a home. And we saw how well that worked out.

>Somewhere along the lines, college changed from being a stepping stone to the goal in and of itself.. and no one considered what comes after.

I think some colleges and universities themselves are a part of this. The attitude from my school (small liberal arts) at least was that college was explicitly NOT meant to be training you for your future career, but rather that your studies were worthwhile for the sake of learning and personal enrichment. Just a lot of the "teaching you how to think" bs that liberal arts schools tend to sell themselves on.

That whole "we aren't a vocational school" attitude is fine for wealthy people, but if you're going to go $150k into hock to get your degree you better have something that makes you attractive to employers.

I think a good degree gives you both. It's important to learn how to study and think on your own, it's the only way to keep yourself from becoming obsolete. This is even more so important in technology and computing.

I think it's clear why. It used to be that most jobs could be performed without any particular major. Instead, a college degree was taken as a generic business indicator that you know how to work. People with degrees in hard sciences could always take entry-level computer jobs with no special training. Technical specialization has resulted in a situation where businesses cannot find enough high technology workers and the students exiting colleges have less useful liberal arts degrees in this economy like journalism. In the past, this was solved by on-the-job training.

Today, large businesses often solve this worker shortage by outsourcing the job to substandard contractors in countries with far lower pay bands. Businesses would rather pay to train a cheap, blank slate worker than pay the premium to train an American with a four-year college degree. This can be profoundly short-sighted, but the most recent management school generation is too often wedded to bean counting and manipulating vanity metrics. They often fail to grasp subjective and hidden business costs. HP's Carly Fiorina is a classic example. She wanted to cut R&D to zero because she believed it was purely a cost center and produced no profit. If anything cannot be counted, it does not count.

You bring up an interesting point that reminded me of an article I read a week ago about how Germany does the exact opposite (with overall better financial implications):


"Germany managed to avoid a surge of lay-offs after the financial crisis and has done far better than others at getting the young and the hard-to-employ into work.

How did it manage that? Most explanations heap praise on the Mittelstand model and the system of vocational training. Firms such as Storopack or Rösch take on apprentices, mixing practical training with classroom tuition."

Of course, this is NOT the only reason for their current financial prowess in Europe, but a contributing factor

it's also interesting to me that a former economist in the obama administration is writing an article about college grads driving taxis, right around the time the powers that be are trying to implement immigration reform to make it easier to import foreign workers to fill various roles. he seems to be dancing around some obvious conclusions that the job market is (gasp) driven by supply and demand for labor, but doesn't quite reach a conclusion.

Personally, I think that the real reason why people with degrees are having a hard time getting jobs is that at one time, having a degree meant you came from money. The problem now? this is diluted. More and more poor folk have degrees, and so it's no longer a reliable class indicator. (the positive view is that it's also possible that class indicators are becoming less important.)

The problem was that they confused cause with effect, and decided that we should put a bunch of effort into getting degrees for poor people. This diluted the degree as a class indicator.

Now, I don't have a degree or rich parents, so obviously, I haven't seen the parts of the job market that rely on those class markers. I'm the riff-raff that those filters are designed to keep out.

However, from where I stand? most individual contributor jobs in my industry that I'm actually qualified for are open to me. In the tech sector, the value of a degree is smaller than actual work experience. (I mean, if you actually /learned/ something while getting that degree, that's pretty valuable. But the paper itself is not.) Internships? they are paid. Maybe not paid a lot, but something, and the real companies usually pay substantially.

As far as I can tell, unpaid internships are 'class marker inflation' - "Not only did my parents have enough cash to put me through four years of art history, and the contacts to get me this internship, they could support me while I worked for free!"

Off topic and sorry for asking in this forum (but I'm guessing others might also be interested).

What ever happened with the colo rates re: "Feb 1, 2013" as detailed on this page:


Did they raise you on this or were you able to renegotiate favorably? (A post on this would be nice. Would like to know the business details as I'm sure others would if you'd like to share).

I'm moving to coresite santa clara, and I'm mostly in, but I'm also mostly out of power, and the conditions are not so favourable for me renting out significant rack space. I've also been kinda soured to the idea of letting other people into my production co-lo[1] so I'm kinda re-thinking the whole customer-accessible co-lo thing.

That's the thing, renting co-lo space, when you least datacenter space is generally a really shitty deal; the economics make more sense when you own the place.

I'm also building out a datacenter in my buddy's warehouse in santa clara, but the fiber isn't there yet, and the power isn't in yet so unless you can deal with comcast-level network, that doesn't help you. It does look like it will be pretty cool when it's up; we have a bunch of those 'datacenter in a cargo container' things; My buddy wants to rent out whole containers at a time to big players; I am focusing on renting dedicated servers in them. Again, it's high density, so having a bunch of smaller customers with access is probably a bad idea.

So yeah, uh, it's essentially still all up in the air, with no real ETA.


There was a mix-up of cause and effect, to some degree. Since early colleges were limited to a very small percentage of the population who tended to have strong parental guidance and even hired tutors, the average academic ability of college graduates was much higher than non-college graduates.

The response was that, then, if everyone had a college degree, everyone would be so able. The problem then is twofold:

First, people without a strong primary education background went to college, forcing colleges to either lower standards and/or spend time remediating (financial pressure from governments to tie funding to graduation rates sure didn't help to preserve high standards).

Second, the presence of a college degree as an indicator of an unusually high level of prior primary education and academic ability disappeared since so many people have a college degree.

The literal answer is, because there are too many college graduates. The US educational system, and society's view of education, is still rigged for a mid-20th-century rose-tinted view of the future that never came to pass, and was never going to.

There is a difference between getting a college degree and obtaining credentials required to gain an amount of income and security.

Two generations ago, they were almost the same thing. With automation, commoditization, increased college graduation rates, and changing economic situations, the effort required to obtain the same relative level of credentials has gone up. First it was a bachelor's degree. Then, you were nothing without a masters degree. Then came the MBA boom. Now we have startup incubators and aqui-hire.

Yup. Just because more people are getting degrees does not mean that there are enough jobs that require/compensate for having a degree.

But this apparently isn't changing anyone's behavior yet, so the education bubble continues to grow.

Are you saying that my degree in underwater basket weaving won't get me a job?

It's not that simple. Your degree in electrical engineering might not get you a job depending upon a number of factors, where once it was considered a sure thing.

I have a hard time believing that someone that averages a B in electrical engineering from any 1st or 2nd tier school can't get a well paying job somewhere in north america.

I have some anecdotal evidence to suggest otherwise, but that's somewhat irrelevant. Perhaps electrical engineering was a bad choice. A business degree then? Used to be a good path into middle and upper management, is now a requirement for stable office work (or so it seems to me).

It's called degree/credentials inflation, and it's caused by a combination of persistent mass unemployment and the message that education can solved it.

Now, mass unemployment simply cannot be solved via education - the parable of the 100 dogs and 92 bones was discussed here not so long ago. (The original link was this one, I believe: http://alittleecon.wordpress.com/2013/06/19/the-parable-of-1...)

However, having a good education and credentials does increase the chances that you'll get one of the 92 metaphorical bones, so of course it makes sense to get one. But this only really works reliably if your education and your credentials are better than those of your peers.

This leads to an arms race which explains why degrees are become simultaneously worth less and more important.

Edited to add: The effect on degrees is actually old hat already. These days, it's about an inflation of unpaid internship to spice up your CV, at least for those in non-technical fields.

The real problem, then, is to figure out what is wrong with our system that it only consistently produces 92 bones...

Why does something have to be wrong with the system for that to be happening?

Keep in mind that the analogy isn't exact. We're talking about workers, not dogs, and jobs, not bones. Workers are productive. They produce when they have jobs. So 92 bones, in this case, means that 8 workers out of 100 are idle. Either society must support them, then, or let them starve.

I reject the notion that they should starve. I'm OK with supporting them, but wouldn't it be better, more popular at least, to have them produce something? A resource standing idle is an opportunity so, all else equal, idle resources should not exist.

I realize it's more complicated than that. Frictional unemployment, etc. But that's not what we're talking about here. We're talking about a significant chunk of the population being permanently idled by structural changes in the economy.

Except that a fair portion of that theoretical 8% is frictional. In the US at least about half of unemployment has historically been frictional or structural.

I think it can be easily inferred from my comment that I'm not talking about frictional unemployment.

Well the problem for a start is the idea that there are only a fixed number of job openings available. My experience is that this is not really true.

In e.g. security consulting, we certainly hire good people wherever we can find and afford them. Being reductive for a minute, each consultant is essentially a cab with a little taxi meter over their their head, and more cabs = more money, up to the limit of available work (which no-one in the industry is anywhere near hitting).

I hear a similar story from my brother who is a plumber.

I acknowledge what you say at a micro level. Most knowledge-based businesses have some flexibility in hiring when "super stars" come along. I think this is essentially just noise contained in the cost of doing business, though.

The reason why I think this: This behavior would break down if things really changed at a macro scale. If there were suddenly lots of people who are great at doing penetration testing or code audits or whatever your particular specialty is, you would raise your standards and start to turn more people away.

Another way to look at it is supply and demand. If there really were demand for people - rather than just a permanent watchfulness for grabbing up above average people when you can - basic economics would predict that salaries would increase. Generally speaking (there may always be some very small, localized exceptions) this is not what is happening.

College-style education is both expensive and risky. Expensive not only from tuition but also four years of lost earnings and missed actual experience. Risky because academia is only loosly connected to the working world - so much of what is taught will turn out to be irrelevant.

While still unproven alternative education techniques such as online or internships/apprenticeships may turn out to be more effective and much less expensive. If employers become convinced traditional diplomas and degrees are unreliable indicators of quality and better alternatives exist, we could see a sudden shift away from traditional education.

Would you rather hire someone with a middle ranking college degree or two years experience and a letter of recommendation from their boss? Or a certificate from a reputable online program in the exact skill you need?

Still sucks for workers though. College is about acquisition of general human capital which, in theory, can be used in a variety of jobs. Thus the higher wages commanded by college graduates: they can go elsewhere. A certificate, on the other hand, provides only a very limited skill set, effectively reducing the options for the employee and thus lowering the expected wage.

For many people the certificate might be worthwhile, of course. There have always been people willing to take jobs that were inherently risky (working for the only factory in a small town, for example). So my point is that even if alternatives become more popular, they probably won't provide what a college education typically provided in the sense that the balance of power will be shifted away from the employee and toward the employer.

I would hire the one with the degree (in computer science), absolutely no question about it. The person with 2 years experience or certificate with the exact skill might be able to do 80% of the work (the easy stuff), like writing some front end code, but as soon as they encounter anything requiring more than basic understanding of computer science and math and some scripting skills, they'd be stumped most likely. Not only that, but someone with extensive math knowledge will see math and elegant solutions where others would see nothing.

University is a great place for people to learn the fundamentals in a structured way and learn how to learn. While a few very talented and motivated folks can pick it up themselves by reading, the vast majority can't reach that point by themselves (me included).

(Note, I'm only talking about sciences and engineering, those are the only ones I know anything about)

I have hired both types of candidate. In my opinion, a four-year college degree is worth roughly the same amount as two years of real-world experience. There are exceptions on both sides, but on average four years of college seems to be roughly equivalent to two years of work experience.

Someone with college experience will probably know more theory, which is useful. But they rarely realize that large projects are significantly different from their college work, and they don't understand why you have to do what your users want instead of what the theory says is correct. So when I hire someone with a degree and no experience, I know my team will need to teach them those things.

On the other hand, people without college degrees can get into a lot of trouble if they don't learn the theory behind their work (especially algorithmic complexity). So when I hire someone without a degree, I know my team will need to teach them those things.

I would hire the one with the most impressive GitHub account.

"because the demand for cognitive skills associated with higher education, after rising sharply until 2000, has since been in decline."

how about..

because the quality of a degree has been falling for decades and it is now widely known outside of government and very large corporations that the skills people have are valuable but the skills a college claims a given person has are fairly unlikely to track reality or to be real world valuable.

Said the federal land grant college graduate!

I am still waiting for more trade schools / bootcamps and apprenticeships to start opening up in the states.

We should be training people for the job that they will eventually hold instead of teaching theoretical scenarios and looking over case studies.

Its already started to gain a foothold in the tech industry and I believe it will be even more in demand as college degrees become less valuable.

"If anything, GPS technology may have had the opposite effect."

They're clearly drawing the wrong conclusion. GPS makes being a cabbie easier, which makes it less valuable for people to put the time into becoming a skilled professional cabbie, which makes driving a cab a more feasible option for someone who looks at it as a temporary job.

On the contrary, Orszag agrees with you. The exact quote is:

    It’s hard to believe this is because the skill required to drive a taxi
    has risen substantially since 1970. If anything, GPS technology may
    have had the opposite effect. (Acquiring “the knowledge” of London
    streets, as taxi drivers there are required to do, is cognitively
    challenging, but it may no longer be necessary.)

Did the study take into account the rise of private higher education companies that have sprung up in the past twenty years (like the University of Phoenix)? These colleges are publicly traded companies that have campuses all over the country. They have a higher acceptance rate, they focus a great deal of marketing to lower income communities and they notoriously accept people that may not necessarily be ready for college (as long as they can pay the fees). Maybe the story isn't "the labor market is so bad that even college graduates are taking menial jobs" but instead "more blue collar workers are getting degrees (that don't necessarily get them better paying jobs)".

There are a lot of ruderless - granted smart - young people out there who were essentially abandoned to the education system by their parents. If you don't have any plausible goal in mind when you go to university, is it really surprising that you end up nowhere after university? All the education in the world won't help you if, at the end of the day, you just don't really want to do any particular job.

> "If cognitive skills became less valuable in the labor market, wouldn’t one expect wages to fall more for college graduates than for others?"

Apparent stagnation could also occur if a small proportion of graduates are become significantly overvalued for non-cognitive skills while a majority experience wage stagnation or decline.

The Obama economy.

citation needed

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