Eduardo Porter, who writes “The Economic Scene” for the New York Times, says our country’s higher education system is in crisis and that he has a solution.
The crisis he sees stems from data showing that young American adults are less likely than those from other developed countries to reach a higher level of education than their parents. These low graduation rates get even worse if one considers only young American adults from low-income families.
As the title of his article suggests, “A Simple Equation: More Education = More Income,” Porter’s solution is to redistribute funds from “one-percenters” to the rest of the nation’s families. After all, those one-percenters don’t need what they have.
Unfortunately, the statistics that Porter uses to support his claim only reveal how misusing statistics can lead us to false conclusions. Further, his solution would decrease the economic value of obtaining a college degree and thus end up padding college revenues but making life harder for graduates.
Porter’s main argument is that compared to their counterparts in other developed nations, fewer young adults in the United States today achieve an education level that is greater than their parents’ level of education. While this statistical artifact may be true, it does not necessarily imply that our higher education system is at fault. It may be that other developed nations are just now catching up to our educational successes.
In fact, the statistics that Porter provides conspire to refute his own argument.
Porter notes that in the 1950s, American teens were more than twice as likely to be enrolled in secondary school as their European counterparts. He states that during this era, “for those Americans between 55 to 64, 42 percent had a college degree, a rate surpassed only by Canada and Israel in the O.E.C.D.”
If American parents are twice as likely to have earned a college degree as their counterparts in other developed countries, then it stands to reason that any other country with the same graduation rate today as the U.S. will produce twice as many college graduates who have attained a higher degree than their parents. Such a result would imply that these other countries are simply catching up to our relative educational success, rather than supporting the claim that our young adults are being underserved.
Porter’s secondary argument is based on a comparison of U.S. college graduation rates between the 1970s and the 1990s. The percentage of young adults from low-income families who surpass their parents’ level of education is much lower than the percentage of young adults from middle- to upper-income families who achieve that success. He uses this fact to claim that our higher education system has failed to serve these low-income students.
Yet this observation only indicates that low-income students have not been as successful at graduating from college. This result could also have been caused by other factors, like a lack of college-ready preparedness from a poor secondary education. This statistic doesn’t shed light on what is causing these smaller gains in college graduation rates and therefore raises questions about his purported solution.
Porter’s solution is to redistribute America’s wealth. He would raise the federal income taxes on the top 1 percent of earners until their share of national income decreased to what they earned in 1979. As he states it, “If the excess money were distributed equally among the rest of the population, in 2012 every family below that very top tier would have gotten a $7,105 check.”
The idea is that redistributing this windfall to low-income families with school children would increase each child’s future earning potential because low-income young people would graduate from college in larger numbers.
But is this true? Children from low-income families, which tend to be headed by a single parent or guardian drop out of high school more often, or graduate with lower grades, relative to children in the middle- to upper-income levels. This means young adults from low-income families are generally less prepared for success in college, leading to lower college graduation rates. This is not evidence that our higher education system has failed low-income students. Nor does it suggest that an additional $7,105 check per year is going to enable more low-income students to graduate.
And this proposal ignores another important fact. All laborers’ wages are based not just on their relative productivity, but also on the relative demand for the products or services that they help their employers produce and sell.
With about 115 million American households in existence today, Porter’s redistribution proposal would repurpose over $800 billion of personal income in our economy away from purchasing consumer goods and services—and away from charitable donations, for that matter. He assumes that it would be applied toward higher education.
The huge reduction in sales revenues for millions of American businesses would mean that far fewer job openings would be available for our college graduates to fill. The value of the diploma would fall precipitously.
Ultimately, the higher education system may well need some serious repair. However, Porter’s use of data comparing relative increases in intergenerational educational attainment across countries fails to identify a true source of the problem.
Further, socialist solutions like taxing the “rich” even further to raise existing and substantial college tuition subsidies will certainly not solve the problem, if it exists. It would only devalue the much-vaunted income differential enjoyed by those earning a college degree.