Before he departed for his freshman year in college, Middle and I were talking about student debt and the high cost of a college degree. He looked at me and asked “How in the hell did this happen?” This article is the third in a series that tries to make sense of what in the hell
The cost of a degree didn’t just skyrocket willy-nilly over the course of decades, much as the shuttle Challenger didn’t just explode and the Titanic didn’t just sink. In each instance, there were a variety of reasons that came together to set the stage for the events in question by guaranteeing that higher education now had a far more massive demand for its services than ever existed previously in American history. In terms of the demand for higher education, the first factor was globalization and the knowledge-based economy. The theory was that the lower-end and unpleasant manufacturing would be farmed out overseas and the Americans would, in their wisdom and foresight (and for those with Asperger’s, this is sarcasm), keep the higher-end technical manufacturing, administrative and service functions here. The second factor – and the one that we’ll explore here – is also business-related: starting in the 1970s and afterwards, the business community shifted the educational baseline for employment from the high school diploma to the college degree.
A reasonable part of the shift during the last quarter of the twentieth century was objective. The baseline for academic performance – rightly or wrongly – is the SAT and since the the Golden Era of the 1960s, the average SAT scores on both the verbal and math components had dropped consistently. There was also continuing criticism of the public school system and its apparent inability to prepare young people to compete in the workplace. No, folks, what we discuss today has been around in one form or another for decades. American business through the 1970s and 1980s was in the process of having its lunch eaten by the Japanese and Germans and entire industries were simply being destroyed. Remember the textile industry? Foreign competition was hungrier and the sense was that the former Axis powers had lost the Second World War but were well into the process of winning the peace. Given these factors, the push was on in the business world to recruit more and more college graduates to work instead of those with potentially suspect high school diplomas. Hey, our high schoolers might be idiots but the good ones go through the still-respected college system and are ready to roll in the workforce was the attitude. If you are old enough to recall the stories about Ford Pintos catching fire and Chrysler employees sending cars out the factory doors with empty bottles rattling around inside the car doors, it actually made sense. This gave the kids another four years to mature and gain a better education in preparation for the world.
But increasing global competitiveness wasn’t the only reason that businesses shifted their baselines upwards. The other reason was simply a question of cosmetics and I was privileged to be intimately acquainted with two separate instances of cosmetic baseline changes. The first instance was cosmetic in terms of appearance to other businesses. My first real job was when an employer hired me as part of its first group of college-educated “professional” hires for a particular operational area. It was the job that actually paid me enough money to allow myself to move out of the family household, where I’d lived for a year after my own college graduation and it pertained to ceded reinsurance. You can certainly refer back to the link, but the best real-world example is that of a bookie laying off bets with other bookies so that he isn’t wiped out should that million-to-one shot actually pay off. Many insurance policies were written with reinsurance provisions that allowed a company with a large loss to be reimbursed by other companies and it was my job, along with the others, to review all of these losses and first ascertain if a reinsurance provision existed, then determine the amount to be billed and finally to get the money back from them. It is an arcane, technical arena of insurance and the hubs for such work are all in major cities such as New York, Los Angeles, Munich, Atlanta and London. My hire came about because the operations director for my new employer had looked around and noticed that everyone with whom his department interacted to retrieve the monies had, at the minimum, a bachelor’s degree and in his mind, they’d be more willing to pay if they had faith in the competence of the people doing the billing. It made sense cosmetically. But the reality was that with adequate training, the job didn’t actually require a college degree as much as the capacity to focus and a simple willingness to learn and this was something that the majority of the existing non-college staff had in abundance. We new hires did have to undergo two full weeks of classroom training before the director even allowed us onto the floor to shadow our non-degreed trainers and to say that it was uncomfortable was an understatement. The demand for a degree was further fueled when these same staffers were told that if they wanted to go anywhere else within the company at or above their pay-grade, they would now require a college degree.
The second instance of a cosmetic baseline change was to demonstrate perceived competence to prospective customers, even if the job again didn’t require a college degree. Hey, we’re better! Our people have college degrees! I left the reinsurance position to move to a smaller city where my better half was in school. There was no hope of another reinsurance job but I managed to swing another hire as a commercial claims adjuster for a regional insurance carrier. It is a mystery greater than the disappearance of Amelia Earhart that the claims manager and supervisor actually hired me since I had no actual experience doing this and simply had to learn on the spot, absorbing information and settling claims across a spectrum of insurance lines – workers’ compensation, commercial and auto liability. But it was also another uncomfortable situation since that company had instituted a college-degree requirement for all claims adjusters. That meant that any future hires into adjusting positions had to be college graduates and that any future promotion for an adjuster was predicated upon the completion of a degree; another increase in the aggregate demand for a degree. Because I didn’t receive the home office training received by new hires with a degree, I was literally dependent upon the goodwill of those around me, most especially those non-degreed adjusters now locked into a position. When one of these adjusters – Bette – asked me to help clarify her purported confusion about a liability case, I agreed to do so and then smuggled the file out of the office to study it that evening to find the appropriate response. When I gave her my response the following morning, I passed her test.
Bette was the perfect microcosm for the debate on whether a degree was truly necessary. A claims adjuster is the person who proverbially walks behind cleaning up after the elephant parade; the adjuster is dealing with those who have had a loss and it’s not uncommon to take undeserved heat arising from misplaced anger. The questions that arise also beg answers that don’t come from calculators: How do you compensate someone for damage to an arm or leg? Does a person who is considered ugly deserve less for a scar than someone who isn’t considered ugly? How much does someone deserve for pain and suffering? It was Bette’s handling of a particular case that taught me a life lesson in assessing value, detail and negotiation. Our insured store’s security had publicly and wrongly detained an African-American educator in a neighborhood store for alleged shoplifting, immediately afterwards releasing him when the manager realized his innocence. A claim was filed for wrongful detention and the insured wanted to see it negotiated promptly so as to avoid a publicly humiliating trial. The case was assigned to Bette and she visited the educator and his wife, departing their home with the skeleton of what became a mutually satisfactory settlement after only the first visit. What she noticed on the visit was a variety of travel magazines on the coffee and end tables and she used that as a departure point for cordial conversation. After they began to discuss their claim, it became the segue to a settlement when she tied a potential amount to the cost of a vacation in their dream locale. The upshot was that the couple happily had a two week vacation for considerably less than a possible jury verdict. This case demonstrated more than anything that the college degree was utterly irrelevant to performance of the job at hand. There was nothing about 120 credits of academia that could have successfully concluded this case, or almost any other for that matter. What was required for a successful career was simply native intelligence, good people skills and an acute ability to observe.
There is a time and a place for higher education. I want my bridge-builder and aircraft designer to have a good basis in engineering, which can only come from concentrated study. I want my Family Practitioner and medical researcher to likewise have skills that only arise from concentrated study. But the simple reality is that we’ve allowed ourselves to be told that the only route to financial success is via a college degree and business hiring has now cast that into cement and again, the only winner is the institution of higher education.