Sunday, December 24, 2006

The Economics of Education

The myth of investing in education is crumbling and fast. This New York Times Magazine article documents the phenomenon.

From "The Rise of the Office-Park Populist" by JACOB S. HACKE.
Remarkably, the ranks of the long-term unemployed — people who spend more than six months looking for work — are disproportionately professional and well educated. And it is better-paid workers who have seen the promise of guaranteed pensions replaced with the risks and uncertainties of private investment accounts like 401(k)s — the less skilled rarely receive pensions at all.

Indeed, in some ways, workers who have invested the most in skills are most at risk today. For one, such investments are a lot more costly than they used to be. About a third of recent college graduates enter the job market with student-loan debts that exceed what experts consider reasonable — a major increase from the past. What’s more, skills can also put you directly at risk. If you have labored for years to learn cost accounting or blueprint preparation, you can gain a big leg up in the competition for jobs that require those specialized skills. But while these talents can help you prosper, they also make you dependent on particular jobs or lines of work. If these positions dry up, so does the market for your skills — and the rewards those skills once delivered. (Unskilled workers, by contrast, have fewer opportunities to increase their wages but generally find it easier to move from one kind of job to another.)

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