Higher ed Econ 101: A bargain that makes you money
Times-Standard 2/10/07
The Chronicle put results (”Education, Race Drive Incomes ...”) on the front page of the Business section on April 6; the story is in their archives and the report is at www.sfeconomicstrategy.org. Though race factors cry out for attention, some remedies for those are also tied to education. The main lesson: Those who can probably should get bachelor's degrees. Further, the state prospers by supporting them.
Employed high school dropouts polled average about $19,000 per year, high school graduates $30,000. Students considering dropping out of high school might pause there -- finishing could be worth over 10 grand a year for the rest of your working life.
There's more. Workers who have some college, a community college A.A. degree or some four-year college credits, average another 10 grand more, not quite $40,000 per year. Finally, workers who had finished a bachelor's degree average close to $72,000 per year, over $30,000 more than those who did not finish and over $40,000 more than those who did not start.
Standard disclaimers apply -- we don't know the Humboldt County figures; you still need a menage a trois to buy a hovel in San Francisco; a mean income number does not tell you the spread or how various majors fared. And there are exceptions -- there are educated people living under bridges and Bill Gates never finished his degree.
Still, it may be that a bachelor's, generally speaking and with cautionary handwaving, is worth 30 grand a year more than some college, 40 grand more than not starting. Some readers may think these numbers small, but for many young people and their families, the numbers are big enough.
Take all the quibbles and doubts into account, and it's still pretty clear that education pays enough to argue for finishing college. Hold constant fixed costs of living in California, a four-year (or more realistically five or six) investment of $4,000 a year in a CSU or UC bachelor's degree may pay you $40,000 a year. With deferred income, the numbers still look good for higher ed.
Education's pay those who get them. But education pays the state, too. California gets a percentage of that added income from sales and income taxes. It is not as quick a payoff, because California invests more than you in your bachelor's -- two-thirds of the cost -- and only gets about 10 percent of the added income.
These numbers are also more shaky, more subject to contingencies, neglect financial aid. But the case is still a good one, even leaving out multiplier effects and non-dollar benefits. Financing public universities is one of the best bargains available to the state. And the state here is the taxpayers, including those who are retired. If you want the state to keep out of your wallet, you have an interest in increasing the number of college graduates carrying their own wallets.
We can rough out the payback to the state. Suppose the state puts in $40,000 -- eight grand a year for five years -- and gets 10 percent a year of the added income. If the added income averages $40,000 per year, that yields $4,000 per year (often more, sometimes less, insert more handwaving) in increased sales taxes and corporate and individual income taxes.
That's a 10-year payback, quicker when the Feds chip in financial aid. Then it's gravy to the state. Add non-dollar factors (all handwaving here -- less violent crime, less dopey movies, more thoughtful elections, more newspaper circulation) and we have another case: that better-educated citizenry help make the state a better place to live.
Even without that case, the state is still more wealthy and less likely to come desperately seeking your county's pocket change or yours.
These are all arguments for supporting the CSU, the UC, and community colleges, and for going to college. I'm a CSU professor, so of course I would make this case. Readers should read skeptically. If anyone knows of a similar study here, let us know.
I have to mention another issue. I'm convinced the most important relevant arguments are not about money. I've written elsewhere about what education is for. Undeniably it's sometimes for money, and undeniably money sometimes means liberation or safety, though sometimes it means addictive values and consumption of the planet. Money is part of its justification, but more than money is at stake in education.
J. W. Powell is a philosophy professor at Humboldt State University.