In fact, here's the article for anyone interested in it. (Why do these magazine companies put their current issues on the web so quickly? I haven't even received mine yet. Basically, if you have web access, there's no need to subscribe?)
forbes.com
There's a lot to be said for going to college, but
don't swallow the propaganda that the diploma is
a great investment. It isn't.
The tyranny of the diploma
By Brigid McMenamin
AT 16 XAVIER DELACOUR dropped out of
Albany Academy, a private day school. He went
to work hawking Egghead software out of a
store in Albany, N.Y. for $6 an hour. Explains
Delacour: "My head was set more towards
getting my career set up." A quick learner, he
was soon writing software code for a local car
dealer. Delacour was only 17 when he was hired
by a Marlborough, Mass.-based startup, Attune,
LLC, where he's helping design a gadget that
writes original music and plays it on the Internet
in CD quality. Attune plans to license the gadgets
to Web sites, which will sell them at $90 each.
At an age when most kids enter college, with
their earning years still well in the future,
Delacour, a soft-spoken teen, has his own
apartment and should earn $50,000 next year,
plus a 10% share of the company's profits.
Bill Gates did go to college, but for only three
years. He dropped out of Harvard to devote
himself full time to computer work. The time he
saved from college—and additional years spared
from grad school—gave Gates a head start in
building what was to become the world's
greatest fortune. It's not inconceivable that had
he gone for a Ph.D., someone else today would
be the world's richest person.
Dell Computer Corp.'s Michael Dell did not
graduate from college, and by all accounts he
spent most of his time at the University of Texas
at Austin building and peddling PCs.
Kenneth Johnson, 28, realizes that if he had not
dropped out of Wichita State University he might
not have founded Dial-A-Waiter, his restaurant
delivery service. Some warned he would end
badly without a sheepskin. "Now I can kind of
laugh and say 'I told you so,'" he says.
Looking for something to do, Johnson noticed
that few local restaurants would deliver to people
after a hard day's work. He persuaded six
Wichita restaurants to let him handle take-out
orders, using for capital $20,000 of credit card
debt. Today Johnson has ten drivers delivering
everything from tacos to sushi for 40 Wichita
restaurants. He charges customers the menu
price plus $6. That surcharge plus a 30% to
35% discount from the restaurant covers his
costs and leaves him with a nice profit, which he
supplements by charging $7,500 a pop to show
folks in other cities how to start Dial-A-Waiter
outfits. "I sort of created my own career," he
crows.
Not all successful dropouts take the
entrepreneurial route. Two years ago Yale-bred
Federal Express founder Fred Smith tapped
William G. Fraine, then 38, as senior vice
president for worldwide sales. Fraine joined the
firm as a clerk in 1979 when he was 21. His only
degree is a high school diploma from Don Bosco
Prep in Boston. Today Fraine supervises 4,000
of the $13.3 billion company's employees in 211
countries, earns an estimated $300,000 a year
and has vested stock options worth several
million dollars.
Stories like these are causing some kids and their
parents to have second thoughts about the
necessity of that sheepskin. Sean Levatino was
an Albany Academy classmate of Xavier
Delacour. Sean's folks encouraged Sean, 19, to
attend Worcester (Mass.) Polytechnic Institute.
But now they wonder: "Are we doing the right
thing to push him to get a college degree?"
His mother counts the cost: The degree could run
Dr. and Mrs. Levatino $120,000. If they were
instead to invest that money in municipal bonds
paying 5%, Sean would have a nest egg of
$500,000 by his 50th birthday. That's far more
than most college grads can hope to accumulate
in that time. And the prospective income from
that $500,000 is a lot more than the theoretical
premium that college grads own over nongrads.
Nevertheless, the Levatinos and their son are
doing the conventional thing. So are most of their
contemporaries—including John Magennis, age
17, a high school senior in Dedham, Mass. He
makes $65,000 a year from his own internet
marketing company, yet still plans to go to
Babson College next fall. "I need something to
fall back on,"he says.
Since World War II the U.S. college population
has risen sevenfold, to 15 million, converting
higher education—a privilege only 15% of the
U.S. population enjoyed before WWII—into a
$200 billion industry serving the masses. Credit
the higher-education industry with brilliant
marketing. University economists wield numbers
showing that each year of additional schooling
ups earnings. They argue that a college degree is
a hell of a fine investment. Few people dare
challenge these numbers.
But anecdotal evidence is growing that there is a
lot wrong with the numbers. Consider this:
Fifty-eight members of The Forbes 400 either
avoided college or ditched it partway through.
These 58—almost 15% of the total—have an
average net worth of $4.8 billion. This is 167%
greater than the average net worth of the 400,
which is $1.8 billion. It is more than twice the
average net worth of those 400 members who
attended Ivy League colleges.
Could it be that the nongrads got such a head
start in their careers that the others never caught
up? Or are those numbers just a fluke? Either
way, there is growing evidence in the country
that college diplomas aren't what they're cracked
up to be when it comes to bringing in the bucks.
Educrats insist those men are exceptional. They
cite the Census Bureau: College grads earn on
average $40,478 a year, 77% more than high
school grads ($22,895) and far more than high
school dropouts ($16,124).
But economist Robert Reischauer of the
Brookings Institution in Washington, D.C. puts a
slightly different spin on these figures. He argues
that they are skewed by the fact that smarter
kids gravitate more easily to college than dumber
kids and that this makes the profitability of higher
education into a self-fulfilling prophecy. This
so-called ability bias may account for as much as
30% of the college premium, admits Educational
Testing Service economist Anthony P.
Carnevale.
In a way, hiring practices in the government and
in private industry almost force young people to
go to college. Time was when a high school
diploma was pretty good proof that the holder
had received a basic education. No more. Too
many high schools certify kids who can barely
read or reckon, with the result that employers
today want to see a college diploma as evidence
of basic literacy.
Could it be that non-grads got
such a head start that the others
never caught up?
Consciously or not, legislation pushes young
people into college. In Abe Lincoln's time
lawyers didn't go to law school; they apprenticed
to practicing lawyers. In recent decades
four-year college degrees have been made
compulsory for architects, pharmacists, physical
therapists and elementary school teachers.
In his 1962 classic, Capitalism and Freedom,
Milton Friedman denounced this educational
bloat as a drain on the economy. Other scholars
have picked up on the message. "[College]
became the licensing agency for Americans who
wanted to enter the professions," writes Marvin
Lazerson in Annals of the American Academy
of Political & Social Sciences. In the U.S.,
23.6% of adults hold college degrees, against
only 11.6% in Germany, 10.7% in the U.K. and
10.2% in France.
No wonder those extra years of education here
seem to pay off according to the universally
accepted numbers: The attendance is mandatory
if you hope to practice many of the most
lucrative professions. Would lawyers earn less if
they could get their degrees in four years instead
of seven? The question answers itself.
Poor majors
It does matter what you study. The monthly
average salary of some college majors is
often less than salaries of jobs requiring only
a high school degree.
College degree
High school
degree
biology
$1,990
real
estate
broker
$4,259
social
science
1,922
insurance
salesman
3,240
liberal arts
1,733
brick
mason
2,713
education
1,669
legal
secretary
2,258
home
economics
1,330
machinist
2,115
Sources: U.S. Census Bureau, 1993; Department of
Labor, Bureau of Labor Statistics, 1996.
Today perhaps 30% of the work force is in jobs
that by law or custom require at least a four-year
college diploma. State and federal agencies also
require degrees for better-paying jobs. No one
can hope to get such a job without passing
through the college gate and leaving a lot of
money there.
By the law of unintended consequences the U.S.
Supreme Court has contributed to this
credentialism that forces young people to acquire
a diploma by whatever means and of whatever
quality. In Griggs v. Duke Power Co., in 1971,
the court effectively outlawed the use of IQ tests
in hiring. This left businesses to rely on
possession of a college diploma as the basic
proof that job applicants possessed at least
rudimentary literacy and intelligence.
This might well have disqualified Bill Gates from
working at most major U.S. companies after he
dropped out of Harvard. It probably would have
made getting a good job tough for Delacour. The
institutional barriers are high for those without the
sacred sheepskin."I don't think they [noncollege
grads] can get in the door," admits Thomas
Gallagher, 54, head of proprietary trading at
Wall Street's CIBC Oppenheimer. He had a
learning disability and quit college after six
months. How did he get his foot in the door? He
started as a runner for an odd-lot house and
worked his way up. Today, for its entry-level
training programs, Oppenheimer will consider
only those job applicants who have a college
diploma.
"In place of the bigotry of race has arisen a new
bigotry of schooling," writes George Gilder in
Wealth and Poverty, calling this system "a
schoolmarm meritocracy." A more cynical
interpretation is that it's hard to get a good job
unless you buy an expensive admission ticket
from the higher education monopoly.
The five best-paying majors
You may want to major in English, but
engineers get the bucks. Here are average
monthly earnings of five top-paying majors
compared with other popular undergraduate
majors:
To earn . . .
. . . or to learn
engineering
$3,189
police
science
$2,331
agriculture/
forestry
3,119
nursing/
pharmacy
2,080
economics
2,923
English/
journalism
2,032
math/
statistics
2,716
biology
1,990
business/
management
2,626
psychology
1,974
Source: U.S. Census Bureau, 1993.
However, in so greatly expanding their market,
the panjandrums of higher education may have
commoditized their product. More than 50% of
Americans 25 and over who entered the work
force in the past six years had college degrees.
No surprise that the wage premium for graduates
over nongrads has slipped. In 1992 it was 60%
for men under 35. By 1996 the premium was
down to 54%.
Yet many college grads find themselves saddled
with debts of $20,000, and even more if
graduate school is involved. For graduates who
don't earn top salaries, those loans are a heavy
burden. Even by the arithmetic that the college
establishment likes to use, a college education is
no longer a great investment for many people.
A hefty 21% of all degree-holders who work
earn less than the average for high school grads.
That's especially true among service
workers—waiters, ticket takers and daycare
workers—which is what many college grads
finally become. "It is the earnings of managers,
sales representatives, lawyers and doctors that
have caused college-educated earnings to rise,"
says Educational Testing Service's Carnevale.
He says that if these top earners were taken out
of the equation, college grads would be little
better off economically than high school grads.
"The B-minus student may be better off not going
to college," admits University of Tulsa history
professor, Paul A. Rahe. What should they do?
The Army, says Rahe, who ticks off the pluses:
Getting paid rather than paying for something
you're not using, learning a marketable skill,
disclipline, and an opportunity to mature.
"Perhaps even a challenge to mature," he says.
Christopher Morrison didn't join the Army, Navy
or Marines, but he did skip college. At 30, he is
a co-owner of a Scottsdale, Ariz. software
company called PLP Digital Systems.
At age 17 he left high school because he was too
busy designing software for clients, like the $18
million (revenues) Barrett-Jackson classic car
auction. Morrison also invented gadgets such as
a battery-powered gizmo to track lawyers'
billable hours.
At 19, he convinced client Michael Addison, a
Harvard M.B.A., to back him with $15,000. "I
don't think a college degree is either necessary or
sufficient for success," says Addison.
Ten years later PLP is housed in its own
11,000-square-foot building, does $6 million in
revenues, has 36 employees and is debt-free. "I
don't think I need to go back to school to
achieve success," says Morrison.
Attention parents!
You don't need a sheepskin for 70% of all
jobs in the U.S. Here are ten of the
fastest-growing job categories for which you
don't need a college degree:
Occupation
Median
hourly
wage
Projected
increase
in number of
jobs
1996-2006
Sales & related
$13.29
811,216
Machinist
$12.56
384,500
Clerical
supervisor
$13.56
261,000
Maintenance
repair
$10.42
245,800
Food service &
lodging mgr
$11.23
167,700
Licensed
practical nurse
$12.00
148,400
Corrections
officer
$12.73
103,300
Paralegal
$14.36
76,426
Police officer
$16.65
73,341
Vocational ed
teacher
$15.26
71,586
Source: Department of Labor, Bureau of Labor Statistics:
National Occupational Employment, Earnings, Training
Database, 1996 -2006.
Okay, maybe you still want to see your kids or
grandkids go to college. Maybe she has a
burning desire to study something. Or maybe he
wants to prepare for a career in a specialized
field and needs the generalized knowledge.
But great investment? It's quite possible that
Christopher Larson's 1981 Princeton degree
may have cost him at least a billion dollars.
Larson was one of Microsoft's earliest
employees and worked there during his summers
off from high school. According to Gates, the
biography by Stephen Manes and Paul
Andrews, Gates begged Larson to drop out of
Princeton and join the company full time. Larson
denies anyone ever pressed him, though the
option of dropping out was always there. Larson
finished his degree and then joined. He got some
founders' stock, but not as much as he might
have.
If you know an ambitious kid who isn't sure
about college, give her a copy of America's Top
Jobs For People Without College, by J.
Michael Farr (JIST Works). It's a useful antidote
to the brainwashing we all get these days from
the Education Industry.
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