Sunday, January 15, 2006

Double Standard for Labor Economists

Labor economists must be carefully watched for what they say compared to what they do. My experience is that they do not all believe that what is good for the goose is good for the gander. Two cases to make this point:

One labor economist at the Bureau of Labor Statistics (BLS) for decades has pointed out that only 20 percent of all jobs in the economy require a college degree (1970s) or more recently only 30 percent do. This has caused no end of trouble in state budgeting for higher education where typically 60 percent or more of high school graduates go on to college. States have used this BLS figure as justification for reducing state investment in higher education. However this economist sent both of his children (100 percent) to college.

Another labor economist at the Economic Policy Institute recently told me that there is recent labor market weakness in the absorption of college graduates into the labor force. That means that government investment in higher education can be reduced. He said that as an economist he would offer one set of advice to the President about appropriate government investment levels in college trained workers, but that as a father he practiced a different (and far higher) standard for his own children. 100 percent of his children attended college.

Besides this hypocrisy I have long been troubled by the disparity between economists' fascination with economic growth, efficient allocation of resources and other important economic principles and their indifference to the allocation of social resources and economic growth benefits. Income and wealth concentration are trivial within the profession. And when it comes to who gets a higher education one hears not a peep that the share of bachelor's degrees awarded to students born into the top quartile of family income has grown from 44 percent in 1979 to 58 percent by 2004. At the same time the share of bachelor's degrees awarded to people in the bottom half of the family income distribution has gone from 28 percent in 1979 to 21 percent by 2004.

The double standard of these two labor economists is troubling because they claim a greater share of higher educational opportunity for their own children than they advise for others, and it is always those with lowest incomes and weakest political voices that bear the consequences of their influential policy recommendations. The indifference of these kinds of economic policy influences to growing inequality in the U.S. is ultimately socially destructive, democratically divisive and economically weakening. I remain deeply troubled by the myopic, tunnel vision of many economists in their public policy work. Their work deserves only a narrow respect and voice.


At 6:56 PM, Anonymous Tracy W said...

Not necessarily. People are different in lots of different ways. In particular, the marginal advantage of going to university or not varies from person to person. If it is good for society to have less people going to uni, then the ones with the best relative alternatives should not go.

E.g. imagine the only options are go to university and become an academic or become a builder. And there are two potential students, who are pretty identical except that one of whom is perfectly physically healthy and the other who has from MS. In that case, if society needs less academics and more builders, it makes sense for the healthy student to become the builder.

Back in the real world, it is possible that both mentioned labour economists have children who they think would have a higher comparative advantage in going to uni.

And, of course, we are talking about young adults here. The children themselves have some choice in the matter, it was not a pure choice by the labour economists.


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