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Comment by dahart | Hacker News Reader

> Four years after graduating, according to recent data from the Higher Education Authority, a third of students earn less than $40,000 — lower than the average salary of $44,356 that workers with only a high-school diploma earn.

Red flag here, this seems like a super misleading and bogus comparison. There is no good reason to compare the bottom third of graduates to the whole pool of non-graduates other than to try to justify a misleading comparison about graduates somehow earning less when they’re not.

In fact, diploma holders as a whole on average earn roughly 2x what non-graduates earn, which is a lot bigger than I thought before I looked it up. The Fed published the stats in an article a few years ago that was trying to suggest college was becoming not worth it, but once I looked at the raw data, it convinced me the other way. (This article has its own misleading comparisons by using ratios and ignoring absolutes, for example suggesting someone who saves 5x their salary is less well off than someone else who saves 6x their salary even when the 5x person has twice the income.) https://files.stlouisfed.org/files/htdocs/publications/revie...

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Your statistic is even more misleading because in the non-graduates category you are lumping in people that couldn't make it to college even if they wanted.

The relevant comparison is graduates versus people that voluntarily skipped college even though they could get a degree if they chose so.

It’s not my statistic. It’s the Fed’s. They have a longer version of this report where they account for and try to calculate the causal value of college, which more or less does exactly what you’re suggesting. It’s in section III here: https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed...

>Your statistic is even more misleading because in the non-graduates category you are lumping in people that couldn't make it to college even if they wanted.

As someone who owns a business doing something I'm way overqualified for, this is something that's way too often overlooked.

A slightly-above-average Electrical Engineer (earning, say $150k pa) might be as competent as someone in the top 5-10% of Electricians (who can own their own businesses and earn $250k+).

Yet when we're looking for a career for our kids, we tend to compare averages rather than their personal outcomes.

>we tend to compare averages rather than their personal outcomes.

because it can be hard to be honest about our loved ones. Everyone wants to say Bobby is a genius and can grow up to be president. But having a 2.3 GPA and no drive in life means getting through the first year of community college will be a challenge, at least a challenge for Bobby. There are core questions to answer before we keep pushing Bobbby down such a path but his support network may never ask those questions to begin with.

Meanwhile, Andy with a 4.0 GPA, nationally acclaimed talent, and mutliple top college acceptances has the world as his oyster. He could probably go to art school and have the drive to end up in a highly successful career, even if that type of schooling tends to end up as one of the worst ROI. OFC, Andy's support network may be pushing him to be a doctor or Lawyer so there's still issues there.

I've known electricians working in data centers that made more than I did -- as the data center manager. I was also in charge of service delivery and some ISP/networking functions.

But.

Dude was 1) union, 2) worked 6 days a week to make that cash, and 3) they were long, hard days. This was also in the big data center areas outside of DC (NoVA) and probably wouldn't be a thing in rural Indiana, or Outer Nowhere, NSW.

FWIW I also know a plumber who owns their own business and had several underlings and they were making well north of ~300k takehome doing mostly construction/new build plumbing work. But again, long, hard days.

Earning is one thing, wealth is another.

""" When the researchers looked at the wealth premium, and a different picture emerged. Older white college graduates, those born before 1980, were, as you might expect, a lot wealthier than their white peers who had only a high school degree. On average, they had accumulated two or three times as much wealth as high school grads of the same race and generation. But younger white college graduates — those born in the 1980s — had only a bit more wealth than white high school graduates born in the same decade, and that small advantage was projected to remain small throughout their lives.

The data for Black families showed the same pattern, but with an even more pronounced downturn. As with the white graduates, older Black college grads were enjoying sizable wealth advantages over their less-educated peers, with generally two or three times the assets of comparable Black high school grads. But Black college graduates born after 1980 were experiencing almost no wealth premium at all. In fact, the researchers found that the wealth premium for Black grads disappeared even earlier than it did for the white graduates. Black college graduates born in the 1970s weren’t receiving any substantial wealth benefit, either, only those born in the 1960s and earlier. Latino families followed a similar pattern. If they were headed by someone born after 1980, they had accumulated no significant additional resources beyond those of a comparable family headed by a high school graduate.

"""

From https://www.nytimes.com/2023/09/05/magazine/college-worth-pr... - source paper is at https://files.stlouisfed.org/files/htdocs/publications/revie...

It make sense, I suppose, that in an efficient market the cost of college would rise to capture the return.

Yeah this effect of wealth premium going down could be due to the rapid rise of college costs. It has gone up faster than inflation for a long time.

The wealth premium is the part I was referring to about this being somewhat misleading, IMO. They calculate wealth premium in terms of a ratio of savings at retirement to yearly salary. They show plots of the wealth premium trending down and saying that savings with a degree are soon to be not better of than savings without. However, this hides the fact that the degree holders have 2x the savings in absolute dollars compared to non-degree holders when the wealth premium is “zero” (because the degree holders have 2x the income).

It's even worse than that - $44,356 is the median salary for high school graduates aged 25 or over with a full-time job (it's extrapolated from the median weekly wage of $853) in 2022:

https://www.bls.gov/careeroutlook/2023/data-on-display/educa...

It's unclear exactly what qualifications apply to "a third of students earn less than $40,000" - I was not able locate an actual source for this claim - but the way it's written, it appears to include everyone, possibly even those that are not in the workforce at all. Also, given a huge increase in nominal income over the past couple years, it's difficult to evaluate this claim without a clear sense of what time frame this covers.

It's also unreasonable to compare college graduates 4 years after graduation to a cohort that includes mid-career professionals decades into their career. Consider for instance, how much doctors tend to make 4 years after graduating from college and how unrepresentative that would be of their full career earning potential.

It’s pretty bad, right? Is it possible for this to be an accident on the part of the author? I don’t see how. It seems like a clear case of bending over backwards to distort the data to tell a summary story that is opposite from the truth. This intentionally misleading comparison undermines the entire article, to me. I’m curious about why they’re trying so hard to spin the yarn that college isn’t worth it, when the data they had to look through in order to write this story demonstrates a somewhat different narrative.

Does that study cover what their parents were worth before they decided to go into higher education or not? Some families can't afford for their kids to leave home —they might be carers, they might have jobs— even before you consider $100k of debt.

If it's really just richer people in, richer people out, it's hardly surprising the median salaries are split.

I'm not questioning whether or not higher education has value, not even if it presents a good ROI, but I am suspicious of numbers that present nothing but race as the "background", when that is such an important part of who goes into higher ed.

Yes, the background question is addressed. https://news.ycombinator.com/item?id=37464064

Not really, that bottom third is the third who shouldn't go to college, and there are ways of knowing whether your child is in that bottom third before they spend $200,000 doing it.

the question is what will that bottom third earn without the college?

And I suppose some of that bottom third are not people who shouldn't go to college but perhaps people who pursued their dream in college only to graduate and found out that dream earns less than the average high school grad.

But sure, some percentage of people in that bottom third are the ones that should instead do some vocational education and pursue a career that does not require college.

Yes really. The high school group also has a bottom third. It’s misleading to cherry pick one of them.

No, the bottom third of people who don't go to college don't ever consider going to college.

So, why does that make it a valid comparison? What data backs up this claim about not considering college (as opposed to chose not to)? The bottom third of people who do go to college don’t fare as well as the rest, and probably considered dropping out.

It’s simply not valid to compare the bottom third of college grads to the top, middle, and bottom thirds of high school grads. They only did that so they could say the college group’s income was lower, which is only true if you leave out most college grads. If you compared the bottom third of high school graduates to all degree holders, the ratio you’d get would be stark, with the college grads earning multiples more than the subset high school group.

It is valid to do what @brobdingnagians suggested, and look at the medians of both groups.

The only people making a real decision are the people on the border. The valedictorian is always going to college and the lunkhead is not. The only useful analysis is the one in the middle.

Real lunkheads don’t graduate high school, they were already excluded. The argument you’re offering is at some level explaining why college grads earn more, and you’re suggesting it’s because they were better prepared for college, more likely to choose it, able to afford it, etc. That is true.

But your reasoning does not justify the comparison that was made in the article, nor does it explain why it’s valid. The statistic is comparing incomes for people who graduated college to people who graduated high school and not college. It doesn’t matter whether they made a “real” decision, whatever that means, or not. It doesn’t matter if some people didn’t consider college, or if some believed they couldn’t afford it, or if some chose not to go. The question the article posed is what is the financial outcome of going to college vs high school but not college, and for that it’s not okay to compare the bottom third of incomes of the college group to everyone else.

You’re rationalizing one of many ways to partition college grads. You’re failing to explain why it’s valid to choose a partition for one group and not the other. The article did not offer a reason to use the lower third of college grads.

If the useful analysis is in the middle, then why not compare the middle third of high school graduates to the middle third of college graduates? That would be valid, and it would show, accurately, that college graduates on average earn more. Comparing the bottom third of college graduates to all high school graduates is obviously choosing to lower the average income of the chosen college group. There is no evidence in the article that it was done to make the comparison more fair, it doesn’t appear to agree with your comments or share your reasons.

In case you missed it, I linked to a different version of the Fed’s report that spends a lot of time trying to tease apart some of the things you’re bringing up, but in a scientific and statistically valid way. They try to answer the tricky question of how much of the income premium of a college degree comes from the person, and how much is actually due to college. They are accounting for ability level, family income, family history of college attendance, race, and other factors that capture people’s ability to choose college, and separate their intrinsic skills from their education. https://news.ycombinator.com/item?id=37464064

The middle third of high school grads are not a similar group of people to the middle third of college grads. It's the top third of HS grads and the bottom third of college grads that are comparable people (top in the sense of academic potential, not income potential).

Why do you believe that? And more importantly, where is the data to back it up? It’s more likely that the top third of high school grads are more capable than the bottom third of college grads. Regardless, the report I just linked to accounts for this.

A better comparison would be the median of both (not average); especially in the context of a young person deciding what their odds of improving their circumstances are by going to college. A quick search looks like median for bachelor's degree is significantly higher. But with declining real wages, there could be a perception that going to 4 years of debt could be a bad idea in the long run.

That would seem to indicate that the raw statistics aren't the reason Gen Z isn't going to college, but is either perception of earnings vs debt / time / effort, segmentation by the colleges the rich go to vs the middle class, or the reasoning is something completely unrelated to finances such as social perception of it.

Definite red flag any time there is an attempt to compare completely different people. Of course the down syndrome kids are going to struggle more in school and, for the same reason, also struggle more in the workplace. There is nothing to suggest that graduating from college will cure their down syndrome, however.

Since college attainment has risen over time, a better look is to see how incomes, adjusted for inflation, have increased over time. The spectrum of people observed over generations, while not totally perfect either, is more comparable. We have always had superstars and down syndrome kids.

If college graduates are making more money, more college graduates means we should see a rise in average incomes. It would appear that a 378% increase in educational attainment[1] since the 1960s brought a 17% increase in average incomes[2]. Maybe there is something to it.

But... We can also see that in the 90s, incomes actually went down as compared to the 1960s, despite still having a sizeably larger group of college graduates. This suggests that, on average, incomes are as good as stagnant and that college graduates are not earning more than they would have had they not gone to college.

[1] https://www.statista.com/statistics/184260/educational-attai...

[2] https://www.statista.com/chart/17679/real-wages-in-the-unite...

> it would appear that a 378% increase in educational attainment[1] since the 1960s brought a 17% increase in average incomes[2]. Maybe there is something to it.

Your 2nd source is not really average incomes, because it intentionally does not include many of the educated - this is what “production and non-supervisory” employees means.

Yeah, I don't love it, but it's what I found. Strangely, it is not plastered over every "Is college worth it?" article. You'd think it would be right up front and center.

Median income is much more readily available, but not so useful here as the median person still does not have a college degree. That said, it could possibly stand in to help control for income gains seen unrelated to college.

>There is no good reason to compare the bottom third of graduates to the whole pool of non-graduates other than to try to justify a misleading comparison about graduates somehow earning less when they’re not.

if 33% of a "more educated population" is ending up worse than the less educated average, I'd say it's something to note. But I think the conclusion came out wrong.

on a micro level, it shouldn't affect if you go to college. But it should affect why and how you go to college. I didn't take this as "college isn't worth it full stop", I took it as "you can't just use college to 'find yourself' anymore". If you don't want to end up in that bottom third who probably switched majors, took breaks, or dropped out, you need a plan and to stick with it. You need to pick a diploma that has a good ROI instead of winging it with a more Artistic degree.

Or you know, you just need rich parents to supplement "the college experience". Let's never forget the elite aare insulated from the problems of the future working class.

> I took it as “you can’t just use college to ‘find yourself’ anymore

This FUD is exactly what I’m worried about. You took away a summary point that things are changing and somehow bad for degree earners, when in fact the bottom third of college grads have always been worse off, they’re the bottom third. College was never a guarantee of financial success. Of course some people can go into tech with only a high school diploma and earn more than someone with a degree who does social work or poetry or anthropology.

What does it say when you look at the stat that degrees earn 2x more than non-degrees, as a summary? To me it says that the dream of finding yourself in college is alive and well, that it’s not risky to go, if you have the means and the choice. To me it says the risk of not going is much higher than the risk of going. I agree with your point about choosing your major and sticking with your plan, if income is your goal, which is what most people try to do, I think. ~2x the income on average for 4 year degrees compared to high school is pretty big number, it surprised me, and it tells a different story than this article does. Before I read the Fed’s study I thought that college was maybe worth 15% more, on average (which would still be a nice boost…)

The Fed’s report calls the extra income that degree holders earn the “income premium”, and they even point out that the income premium is quite robust and not changing much, at the same time they’re arguing that the “wealth premium” is going down. They go so far as to ask “Why Has the College Income Premium Been More Durable than the Wealth Premium?” As far as the US Federal Reserve goes, there is no question and no debate about whether degree holders are earning more.

> Let’s never forget the elite are insulated from the problems of the future working class.

Sure, that is true. But with ~40% college degree attainment in the US, we are not talking about the upper class at all here, we’re talking about the middle class too, and talking about education that is available to most people.

>You took away a summary point that things are changing and somehow bad for degree earners, when in fact the bottom third of college grads have always been worse off, they’re the bottom third.

Sure, but when they were worse off they wasted maybe 10-20k on a degree. Lot of money down the drain, but you could pay that off working at a minimum wage job. Now it's more on the order of 5x those numbers, while spending power of minimum wage is down.

I didn't make that conclusion in a vacuum.

>What does it say when you look at the stat that degrees earn 2x more than non-degrees, as a summary

A general summary isn't a good idea on how to look at things, especially in a downturn. A general summary is that most "household's" average income is decent. But that's not who minimum wage is for, and also clouds the fact in the details that "households" have become more and more dual-income. Even if we didn't, we shouldn't ignore the 8% homelessness (random statistic, substitute it with the real govt statistic) and 20% minimum wage earners because the median is doing fine.

Fair points. College is more expensive, and has been growing faster than inflation for decades, no question about it. Looks like avg. cost of attendance for a 4 year degree at a state school is 80-90k. I don’t know how many people get financial assistance, or how many experienced loan forgiveness. I do think the U.S. could afford to pay for college outright based on the fact that degree holders earn more, and thus pay more taxes. The lifetime taxes for this group exceeds the cost of college.

> 8% homelessness

FWIW, homelessness in the U.S. is currently about 0.18%

Yeah I absolutely agree. There will always be crazy expensive anything and education is no different. but for state institutions they shouldn't be beholden to the same trend chasing that a private school does. Especially when all those fancy amenities are partially coming out of taxpayer money to begin with. What are we paying for if they can take that money and still increase costs to new students?

The correlation is there, but do we know this is causation in the implied direction? It seems to me that anyone who comes from an upper-middle class educated family would actually make a lot more by not going to college.

See the full report, which answers this question. https://news.ycombinator.com/item?id=37464064

In fact, diploma holders as a whole on average earn roughly 2x what non-graduates earn

The other number you have to consider is how many of the people that start university end up with a diploma. Also not all diplomats and schools are created equally. While the avg. might 2x that is no doubt skewed heavily by people with the 'right' diploma from the right 'university'. If I can only get into a 'bad' university and I'm not 100% sure I will graduate, it is not at all sure that it makes financial sense for me to go.

> Red flag here, this seems like a super misleading and bogus comparison.

I don't think so. It's still a 1 in 3 chance of earning less with a college degree than without. It's useful to show how much overlap there is.

You could also argue that the bottom third of college graduates might also be the bottom earners without a degree, but at some point, you have to work with the real numbers that you do have, instead of hypotheticals.

To improve the article, one could have plotted the income distributions, so that readers can draw their own conclusion about risks.

It would be fine if they had summarized it as a minority 1/3 chance of earning less. It would be fine if they had compared the overall averages, where college grads earn more, and then compared the bottom third of college grads. But the story is trying to justify a summary point suggesting that college isn’t worth it, which justifies the title that Gen Z is giving up on college. The issue is that they didn’t point out that outcomes for college grads on average are quite a bit better, and that it’s only a minority of the time that things don’t work out as well for degree holders (and always has been only a minority of the time.) They didn’t explore the reasons behind the bottom third’s performance, and the comparison is more misleading than the parts I pointed out: https://news.ycombinator.com/item?id=37468176

> Red flag here

Impressionable students believe they can go to college, do little to no work actually comprehending the material they’re going to be using in their field of choice, and then go all “shocked pikachu” when they graduate and are unemployable.

It’s not a college problem. It’s a student problem. They believe just because they have a degree that they’re entitled to high paying jobs when a degree isn’t that special anymore.

I like the phrase ‘shocked pikachu’, I’m definitely borrowing that some time. ;)

Yeah it could be that expectations have gotten lazy. It was always the case that you get out what you put in, so if people are coasting more, then outcomes probably reflect that.

The Fed’s paper does say that the income premium for college degree remains relatively robust, as it always has. The part that they call out as changing over time is the relative savings the college educated have by the time they retire. They don’t know why though, and spending and savings habits might be changing, so the wealth premium going down might not indicate that college is less special.

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