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Why is a College Education Important? – An Economic View

There seems to be a push for a college education nowadays as everyone has a degree, has contemplated going back for one, or is pursuing another degree.  However, we should stop and think about why a college education is important.  There are certainly people who argue that a college education is no longer worth it, especially since the cost of attending college has dramatically risen, as evidenced by the Camry College Cost Comparison.  However, there are solid monetary and economic reasons for getting a college degree to safeguard yourself against future changes.

The reason why a college education is so important nowaday is not because of anything internally in the US, but rather the changing landscape of the economic world order.  The US used to be the best educated nation in the world where our high school graduates were the cream of the crop, driving innovation and creating a strong skilled workforce.  The most important thing about the previous economic dominance of the average US worker (in particular the blue-collar worker) is that they were highly skilled in comparison to almost anywhere else in the world.  However, that is no longer the case.

With the resurgence of China, India, and other third world countries, what we see is a degradation of the value of a high school education.  Why?  Well, high school graduates in the US are probably more prepared nowadays than in previous years in terms of what they know.  However, the problem lies in that in China and India, there are hundreds of millions of people who have at least a high school education.  This talent glut at the high school education level means that the value of a high school education has decreased.  As other countries around the world upgrade their education infrastructure, the value of a high school education, even a US high school education will continue to decrease.  It is simple supply and demand of the labor market.

However, in order to protect yourself, it is probably smart to get a College education.  The arguments that you may no longer need to attend college is probably correct.  People like Mark Zuckerberg and many other college dropouts who started multi-billion dollar corporations probably didn’t need to attend a university.  However, not everyone is as skilled as those people.  The thing about a college education is that it presents a baseline of your own talents and the level of skill.

The reason why skill is important because it determines how much you can earn for the company.  The best way to describe this without getting into too much economic detail is to start by thinking of yourself as a labor talent.  As a labor talent, you’re similar to a baseball prospect.  The company can observe you and they can see what you do else where, but they don’t know how you will perform when you get to the position they want to hire you.  Once they hire you, you perform and you provide a certain benefit to the company.  Here, instead of winning baseball games, you help the company earn money and you get paid a set amount.  However, to maximize how much the company earns from your labor, they need to know how much money you can make, which is dependent on your skill level.

The problem is: it is hard to determine how skilled a white collar worker is, so companies often rely on educational attainment as a baseline among other considerations, such as test scores, work experience, and recommendations.  However, getting a college education is simply not enough any more.  The major matters more, not because you’ll be suck in a certain career, but rather the learning opportunities that each major offers.  The US job market has shifted to emphasize critical thinking and math skills, which is why many of the top jobs often require math/science skills as well as the ability to critically think.  The major you take should encompass what you’re interested in, but your coursework should also reflect critical thinking skills.

The fact is that the first employer will teach the newly graduated students what they need to know.  Even business school coursework doesn’t fully prepare the students for the private sector, but rather gives them a slight leg up on the learning curve.  However, even English or sociology majors can enter the private sector successful as long as they emphasized writing detailed analytical papers that showcase the extent of the critical thinking skills that they possess.

In today’s service dominated economy, “soft skills” are needed more than ever as America’s primary export has not become physical goods, but ideas which other nations manufacture into physical goods.  As a result of this shift, a college education has become important not only as a place to train critical thinking skills, but also to become more familiar with advance applications of technology.  A college education may not be necessary today, but it will in the future.  Otherwise, your earning potential may not be as great as it is now.

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