• July 24, 2014

All About the Money

What if lawmakers and students used starting salaries to evaluate colleges and their programs?

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What is your college degree truly worth?

That is the question that a new report seeks to answer. And it does so by distilling college into a number, expressed in dollars.

"The Earning Power of Graduates From Tennessee's Colleges and Universities" is the latest effort to precisely quantify the value of a degree. It identifies the payoff that individual programs at specific colleges yield the first year after graduation. While limited to Tennessee, it will be followed by similar analyses in other states, and it marks the arrival of a new way of evaluating higher education that brings conversations about college productivity and performance to the program level.

Due out this week, the report—by College Measures, a partnership of the American Institutes for Research and Matrix Knowledge, a consulting firm—is bound to spark debate about what it counts and omits, and to raise fears over how its findings will be used.

The report has been praised by some analysts for merging data on education and employment in valuable ways and for producing revealing insights. For instance, in Tennessee, attending the flagship, in Knoxville, might not lead to a higher paycheck for new graduates than completing a community-college program, depending on the major a student chooses.

The report also exposes simmering arguments in higher education: whether college is chiefly for personal economic gain or for serving the public good, whether teaching potential students about the costs and benefits of their college choices will further cement an already widespread consumerist ethos, and whether data on disparate outcomes by discipline will fuel more attacks on liberal-arts programs, whose graduates may not earn large salaries right after college but fare better later.

Produced in collaboration with the Tennessee Higher Education Commission, the report was preceded by a Web site, which became public last month, with data for institutions in Arkansas. College Measures is also producing analyses for Colorado, Nevada, Texas, and Virginia.

More states may follow suit. About half the states have the ability to link postsecondary academic records with labor data, according to a 2010 report by the State Higher Education Executive Officers. Few states have done so, says Travis J. Reindl, a program director for the National Governors Association, but interest is growing in the types of analyses that College Measures performs.

"Governors care very much about job creation, and they care very much about meeting work-force needs. Both of these things rely on good information," says Mr. Reindl. "This is an issue that's clearly starting to percolate because it all goes back to jobs, job, jobs."

Salary Matters

Previous studies by the Georgetown University Center on Education and the Workforce, among others, have analyzed wage differences by major. The Tennessee report breaks new ground, says Jeff Strohl, director of research at the Georgetown center, by marshaling data from disparate state agencies to identify the average first-year wages of the state's college graduates between 2006 and 2010, and linking those data to the majors they pursued and institutions they attended.

"These types of efforts are wonderful to see happening," Mr. Strohl says. "We're just entering a whole new chapter of finally having adequate data."

Delving to the disciplinary level at each institution is especially valuable, says Mark Schneider, vice president of the American Institutes for Research and president of College Measures, who wrote the report with Ben Vivari, director of College Measures.

It makes little sense to rely on disciplinary and institutional distinctions alone to analyze the wage benefits of college, says Mr. Schneider, especially when states have the capacity to track students as they proceed through elementary, secondary, and postsecondary levels of education and into the work force. If finer-grained distinctions are becoming available, the thinking goes, why not use them?

"I don't just get a bachelor's degree," Mr. Schneider says. "I get a bachelor's degree from a particular institution and in a particular field."

The added level of detail that Mr. Schneider wants to explore simply expands on one of the central value propositions that colleges often make in arguing for more money from states and more applications from students: Holding an associate or bachelor's degree yields a big bump in future earnings.

While most faculty members and administrators are comfortable with such an argument in general terms, closer views of specific programs and their salary outcomes tend to arouse objections.

"College and university presidents who opted to pitch the value of a college degree in terms of income and job placement boxed themselves into a corner," John R. Thelin, a professor of higher education at the University of Kentucky, said in an e-mail.

While the Tennessee report is not meant as a tool to hold individual institutions and programs accountable, Mr. Schneider says it may help policy makers and administrators ask more-probing questions and identify programs that might be underperforming.

Why, for example, do graduates of the health programs at Dyersburg State Community College earn, on average, $52,000 in their first year, while those who pursued the same majors at Northeast State Community College make nearly $15,000 less?

And why do some graduates of community-college programs earn more money in their first year than those who spent four years at a university studying the same field? "The value of a technical associate degree is one of the biggest takeaways here," Mr. Schneider says.

The main purpose of these reports, however, is to help students and their families make better-informed choices among colleges and majors, the authors say. While the purpose of college is not solely to get a job and earn money, they acknowledge, pay is still an important consideration.

"Part of the motivation of this report is that I don't want students borrowing $100,000 for a degree in which they'll earn $25,000," Mr. Schneider says. "It's not the debt that matters, it's the salary."

Financial concerns and employment prospects also appear to be uppermost in students' minds. In 2011 nearly 86 percent of incoming freshmen said their top reason to go to college was to get a better job, according to the Higher Education Research Institute at the University of California at Los Angeles. It has been their leading reason to attend college since 2006. In previous years, the survey found, students' prime motive for college was to learn more about things that interested them.

"This is consumer-driven," Mr. Schneider says of his analysis. "This is perfectly consistent with the needs of students."

'Desiccates and Distorts'

The notion that a degree should lead directly to a specific job is fairly new, historically speaking, says Mr. Thelin. While policy makers and potential students have long paid attention to the employment outcomes of graduates of technical and community colleges, similar scrutiny is now coming to other areas of higher education, like prestigious law schools, that were once thought to be untouchable, Mr. Thelin says.

While the tools to analyze these outcomes are new, the underlying tensions about the larger purpose of college are longstanding, says Elizabeth Minnich, a philosopher who is a senior scholar at the Association of American Colleges and Universities. What makes these tensions more salient now, she says, is the current context, in which colleges are more managed and corporatized than in the past, and public financing for higher education is on the wane.

While Ms. Minnich agrees that graduates need to be able to earn a living, and that financial analyses of colleges have their place, framing the broader purpose of higher education in monetary terms is harmful, she says. It equates college with a wage and reduces education to a single goal: getting a job.

"It desiccates and distorts," Ms. Minnich says. "I do think something has gone really a little nutty—and I think it's a marketing device—when schools in any way go along with the notion that they can guarantee future earning power."

She says she finds it ironic that policy makers are looking to education to help people compete in an increasingly global and complex economy at the same time that the purpose of college is cast in narrower terms.

Such dynamics are a poor fit for four-year degrees, says David A. ­Reidy, head of the philosophy department at Knoxville. Four-year degrees, in the liberal-arts in particular, are not solely for job training, he argues. "They're opportunities to develop broad intellectual capacities and to pursue intellectual interests," Mr. Reidy wrote in an e-mail.

"The success of the American democratic experiment depends significantly on a broadly educated citizenry, capable of critical thinking, cultural understanding, moral analysis and argument," he wrote. Philosophy and other core disciplines in the arts and sciences, he continued, help nurture such a citizenry. "And the value there is incalculable."

While many liberal-arts departments have sought to describe their worth in terms of a larger social good, they have also mounted economically based arguments to woo students.

On its Web site, Mr. Reidy's department at Knoxville begins its appeal to future majors by describing the fundamental questions about the human experience that philosophy seeks to answer: What is reason? What is involved in knowing the truth? How is acting rationally related to acting morally?

The department also promotes what it calls "the philosophy major's (surprisingly solid) career prospects." Citing statistics from Payscale, a Web site that compares salaries across industries and job titles, the department notes that philosophy majors earn more than $80,000 a year, on average, at midcareer. It attributes that to the discipline's rigorous training in reading, writing, and thinking, which can be applied to a wide range of careers.

The data from College Measures tell a less-encouraging story, at least about the major's immediate payoff: They show first-year earnings for philosophy and religious-studies majors at Knoxville to be $28,500, the second lowest-earning bachelor's program at the institution after biological and biomedical sciences.

Job or Career?

The differing outlooks for philosophy majors, depending on whether they are in their first year after college or at midcareer, suggest the chief limitation of the Tennessee report, according to both its supporters and its critics. They say first-year earnings data paint a misleading picture of a graduate's path through life.

"A starting salary doesn't tell you anything about whether you're in a dead-end job or about the quality of the work," Ms. Minnich says.

Many young graduates are just beginning to figure out what they want to do after they leave college, says Mr. Strohl, of Georgetown. The first year is particularly volatile, he says, for liberal-arts majors who will probably make multiple career changes, some of which will occur during the first few years after graduation. They may also be in graduate school.

While the first year of wages can accurately forecast later earnings, Mr. Strohl says, its predictive power is strongest when the pay is for full-time work, spread over a full year, and perhaps most important, in a field in which someone wants to work for a long time. "The problem isn't first-year earnings," he says. "It's 'What is the likelihood first-year earnings have anything to do with a career?'"

Many of the systems used to track wage data are still in development, though future analyses may follow graduates after their first year as alumni.

The report's wage data do not include earnings for entrepreneurs or the self-employed. Nor do they show pay for federal employees or those who have left the state. The codes used to identify degrees are large and heterogeneous, leading to broad categories like "health professions and related programs," which include such diverse subjects as allied health, audiology, nursing, phlebotomy technology, and premedical studies.

Mr. Strohl also says he is not persuaded that the report's analysis has much value in comparing institutions. Previous research indicates that the more selective an institution is, the more its graduates tend to earn.

One reason the Tennessee report may not confirm those prior findings is that it does not account for regional differences in wages, which Mr. Strohl says could skew how much money graduates earn. The University of Memphis, for example, located in the state's largest city, fares quite well in the report. That may be a reflection of the quality of its programs, its location, or a bit of both. The College Measures analysis may be more relevant for community colleges or regional universities, he says, where graduates more often set down roots near the institutions they attend.

Mr. Schneider, of College Measures, sees regional economic differences as less important in Tennessee than in larger and more economically diverse states, like Texas and Virginia, where he is also conducting analyses.

Gaps in the data also ill serve flagships, Mr. Schneider acknowledges. Salaries of graduates who leave the state are not tracked. Flagships attract both out-of-state students and many of the brightest minds from inside their borders. Both types of students are often most equipped to seek job opportunities elsewhere. In Tennessee, less than 30 percent of the graduates from the flagship campus in Knoxville had wage data available, while twice as many community-college graduates did.

Even though the large number of graduates of flagships who leave the state may make certain aspects of the data less robust, Mr. Schneider argues that state legislators can still benefit from knowing how much human capital stays in state.

"In my discussions with policy makers, they want to know, 'If we're spending $50,000 on this person's bachelor's degree, how many are staying around and contributing to the wealth of the state?'" he says. "For a lot of states, this matters a whole bunch."

Legitimate Data

While Mr. Schneider hopes lawmakers will not base sweeping conclusions on the data he has produced, some observers note that such arguments may prove too tempting. Gov. Rick Scott of Florida, a Republican, sparked a furor last October when he said the state should allocate money to fields that are likely to lead to jobs instead of those, like anthropology, that he said do not serve the state's vital interest.

Such misuses of the data should not dampen enthusiasm for efforts like those by College Measures, says Jane V. Wellman, executive director of the National Association of System Heads. "These are legitimate questions and legitimate points of data."

While she is concerned that the data also further cement a prevailing market ethos in higher education, she is not worried that such analyses will persuade more students to abandon the arts, humanities, and social sciences, or legislators to further cut state money for these fields. "I don't think this is the thing that'll put the nail in the coffin of the liberal arts," she says.

The purpose of the report, says Mr. Schneider, is something more personal: to help students understand that majoring in such disciplines as family studies or religious studies entails some risk of low pay.

"You should know that if you're going to major in something you love that much, you may have to pay for it," he says. "It's just a warning."

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