The decline of college as we know it

The headlines are coming in fast and furious. The Wall Street Journal had this one two weeks ago: "College Grads in Minimum Wage Jobs". Apparently as many as 284,000 young Americans who have graduated with a college degree over the past three years work as restaurant waiters, store cashiers, and lifeguards - because, in spite of their college degree, these are the only jobs they could get. What's worse, 37,000 of them have advanced college degrees.

A New York Times article two months ago struck a similar chord about the fate of college graduates in the world's other superpower. The headline read: "Chinese Graduates Say No Thanks to Factory Jobs". Apparently, 25-year-old Wang Zengsong, who holds a college degree, has spent the last three years in a series of low-paying jobs - first as a shopping mall guard, then as a restaurant waiter, and, most recently, as a building security guard. There are plenty of factory jobs in China, but Mr Wang will not consider applying for one; as a college graduate, he thinks such jobs are beneath him. He continues to hunt for an office job even as he works as a security guard.
 

Young Mr Wang is representative of the hundreds of thousands of college graduates throughout the world whose dream of a full-time white-collar job is tantalisingly out of reach. This is after leaping over innumerable hurdles to make it to college and then graduate. There are many Wangs in China and as many in India, the United States, France, England, Ireland, and, hold your breath, Tunisia, Egypt and most of West Asia.

Egypt! When the Arab Spring burst forth in December 2010 and dictator after dictator fell throughout the region in a matter of weeks, the world rejoiced that West Asia finally discovered democracy - and that too prodded by the young people there. The world looked on approvingly as Hosni Mubarak was hauled over the coals as punishment for corruption and mismanagement of the Egyptian economy. But there is irony in this. During Mr Mubarak's 30-year reign, the Egyptian economy had grown 4.5 times, a growth record that very few Third-World countries could match. Even after the global financial crisis of 2008, the Egyptian economy continued to grow - it merely slowed from a 7.2 per cent growth rate before the crisis to 4.5 per cent through the crisis years. As for corruption, Egypt was a gentlemanly 80th in the world, according to Transparency International rankings, which place it at about the same level as India and China.

So what went wrong in Egypt? The answer will make your blood curdle. As a result of a sharp drop in infant mortality, something that the Egyptian government can take credit for, Egypt's population saw explosive growth in the seventies and eighties. By 2010 this cohort of 20- to 25-year-olds amounted to a massive 2.5 million, half of whom had college degrees. The tragedy was that the only jobs available for these college graduates in Egypt were in the informal sector, tourism or agriculture. This was the group that made its way to Tahrir Square.

The US National Bureau of Economic Research has just released a study, which has a scary title: "The Great Reversal in the Demand for Skill and Cognitive Tasks". According to the study, since 2000, the US economy has seen a decline in the demand for tasks that require cognitive skills. In other words, since 2000, there has been a decline in the demand for people who have college degrees. What's worse is that this decline in demand has come at a time when there has been an explosion in the supply of college-educated people. This mismatch - an excessive supply of college graduates and the lack of enough jobs that require their cognitive skills - has led college-educated people to take up low-skilled jobs such as waiters, check-out clerks and car mechanics, thereby pushing low-skilled workers out into the ranks of the unemployed. The authors say that college enrolment in the US had been driven up by a boom in the demand for college graduates in the eighties and nineties as the IT infrastructure for the Information Age was being installed. This installation phase is over, and the turning point was the year 2000. Since then, only a much smaller number of people with cognitive skills have been required to maintain this infrastructure.

You don't have to look far to see a similar process in action even in India. Each time you amble over to an automated teller machine, or ATM, and draw cash, try and remember the time up until the late 1990s when you stood in a queue at a bank branch and at least 50 clerical employees delivered you the same cash disbursement service that this single ATM does. All we need to run a chain of several hundred ATMs are security guards and cash van drivers. And perhaps a single-digit number of people with super-high cognitive skills to plan and execute new and innovative services for these ATMs. The white-collar jobs in between have disappeared.

The vast college infrastructure that every country in the world virtuously built in the eighties and nineties is starting to idle. If the cognitive tasks in an economy decline, so will the college as we know it.

Ajit Balakrishnan is the author of The Wave Rider
ajitb@rediffmail.com