Tuesday, April 30, 2013

Higher Education, Public Support, and Inequality

It has become axiomatic that US society is experiencing levels of wealth inequality not seen since the early stages of the 20th century, before the Great Depression. This is worrying a lot of people, none of them apparently policymakers or politicians, whose interest in the subject seems near zero.

Education is often touted as the antidote to inequality, and well it should be. If there is any opportunity for folks from lower socioeconomic to raise their standard of living, it will be through education that enables better jobs, better opportunities, better wages - and better education for their kids. Education feeds on itself - the more education you have, the better your kids' prospects both in school and in life.

Yet at the level of higher education, things have been getting worse, not better. In the early 1970s, about 40% of the top quartile of US households (by wealth) had a college degree; only about 6% of those in the bottom quartile did. Today those figures are over 70% for the top quartile but only 10% of the bottom. The rich are indeed getting richer (and better educated), while we've hardly moved the needle on the bottom end that needs it the most.

Over some - but not all - of that time frame we've seen a drop in public support for higher education, a subject I've commented on before. And while it's been de rigueur to blame universities themselves for the rising cost of education - everything from rock-climbing walls to "posh" dorms to gourmet food has been singled out - the fact remains that, in public universities where the vast majority of Americans earn their college degrees, there has been a massive cost-shift going on. Universities are non-profits; they can't give money away to shareholders, they for the most part don't stockpile it away in rainy day funds, and for all that faculty like to complain about how much administrators are paid your average university VP or president makes a small fraction of what similar positions in industry make. Simply put, if there's less money coming in from one source universities have to find it in another - which generally means tuition.

Now we get confirmation of the effects this has on the inequality equation. One of the strategies that public universities use to try to boost tuition revenue is bringing in more out-of-state students (who generally pay higher tuition rates). But when they do this, evidence shows that minority and low-income enrollment go down. Universities' ability to play the role of socioeconomic equalizer is directly undermined by the strategy of seeking higher-paying, "off-shore" students (out of state or out of the country). And that strategy is brought on in large part by the continual drop in public funds.

The broader argument that the marketplace will provide its own opportunities for the poor has so far been little more than a pipe dream. The great experiment in for-profit universities is coming to a screeching halt (as I've noted here, here, and here among other places), brought down by a combination of bad debt, unscrupulous actors, and short-term profit-seeking. There is little hope (and no evidence) that the marketplace is going to solve this problem.

The first question, of course, is basic: what kind of society do we want to live in? If we want a society with substantial inequalities of wealth, and the problems that go with it (see Latin America in the 1980s and 1990s), we're on the right path. If, on the other hand, we want a more broadly prosperous society - not one that enforces Orwellian equality but one in which there are greater opportunities for everybody (think modern Switzerland, Norway, or Korea), we need to do things differently. And shifting some of the burden of higher education back onto the public ledger is likely to be a part of that. We need to figure out what we want, and then put our money where our values are.

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