Another dynamic also undermines the value of a college degree, says David H. Autor, an economist at the Massachusetts Institute of Technology. While the college premium appears to be leveling off, the spread between the incomes of the highest-earning Americans and those in the middle expanded almost as fast in the 1990's as it did in the 1980's.
"If I may speak somewhat loosely, there continues to be rising demand for people who have very strong cognitive, managerial and communications skills," Mr. Autor said. "The vast middle, whether they are college educated or not, are not in that upper category of cognitive elite. The elite is college educated, but not all the college educated are those people."
In other words, nonlinear returns to the highly talented in our winner-take-all society, while ordinary people (college degree or not) struggle. And note that, despite recent attention, white-collar outsourcing is still too small a phenomena to affect these numbers, although that will change in the future.
A related statistic I heard in an economics of higher ed talk: after controlling for family wealth and academic performance (high school grades and SAT scores), there is very little difference in earnings between graduates of public and elite private universities. According to this data, the additional economic value of an Ivy League degree is less than the extra tuition paid!
