Washington Monthly - September/October 2014 - 50

ware development needed a new kind of worker. Instead of people who could perform repetitive tasks within a tightly controlled system, they needed people who were adaptable and creative, able to work inside complicated and constantly changing
organizations. Most of all, they needed people who were good at
learning, because job requirements were evolving at the accelerating pace of the economy itself. Naturally, firms in the market
for workers looked to the products of learned institutions: colleges. People responded to the surge in demand for college graduates by flocking onto college campuses, often with the aid of
government grants and loans. From 1960 to 2010, the proportion of high school graduates going on to college increased from
45 percent to nearly 70 percent.
Many of the new collegians eschewed traditional subjects
like English and history in favor of job-oriented programs. Business became the most popular major, by far, with 365,000 students earning business degrees every year.
Yet there are reasons to question how much all those
new business majors actually learned. Richard Arum and Jo-

Companies like General
Assembly are filling the
growing chasm between
the end of college and the
beginning of meaningful
work, a gap that exists
because neither colleges
nor businesses are willing
to give students the
training they need.
sipa Roksa's 2010 book Academically Adrift tracked how much
students learned in college. Those who majored in traditional subjects such as the social sciences, humanities, science,
and math learned the most. Those who majored in business
and communications learned the least. The study controlled
for students' demographics and previous academic history.
The difference seemed to lie with intensity-students in the
traditional majors were asked to work harder and longer,
and learned more as a result.
Businesses, meanwhile, are perpetually dissatisfied when
those college graduates arrive for work. A 2014 Gallup survey
found that only 11 percent of business leaders "strongly agreed"
with the proposition that recent college grads are prepared with
the necessary skills to enter the workforce. By contrast, another
Gallup survey found that 96 percent of college leaders thought
they were doing an excellent job.
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September/October 2014

At the same time, companies don't want to spend the money necessary to train recent college grads on the job. This has
been another huge change in the nature of work. When people
spent their whole careers working for a single company, it made
sense to train and promote them into increasingly better jobs.
But as competition between firms grew fiercer, jobs and people
became more mobile, and the speed at which job requirements
changed accelerated, businesses became increasingly reluctant
to make that investment. One survey found a 50 percent reduction in the number of training and development employees at
U.S. manufacturers between 2006 and 2013. Why spend large
amounts of money to train someone who could easily jump to
your competitor?
The resulting "no skills, no job; no job, no skills" dilemma for
students only grew worse after the 2008 financial calamity. Every year, hundreds of thousands of undergraduates emerge from
garden-variety colleges and universities lacking the selective admissions policies that send signals of cognitive ability and elite
acculturation to the job market. In past recessions, college grads
eventually found their way into the good parts of the labor market, albeit with some permanent scars to their long-term earnings potential. But this was the worst recession in living memory,
and for many it came with new and unwanted baggage: debt. As
late as the 1990s, most undergraduates finished college debt free.
Now, nearly 70 percent leave owing close to $30,000 per year. For
a substantial minority, the numbers are much worse.
Colleges, as it happens, have a solution: even more college, at a
steep, debt-financed price. Media attention to the huge amounts
of outstanding student loan debt often glosses over the fact that
graduate school borrowing makes up a substantial chunk of the
$1.2 trillion outstanding balance. From 2008 to 2012, the median
combined undergraduate and graduate debt of people graduating
with master's degrees jumped from $44,000 to $57,600.
Universities see master's degree programs as largely unregulated cash cows that help shore up their bottom line. Selective institutions monetize their brand names by offering expensive one-year "professional" or "executive" master's degrees
with lax admissions criteria that don't have to be publicly disclosed. Enrolled students can defer paying off their undergraduate loans. This amounts to doubling down on the risky proposition that, armed only with academic credentials, they can
break into the job market with enough success to pay even bigger loans back. Rising loan default rates suggest that many of
them have been wrong.
Normally, organizations that under-serve and overcharge
their customers are vulnerable to competition. But colleges are
special-heavily subsidized by the government and protected
by regulations that make it difficult for people with unorthodox
business models to enter the market. So it's a mark of how bad
the problem has become that a growing number of people are doing it anyway.

hen Jake Schwartz, the co-founder of General Assembly, went to Yale, he ignored the siren songs of recruiters from the management consultants and Wall Street

Washington Monthly - September/October 2014

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