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article imageOp-Ed: Downvaluing grads — Where the elite meet the street

By Paul Wallis     Sep 4, 2014 in Lifestyle
Sydney - The day of the invulnerable college grad is drawing to a close. Indications are that relative wages are getting lower and job security is non-existent. Against steadily increasing college degree costs, return on investment is not looking good.
Sydney Morning Herald
Technology, outsourcing and globalisation are turning some traditional white-collar office jobs into lower-paid labour, more akin to some types of blue-collar work.
This transformation in white-collar jobs is more pronounced than is widely realised. Technology crunched many blue-collar jobs and led to a rapid rise in the casualiation (sic) of the workforce. Now it is having the same effect on a growing number of white-collar jobs.
That’s not all. This is just one of many symptoms of a crashing economic model. Many of the white-collar jobs, notably in accountancy, administration, and many related management positions have no hope of surviving incoming technology. Ironically, the desperate shedding of blue-collar jobs in preference for technology has effectively killed the related white-collar jobs.
Inefficient as outsourcing often is, and if it did nothing for employment numbers in the West, it also showed how inefficient things like call centres and other old-style business practices really are. That process feeds back directly into management and professional structures.
Technology is showing that you don’t need highly paid people, or even qualified people, to do many fundamental business operations. Simultaneously, people are learning that major commitments to expensive degrees with a shelf life of 10 years and required ongoing training can be more trouble than they’re worth.
If you’re going to be in and out of employment on an average of once every four to six years, you probably have other things to worry about than maintaining good grades. You may want to keep a roof over your head instead, be able to pay bills, and go into business for yourself, for example.
US colleges and the Bureau of Labour Statistics figures indicate a generally stable relationship between the wage differences in academic qualifications. Those with doctorates doing substantially more than those with high school diplomas or below. What is not clear, however, is the employment track of the future.
The benefits of the overall trend to “doing more with less” is very much open to debate. Critics would say that “doing much less and doing it badly with less” would be a more apt description. Those who have been watching the job market, with its extremely erratic employment methodologies, would say that “earning less while doing more” was the norm.
The gap in income brackets is certainly top-heavy. That’s been the case for quite some time now, with senior executives getting unbelievably large amounts of money and many employees getting unbelievably low amounts of money. At the same time, the general cost of living has been rising steadily.
There has to be a cut-off point somewhere. The “working poor” are no myth. These people are typically at the lower end of the pay spectrum, but bracket creep in this form appears to be going upwards. What is good pay today will be less good tomorrow and absolutely terrible 10 years from now. That has been the standard practice since the 1980s. Wage growth never catches up with costs.
Where the elite meet the street
Put this unholy Trinity of declining grad pay rates, rising living costs, and diminishing returns on work done, and you have perfect storm in progress. Add to this the now built in standard corporate behaviour of shedding staff at every opportunity, and you can wind up with a meltdown scenario quite easily.
A further problem, the projected oversupply of graduates, is likely to hit this very unreliable employment market and bounce right off it. Employment patterns in recent years indicate that a mix of employment and unemployment is now much more prevalent than it was.
The original Western economic model, which was basically a running commentary on the 1950s, assumed a very straightforward trajectory — people would go to college, graduate, earn money, have great careers, by houses, and grow the economy productively.
In the past, college fees could be earned by working at night. Home ownership and rental didn’t cost a fortune, and life was comparatively cheap, if not luxurious.
The exact opposite is now becoming the case. Costs of living are murderous and rising, savings are nearly impossible to achieve, private capital is usually decimated by much more common periods of unemployment, and demand for welfare is therefore going through the roof.
Even the expression “disposable income,” once a favourite of economists, has disappeared almost entirely. As a matter of fact, economists aren’t even proposing any new models. Like politics, economics now seems to be largely concerned with tinkering with the broken-down remains of the existing system and pretending it works.
The fact is that the original economic model simply doesn’t work any more, and is due to break down. The only natural economic development to fill the gap is essentially a feral business model. Indications are that the New Economy, which is basically “employ yourself,” is becoming the preferred option.
Some New Economy businesses do well, but you can’t take success for granted. This tricky option is based on doing things the hard way, and self-employment can be a quite demanding way of earning a living. Expecting hundreds of millions of people to become self-employed is expecting too much.
The grad situation has become the dead canary in the coalmine scenario. If you search “underpaid college graduates,” you will get pages and pages of case studies and anecdotes regarding cheap employment practices and many arguments regarding the value of college degrees.
What’s emerging is basically a peasant economy. History teaches that peasant economies don’t work. This type of economy is inefficient, backward, corrupt, wasteful, crime ridden, and socially stagnant. The New Economy will eventually override it, simply because it’s infinitely more cost-efficient and competitive.
That said, the New Economy is all about business, not about simple career tracks and 1950s-style living. It won’t replace the old economic model, it will simply surpass it. This type of economy doesn’t come with guarantees and rosy visions of prosperity for all.
If getting a college degree is now the equivalent of placing a bet, many economies will be in very sad shape, very soon. Even the ultra-cheap outsourcing countries are starting to find that large numbers of graduates are actually more than they need. IT is a case in point, in which huge numbers of graduates have to compete for relatively small numbers of jobs.
Business administration, for example, could easily follow suit, ditching large numbers of irrelevant roles, like middle management, and bureaucratic jobs. Machines are much better bureaucrats than humans, and far cheaper.
Pleasant as it is to think that the insane micromanaging office tyrants of the past will become extinct; the problem of very large numbers of people with nothing to do and no way of earning a living is very unfunny. This is a traditionally dangerous social structure, and worse as an economic model.
Poverty breeds some hideous social monsters. Most of the world’s worst events have related to dysfunctional societies suffering from high levels of poverty. Typically, these events are preceded by years of failure of economic management, government ineptitude, and political blindness to emerging situations.
The asteroid is coming, and it's not likely to be a social visit. Maybe now would be the time to take some evasive action?
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
More about graduate employment, graduate economic model, Working poor, macro economics, Downsizing
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