It is an article of faith among California’s political class that insufficient higher educational opportunities are a constraint on California’s economic and job growth.  Just about every California economic development document includes a discussion of California’s desperate need for more college graduates.

Unfortunately, the facts disagree with the faith.  California is educating far more people than it is creating jobs for them to take.  In the past 10 years, California’s public higher education system alone issued 2,455,421 degrees.  Over the same period, the state saw a net increase of only 1,136,642 jobs.

That’s right.  California granted more than twice as many post-high-school degrees as net new jobs.

We can quibble about the numbers, but the conclusion does not change. The number of degrees includes 871,922 community college degrees, including a conservative estimate of 94,000 in 2015, because data are not yet available.

If we exclude community college degrees, California’s university and state college systems still granted 1,583,499 degrees, a much greater number than new jobs.  Some of those represent one person earning multiple degrees, but more than 28 percent of students would have to have earned multiple degrees for the number of college graduates to be less than the number of net new jobs.

These numbers don’t include California’s private colleges and universities, of which there are many.  The University of Southern California, for example, granted 14,633 degrees in June 2015.

You cannot escape the conclusion that California job growth lags the rate at which the state creates college degrees.  College graduates are a significant California export.

Of course, not all of California’s new jobs require college degrees.  For example, almost 31 percent (351,926) of California’s net new jobs over the past 10 years were in the Leisure and Hospitality sector.  Very few of those jobs require a college degree.

So, why is everybody saying that higher education is a constraint on California’s growth?

Part of the reason is that education ranks with motherhood and “tolerance” on California’s pantheon of virtues, particularly among the highly educated political class, and education — notably the teachers’ unions — has a powerful lobby, perhaps the most powerful in California.

Part of it is a poor understanding of statistics.  People observe that, on average, college graduates earn far more than non-graduates and conclude that education creates higher income, completely ignoring the self-selection bias: The lowest-ability student in your high school didn’t go to college, because he was the lowest-ability student. The highest-ability student went to college because she would have been bored beyond measure holding up a “slow” sign in a construction zone.  Repeat after me: correlation does not imply causation.

Then, even after all this pumping out of graduates, there remain persistent shortages of qualified Californians to fill some jobs. Of course there are.  Nobody expects San Jose to produce all the geniuses that drive Silicon Valley’s innovation. Why should we expect them to all come from California?  These are very special jobs requiring very special skills. In this situation, large numbers work to employers’ advantage.  If the entire world is your source of these special workers, you have a much better chance of finding exactly who you need, or pay what you prefer.

The forecasting industry is a big part of the problem. It is easy to find forecasts such as this Georgetown University report that says by 2020, a whopping 65 percent of all U.S. jobs will require post-secondary education. It is just as easy to find forecasts that robots will take away all of our jobs— including in the so-called “knowledge” sector.

Long-term forecasts are extraordinarily unreliable. Long-run forecasts of necessary skill sets for future jobs are even more unreliable. They are completely dependent on assumptions that frequently prove wrong. Famously bad long-term forecasts include Time Magazine 1966 statement that “Remote shopping, while entirely feasible, will flop.” and Western Union rejecting the telephone in 1876 as having “… too many shortcomings to be seriously considered as a means of communication.”

Forecasts of increasing demand for educated workers seems to be contrary to observation. Because of computers, a McDonalds’ worker doesn’t need to know how to make change, or the price of any product. All they need to know is what a product looks like and how to push a button.

What we appear to be seeing is what my colleague Dan Hamilton calls a “hollowing out of the middle.”  Technology has increased demand for very-high-skilled people, as we see in the Silicon Valley, and it’s increased the demand for low-skilled people, as in the McDonalds example. It’s also reduced demand for many people in between, that is, the middle class.

Focusing excessively on higher education creates problems while doing no good. It is ridiculous to attempt to give 65 percent of young people a college degree. You cannot achieve that goal without reducing the quality of the graduates, which reduces the value of the degree for the better students.  This would be repeating what California has done with high school diplomas. Graduation requirements have been reduced to the point that the degree is meaningless for almost all purposes.

Increasing supply at any educational level will not make new jobs appear; in fact, many of those workers are likely to go to where there are jobs and basic costs, particularly housing, are more reasonable.  A recent study by Cleveland State University documents the ongoing migration of educated Millennials from high-cost places with few opportunities to places with lower costs of living.

Yet rather than into look how to create better paying jobs across the board, the education lobby — including many now at universities — have a perfect motivation to support more spending on, well, they and their friends. If we did achieve a 65 percent college graduate rate, we’d hear the policy wonks calling for more advanced degrees.

So, we ask, why we are creating so many more college graduates than jobs for college graduates?  I think it’s because we’ve promised our young people an education to match their abilities. That’s fair.  Government is providing a service for citizens. If it provides an educated workforce for Arizona and Texas, well that’s an unintended consequence.

We also need to ask, why is California not creating jobs for our educated young people? That’s another discussion, with lots of reasons. But, creating more college graduates is not among the answers to that question. Focusing on it diverts energy and resources from the real challenges to California’s economic growth.

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It sounds reasonable. Congress certainly thought so. It was co-authored in the Senate by Edward Kennedy (D-MA) and Judd Gregg (R-NH), while John Boehner (R-OH) and George Miller (D-CA) introduced it into the House. It passed both houses by huge bi-partisan majorities, 91-8 in the Senate and 384-45 in the House.

The Act’s passage also marked the low point in California’s High School dropout rate.

In 2002, California’s High School dropout rate had been declining for several years. After the act’s passage, the dropout rate trend experienced an unprecedented reversal. What had been a declining trend became an increasing trend, one that continues today. After bottoming out at less than 11 percent in 2002, California’s High School dropout rate is now approaching 22 percent.

The costs of dropouts are enormous, both for the students who leave school and for society. A person without a High School education is economically crippled. For all but the very exceptional few, dropping out of High School is a sentence to a lifetime of poverty and drudgery. For many dropouts, a lifetime of poverty and drudgery is the best possible outcome. Far too many will be involved in drug abuse, dysfunctional or violent relationships, teenage pregnancies, and crime.

The costs to society are large. They include losses to crime, and the direct costs of subsidies, social programs, healthcare, prisons, and law enforcement. Those costs may be exceeded by the dropout’s output deficiency, that is, the difference between what the dropout would have produced with a decent education and what he or she actually produces.

One way to improve standardized test scores is to increase the retention of tested topics by the students. An easier way is to prohibit students who would perform poorly from taking the test. Since all students have to take the test, this means converting poorly-performing students into non-students, letting them drop out.

It looks to me like California’s educational establishment has opted for the easy way.

On the chart below, the purple line shows California’s dropout rate from 1997 through 2009; you can see the percentages on the right-hand side of the chart. The other lines show the percentage — on the left side of the chart — of California’s students who passed the standardized tests for Math, Language, and Science. California’s passing percentage in each field has increased lockstep as dropouts increased.

It is worse than that, though. The percentage of students passing the standardized tests has increased by about 15 percent, on average, while the percentage of students dropping out has just about doubled. That’s an extraordinarily expensive improvement.

Did the schools follow this strategy deliberately? You can’t rule it out. People react to incentives, and the Act provides an incentive to abandon those who will likely perform poorly on the tests. Teachers will probably object to that, but we have no reason to believe that they should somehow be different that most people and ignore the incentives. Besides, we’ve already seen examples of teachers and administrators cheating on these tests.

Teachers assert that the solution to all of No Child Left Behind problems is to abandon it. The other solution, of course, is to fix the incentives. The way to do that would be to assign the schools a huge financial penalty for dropouts. Teachers and administrators would scream. They would tell us that dropouts result from problems at home and socioeconomic conditions.

No doubt, many students have terrible home conditions that put these children at a huge disadvantage, but those are exactly the children that we should be giving the most attention. A lousy home environment doesn’t explain the sudden increase in dropouts. These issues have been with us for a very long time. I took my first college economics class, The Economics of Poverty, in the 1969-1970 school year. There is nothing about poverty today that we didn’t discuss in that class, except that the returns to education have increased dramatically since then.

Failure to educate disadvantaged children guarantees that the perverse cycle of poverty and despair is perpetuated. Providing them with quality education, even with the active resistance of family, friends, culture, and the students themselves, is the only way to provide them with even the minimum hope for the upward mobility that government-provided education implicitly promises.

Abandoning our least advantaged children is unconscionable. If we are to have an egalitarian and merit-based society, we must reduce the dropout rate. The way to ensure that no one is abandoned is to penalize the school for dropouts. It sounds harsh, but we owe it to the students, and we owe it to ourselves.

Previously appeared at newgeography.com

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