At Imprimis: Richard Vedder is wrong; education pays

At Imprimis—the "most influential conservative publication you've never heard of"—Ohio University economics professor Richard Vedder argues that the federal government is creating more problems than benefits with its student loan programs, and along the way makes a weird observation:

What about higher education being a vehicle for equal economic opportunity or income equality? Over the last four decades, a period in which the proportion of adults with four-year college degrees tripled, income equality has declined. (As a side note, I do not know the socially optimal level of economic inequality, and the tacit assumption that more such equality is always desirable is suspect; my point here is simply that, in reality, higher education today does not promote income equality.)

Vedder kind of gives the game away with his postscript—he doesn't care about income inequality, he just thinks it a handy tool to use in the argument against education. And it's true in a very narrow sense that increased access to college hasn't reduced income inequality. In truth, it's probably contributed a bit. Check out this chart:

Would you rather have a four-year college degree—likely with above-average earnings and below-average unemployment—or do you want to just keep that high school diploma?

Or study the numbers here: Between 1990 and 2008, a man with a high school diploma saw his earnings grow just 61 percent—that lagged the 67 percent inflation rate during that same period. Men with bachelor's degrees saw a 209 percent increase in income; men with PhDs saw a 227 percent increase.

Getting a good education, it seems, has been really smart way to stay ahead of the inequality trend.

And that matters, because college education—while more pervasive than it ever has been—is still the exception than the rule: Adults with four or more years of college comprised less than 30 percent of the population in 2009. Combine the relative scarcity of diplomas with the income benefit those diplomas conferred, and you get part of the explanation for increased income inequality in the United States in recent decades.

There are other things that Vedder, to my mind, gets wrong, and clearly we need to talk about how we pay for education and get it delivered. But Vedder's case is premised on this wrongheaded—misleading—idea that college education hasn't been very helpful economically, so to hell with the federal government helping young people get a degree.