Guest Post: The Higher Ed Bubble Is Already A Disaster
“The housing bubble was obvious; just look at any graph on housing prices.” Hindsight seems 20-20 in many cases, and the housing bubble is no exception. That is because after bubbles burst, they seem obvious. However, not all bubbles appear obvious to all. For instance, the education bubble carries its doubters. While some agree that the costs of college have grown exponentially, some of those same individuals have been stubborn to admit that an education bubble is forming.
But major media players seem to be changing their tune. The New York Times joinedamong the many education bubble articles by comparing the education industry to the housing industry. But it fell short. The article concluded that the education bubble would not bring about significant consequences, like the housing bubble did. The claim is that demand in education could drop and that would have little effect on our economy.
Will the education bubble popping bring about a disaster, or will it be a pop that few people see after it bursts?
Like the housing bubble, a pop in this industry affects other industries. For instance, educational institutions create demand for products offered by other companies. If educational institutions receive fewer dollars, they won’t need the resources they currently demand, like textbooks, technology, and even construction. When companies experience a drop in demand for their resources, they won’t need as many employees either, and will cut back on their work force.
Add to this mix that a drop in educational demand will change the employment rate for professors, advisors and other workers in the educational fields. These people will then enter the workforce as competition against those relying on education to get a bump. Consider this picture: a laid of college professor with many educational credentials competing against a college graduate for a job. A lower demand for education will directly create a lower demand for professors and others in the educational industry.
Of course, these economists that doubt a disaster may be right. If wages suddenly begin to soar for those in with degrees (which we have yet to see), college will still hold the reputation of being worth it. But as the AP reported, one in two college graduates are either unemployed or underemployed. We’re already seeing the disaster.
Tim Smith is a SAB reader and blogger who writes at Echo Boom.Tags: guest posts, higher education, higher education bubble