The number of PhD recipients on food stamps and other forms of welfare more than tripled between 2007 and 2010 to 33,655, according to an Urban Institute analysis cited by the Chronicle of Higher Education. The number of master's degree holders on food stamps and other forms of welfare nearly tripled during that same time period to 293,029, according to the same analysis. [Hat tip.]
There have been some that have proposed that the current surge in college costs is not proof of a bubble, but rather the natural byproduct of college’s sorting function. (I think I first heard this proposal at Foseti’s.) If that were the case, it doesn’t make sense that holders of advanced degrees are having difficulties getting good jobs, since the natural purpose of sorting is to take the best and brightest and put them in the best positions.
The theory of sorting makes its case on the grounds that colleges are largely meritocratic—a dubious claim at best, though true relative to colleges of, say, fifty years ago—and that they can be trusted to determine the best, brightest, and most dedicated. Naturally, employers cannot perform direct testing for this, mostly because those sort of tests are racist, and so they need other proxies. The meritocratic elite just so happen to provide those proxies.
Unfortunately, the sorting theory of higher education is untrue because the reality does not follow the model: namely, those who have earned high educational honors and degrees aren’t more employable or working the better jobs. Thus, if college is supposed to sort people, it has obviously failed, as evidenced by the fact that holders of advanced degrees are 300% more likely to receive food stamps now than three years ago, while US citizens in general are only 43% more likely (see linked article above.)
Funnily enough, there is a model that would generally predict this occurrence, and it is the bubble model, which posits that wages for holders of college degrees will decline as the supply of holders of college degrees increase, which is a direct result of government intervention into the market, particularly through the expansion of cheap credit and direct subsidy. Low and behold, this has come to pass, mostly because the bubble model has better predictive power than the sorting model, and is thus more correct.
Since we’re on the subject of college degree holders, I’d like to point out as an aside that the idea that degrees aren’t real property because they aren’t transferrable is partially false. It is true that one student can’t sell his credentials to another student, but it should also be noted that students aren’t the only ones who use the credentials they earn. Employers also use student credentials by hiring employees who have certain credentials. While they don’t “transfer” credentials per se, it is observably true that when someone switches jobs, the people employing their credentials also changes as well. Given that there are signaling elements to college credentials (as evidenced by every guidance counselor that ever repeats the trope that college grads do better on the job market because they’re college grads), it should be plausible that there is a type of transference that exists with college credentials, except that is at the employer level, not the possessor level. Incidentally, this conceptual model reinforces the idea of a college bubble since it suggests that there can be diminishing marginal returns to adding one more college educated participant to the labor market, thus driving down wages.